Overdosing on authority: negative side effects of the FDA's proposal for generic label changes may include increased costs and liabilities.

• Author: Santoro, Cassandra L.

"The risk reasonably to be perceived defines the duty to be obeyed, and risk imports relation; it is risk to another or to others within the range of apprehension." (1)

1. INTRODUCTION

   A generic drug is both pharmaceutically equivalent and bioequivalent to its brand-name counterpart. (2) A variance can, however, exist between the inactive ingredients of the respective drugs. (3) Although the two drugs are not required to be identical, their warning labels must be exactly the same. (4) It is the brand-name manufacturer's responsibility to ensure that the warning labels are both accurate and adequate, and the generic manufacturer's corresponding duty to maintain an identical drug label. (5) This "duty of sameness" prohibits generic drug manufacturers from making unilateral changes to their warning labels. (6)

   Despite generic manufacturers' forced reliance on brand-name warning labels, brand-name manufacturers are immune from liability for failure-to-warn or negligence claims arising from generic drugs.7 In a majority of jurisdictions--as long as the drug that caused the injury was generic--brand-name manufacturers escaped negative judgments, even though they played an integral role in the initial development of the drug and its warning label. (8) On an issue of first impression, however, the California Court of Appeals in Conte v. Wyeth, Inc. (9) rejected this traditional view and held that a brand-name manufacturer's duty to warn extends to patients whose prescriptions are filled with the generic version of the drug. (10) Following the decision, three other courts adopted this minority position that brand-name manufacturers can be liable for injuries caused by the generic version of their drug. (11)

   On November 13, 2013, the Food and Drug Administration (FDA) proposed a new rule that would make it nearly impossible for courts to follow that minority view. (12) The new rule would allow generic drug manufacturers to update warning labels without waiting for the brand-name manufacturer to make changes. (13) This change in policy will have widespread consequences, both positive and negative, for consumers and manufacturers alike, including quicker safety updates for pharmaceuticals. (14) In November 2014, the FDA announced that it was delaying the finalized rule, which was to be published in December 2014, until the fall of 2015; by November 2015, instead of publishing the finalized rule, the FDA again delayed and stated it plans on issuing the final rule by July 2016. (15)

   This Note will explore the procedure for introducing new drugs and chronicle changes in manufacturers' postmarket duties. (16) It will also explain the proposed rule for making changes to a drug's warning label. (17) In Part II, this Note will examine how different courts handled liability issues between brand-name and generic drug manufacturers, and it will focus on the recent shift in liability to brand-name manufacturers for injuries caused by generic versions of their drugs. (18) In Part III, this Note will analyze the proposed rule's effects on consumers, prescribing physicians, and drug manufacturers. (19) In conclusion, this Note will provide an overall impression of the proposed rule and further suggest that the FDA not finalize this rule as it is currently proposed. (20)

2. HISTORY

   1. Process of Marketing New Drugs in Interstate Commerce

      A new pharmaceutical drug cannot be introduced into interstate commerce until the FDA approves its application. (21) The process for filing a new drug application is cumbersome and extensive. (22) In addition to filing the application, the applicant must also file the patent number and expiration date of any other patents claiming the drug or a method for using it. (23) Within 180 days from the application's filing, the Secretary shall either approve the new drug or give the applicant notice of a hearing. (24) After a hearing, an application can be rejected for a variety of reasons, including insufficient testing on drug safety or results showing the drug to be unsafe. (25)

      The two major concerns with approving new drugs into the market are safety and efficacy. (26) It is unlikely any drug is completely safe for all people under all circumstances; thus the safety assessment of new drugs requires a delicate balancing test. (27) A new drug is deemed unsafe if its potential for death or physical injury outweighs its therapeutic benefit. (28) The FDA can similarly refuse to approve a new drug if there is no substantial evidence that the drug is effective for its intended use. (29)

