Taking the 'product' out of product liability: litigation risks and business implications of innovator and co-promoter liability.

• Author: Lasker, Eric G.

PLAINTIFF files a lawsuit claiming that her use of a prescription medication caused her to sustain injuries. Brand Pharmaceuticals did not manufacture the drug and therefore cannot be liable to Plaintiff, right? Not necessarily. Two emerging theories of liability, so-called "innovator liability" and "co-promoter liability," aim to hold a non-manufacturer responsible for injuries caused by another company's pharmaceutical product. Under innovator liability, a pharmaceutical manufacturer may be liable for injuries caused by a competitor's generic version of its brand drug based on its supposed responsibility for the drug's prescribing information. Under co-promoter liability, a company that contracts to market another manufacturer's pharmaceutical product may be liable based solely on its marketing activities. This article explores the theories underlying these novel sources of liability and proposes business strategies to consider that could help mitigate these emerging risks.

1. Traditional Tort Doctrine Limits Product Liability to the Manufacturer of the Product.

   By asserting innovator and co-promoter liability, plaintiffs are attempting to circumvent well-established tort law principles. It is axiomatic that "[a] fundamental principle of traditional products liability law is that the plaintiff must prove that the defendant supplied the product which caused the injury." (1) A plaintiff suing for alleged injuries from a pharmaceutical product (or medical device) must identify the actual defendant that manufactured the product she alleges injured her. (2)

   When advancing theories of innovator and co-promoter liability, plaintiffs target defendants they acknowledge played no role in manufacturing or supplying the drug that allegedly caused their injury. These theories require courts to suspend traditional tort law doctrines of causation and duty and have, for that reason, largely been rejected. However, as discussed below, a handful of jurisdictions have viewed these theories more favorably.

2. Innovator Liability Against Brand Manufacturers for Generic Drugs

   1. Background: Hatch-Waxman Act, Wyeth v. Levine, and PLIVA v. Mensing

      The roots of innovator liability can be found in the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the "Hatch-Waxman Act." (3) Designed to facilitate the entrance of generic drugs into the pharmaceuticals market, the Hatch-Waxman Act relaxed the requirements for U.S. Food and Drug Administration (FDA) approval for those drugs. Instead of having to leap the same clinical hurdles as the original drug sponsor, generic manufacturers need only demonstrate that their product is "the same as" an existing brand drug, meaning that it is bioequivalent to its brand counterpart and has the same active ingredient(s), route of administration, dosage form, and strength. (4) Other than routine information reflecting the different manufacturer or distributor, the generic drug also must have "the same" prescribing information, i.e. label, as the brand drug (i.e., the reference listed drug) on which its approval was based. (5)

      This requirement of "sameness" is key to two recent U.S. Supreme Court decisions addressing federal preemption that appear to have reinvigorated innovator liability arguments. In Wyeth v. Levine, the Court held that FDA's approval of a brand drug's prescribing information did not preempt state-law failure-to-warn claims because the brand manufacturer had discretion under FDA's "changes being effected" (CBE) regulation to unilaterally strengthen a drug warning. (6) Two years later, however, the Court held in PLIVA, Inc. v. Mensing, that failure to warn claims against generic manufacturers were preempted because--due to the Hatch-Waxman Act's sameness requirement generic manufacturers cannot use the CBE process to unilaterally change their labels. (7)

      In the post-Hatch-Waxman age, approximately 80% of prescriptions are filled with generic pharmaceuticals. (8) After Mensing, failure-to-warn claims involving a generic pharmaceutical should be preempted, arguably denying consumers of such products an effective remedy if they believe they were injured by the drug. (9) Enter innovator liability.