   2. FDA Prescribes the Hatch-Waxman Act To Create a Cheaper Drug Market

      Traditionally, all new drugs followed the same tedious application process, regardless of whether it was a generic or a brand-name drug. (30) In response, Congress passed the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act). (31) The Hatch-Waxman Act was a compromise between brand-name drug manufacturers and generic drug manufacturers that sought to induce brand-name manufacturers to invest in research and development for new drugs while also bringing cheaper, generic versions of those drugs to consumers. (32) Congress designed the Hatch-Waxman Act to provide access to more cost-efficient generic drugs by establishing an approval process for all new drugs approved after 1962. (33)

      The Hatch-Waxman Act allows an applicant to file an abbreviated application for a new generic drug. (34) A generic manufacturer can enter the market using this expedited process when the brand-name manufacturer's patent expires. (35) The abbreviated application has fewer extensive requirements, making the application process easier and faster for generic drugs to enter the market. (36) Not only did the Hatch-Waxman Act benefit generic drug manufacturers, but it also achieved its desired balance by providing innovative pharmaceutical companies with the ability to receive a patent extension on their brand-name drugs. (37)

      The Hatch-Waxman Act's success is unprecedented in the pharmaceutical industry. (38) It prompted an eighty-six percent generic substitution rate by 2014, which consequently saved consumers and the healthcare system billions of dollars. (39) The Act also benefited the public by stimulating new drug innovation. (40) Since 2000, brand-name drug manufacturers invested over $500 billion in research and development for new drugs. (41) This increased funding for new drug development created hundreds of new drugs that will help patients live higher quality lives, and, as of 2014, 3400 more drugs are currently in development. (42) The Hatch-Waxman Act is responsible for creating the system in which more than ninety percent of all approved, brand-name drugs have generic alternatives that allow patients to improve their standard of living in a safe and affordable manner. (43)

   3. Post-Market Duties: Differing Treatments for Brand-Name and Generic Drug Manufacturers

      Once a new drug application or an abbreviated new drug application is approved, the manufacturers cannot make any major changes to the drug's formulation without the FDA's approval. (44) Both brand-name and generic drug manufacturers must continue to monitor their drug and review any reports they receive of an adverse drug experience. (45) Serious adverse drug experiences must be reported to the FDA almost immediately, whereas most other, less serious adverse experiences need only be reported one to four times per year. (46)

      Although brand-name and generic drug manufacturers' monitoring responsibilities are the same, the two manufacturers have different labeling duties. (47) Brand-name drug manufacturers are responsible for the accuracy and the adequacy of the drug's warning label. (48) Generic drug manufacturers instead have a "duty of sameness," which requires that the generic drug label be identical to the brand-name drug's label. (49) As a result of that duty, generic drug manufacturers are prohibited from making unilateral changes to any warning labels for any of their drugs. (50) Despite this inability to unilaterally change their drug labels, if generic drug manufacturers think their warning labels are inadequate, they must provide the FDA with any information they have about the new risks to ensure the drug's safety for consumers. (51)

   4. FDA Proposed Regulation Speeds Dissemination of Information

      On November 13, 2013, the FDA proposed a new rule that would allow generic drug manufacturers to revise their drug label and temporarily distribute a label that is different from the listed drug's warning label. (52) The FDA will require the generic drug manufacturer to send notice of both the proposed labeling changes and the information supporting those changes to the brand-name manufacturer when it submits the CBE-o supplement. (53) Perceiving healthcare providers as unlikely to review labels for every generic drug, the FDA also proposed creating a website where the FDA would promptly post information about proposed warning label changes while it reviews the CBE-o supplement. (54) The proposed website would be accessible to healthcare providers, as well as the general public, and would provide information about CBE-o supplements in review, including: "[t]he active ingredient, the trade name (if any), the application holder, the date on which the supplement was submitted, a description of the proposed labeling change and source of the information supporting the proposed labeling change . . ., and the status of the pending CBE-o supplement." (55) The proposed amendment addresses safety concerns about unilateral label changes for generic drugs by permitting the FDA to send a request letter notifying the brand-name manufacturer of the new safety information. (56) The FDA would then evaluate the proposed label change for the generic drug and approve it for both the generic drug's label and the corresponding brand-name drug's label. (57)

      These regulations are intended to improve...