   2. Judicial Response to Innovator Liability

      Innovator liability first arose in a California case in 2008, in which an appellate court allowed a generic consumer's misrepresentation claims against the brand manufacturer to survive on the grounds that it was foreseeable that the prescribing doctor would see and rely on the brand manufacturer's prescribing information. (10) A federal court in Vermont later followed suit. (11)

      However, the vast majority of courts faced with claims based on innovator liability have rejected the theory. (12) In fact, "[e]very circuit court of appeals that has addressed the issue is in accord." (13) In July 2014, the Supreme Court of Iowa also rejected plaintiff's attempt to hold a brand manufacturer liable for injuries allegedly caused by a generic version of the drug. (14)

      Following Mensing, the innovator liability theory was at least somewhat revived by a handful of courts concerned about Mensing's seeming elimination of a remedy for consumers of generic drugs. Most recently, the Supreme Court of Alabama held that a brand drug manufacturer "may be held liable for fraud or misrepresentation ... based on statements it made in connection with the manufacture of a brand-name prescription drug, by a plaintiff claiming physical injury caused by a generic drug manufactured by a different company." (15) The court recognized that federal courts predicting Alabama law had previously rejected innovator liability, but distinguished those cases as no longer correct post-Mensing. (16) Two additional courts reached the same conclusion under other states' laws, although one was effectively overruled by a subsequent ruling. (17)

   3. The Key Areas of Dispute

      Although the courts considering innovator liability have addressed the laws of dozens of states, their reasoning usually boils down to their views on three basic principles.

1. Are All Product-Based Injury Claims Product Liability Claims?

   The majority of courts rejecting the theory hold that where the alleged cause of the injury is a product, the resulting claim necessarily sounds in product liability, no matter how the plaintiff seeks to characterize it. (18) Plaintiffs cannot pin liability on a non-manufacturer of a brand drug through semantic wordplay seeking to separate the product from the alleged injury.

   A minority of courts, however, views matters differently. For example, the Weeks court stated that Alabama's product liability doctrine "did not subsume a common-law negligence or wantonness claim" or a claim for "fraudulent suppression," and therefore plaintiffs claims against the brand manufacturer would not be "governed by the principles" of Alabama product liability law. (19) These minority courts often treat a drug's prescribing information as somehow independent from the drug in question. The Weeks court, for example, reasoned that, "[b]ecause a warning label is not a part of the manufacturing process, ... the fact that a brand-name manufacturer did not produce the version of the drug ingested by the plaintiff' did not "bar[] the plaintiff's tort action when the plaintiff is arguing that he or she was injured by a failure to warn." Therefore (the argument goes), brand manufacturers are not liable because of their products, but because of their (allegedly false or inadequate) representations about their own drugs which "would necessarily be repeated in the generic labeling, foreseeably causing harm to a patient who ingested the generic product." (21)

   This logic is most certainly wrong and misunderstands the fundamental nature of pharmaceutical products. Comment k to the Restatement (Second) of Torts recognizes that prescription pharmaceuticals are unavoidably unsafe products, and thus they are neither defective nor "unreasonably dangerous" so long as they are "properly prepared, and accompanied by proper directions and warning." (22) In other words, a drug's warning cannot be separated from the product itself; it is an inherent part of the pharmaceutical product, i.e., the means by which these otherwise unavoidably unsafe products are rendered non-defective. Nonetheless, in the minority jurisdictions, a plaintiffs artful pleading is sufficient.

   2. Does a Brand Manufacturer Owe A Duty to the Consumer of a Generic Drug?

      Even if claim(s) involving products do not have to be governed by products liability principles, most courts still recognize that a brand manufacturer owes no duty to consumers of generic drugs because it has no nexus with such consumers and no control over the products to which they are exposed. The Fourth Circuit found "no legal precedent for using a name brand manufacturer's statements about its own product as a basis for liability for injuries caused by other manufacturers' products, over whose production the name brand manufacturer had no control." (23) The Tenth Circuit rejected innovator liability based on negligent design because "[t]he brand-name manufacturers do not have any relationship with the [plaintiffs]." (24)

      The minority courts have attempted to skirt these basic principles through the concept of "foreseeability," i.e., brand manufacturers can foresee that their inadequate warning will harm users of the generic equivalent to their products. (25) But, as the Fourth Circuit held in Foster, the traditional tort law concept of duty still trumps an expanded notion of foreseeability. To impose a duty to consumers of another manufacturer's products "would be to stretch the concept of foreseeability too far." (26)

   3. Do Public Policy

      Considerations Support Innovator Liability?

      To the majority courts, public policy concerns "weigh against holding namebrand competitors liable for injuries caused by their generic competitor's drug." (27) As the Foster...