Massachusetts Supreme Judicial Court Expands Liability for Branded Drug Companies to Consumers of Generics

On March 16, 2018, the Supreme Judicial Court of Massachusetts, the state’s highest appellate court, issued a decision of importance for branded drug companies. In Rafferty v. Merck & Co., the Massachusetts high court held that a brand-name drug company can be liable to a consumer of a generic drug for injuries arising from the failure to update the brand-name drug’s label that results from a “reckless disregard of an unreasonable risk of death or grave bodily injury.”

The background for this decision is the intersection between federal law governing drug labeling and state product liability and negligence law. The FDA pre-approval process requires a branded drug company to show that its label is accurate and adequate. Post-approval, the drug company has the authority and obligation, under certain circumstances, to add to or strengthen a drug’s label to maintain that accuracy and adequacy. A generic drug company, on the other hand, is required to use the branded-drug company’s label without deviation, and must update its label if the branded-drug’s label is updated.

Some plaintiffs have argued that consumers of a generic drug may rely on the label provided by the branded-drug manufacturer even though they may actually ingest a drug from a generic-drug manufacturer. Since product liability law generally only permits an action by the injured plaintiff against the company that supplies the product, these plaintiffs argue, the consumer of a generic-drug that is injured by relying on an inaccurate label is in the position of being unable to sue the generic manufacturer because she’s not relying on it for the label, but unable to sue the branded manufacturer because she did not buy the product from it.

While most courts that have considered this argument have rejected it, the Massachusetts Supreme Judicial Court reached an opposite conclusion by resorting to the law of negligence. In Rafferty, a consumer of a generic drug suffered side effects that worsened after the consumer weaned himself off the drug. The branded label and the identical generic label warned of the side effects, but stated that they would resolve after discontinued use. The consumer alleged that by the time he began using the drug, reports already existed of the persistent side-effects and that the branded manufacturer had already changed the label in certain foreign markets, but not in the U.S.

In reviewing the dismissal of state court claims against the branded manufacturer, the appellate court noted that while product liability law requires a consumer/plaintiff to have purchased the defendant’s product, no such requirement exists in the general law of negligence. Instead, a defendant can be liable for negligence to one to whom it owes a duty, and a duty can be owed to anyone foreseeably endangered by its conduct, subject to public policy considerations as to particular claims. The court found that consumers of generics are foreseeably endangered by the inaccurate labeling of branded drug companies. However, the court also found that imposing negligence liability on branded-companies for the labeling of generics, which are generally released years after the branded-drug first comes to market and during a period when branded sales would be diminished, would risk chilling drug innovation. The court struck what it believed was a balance, holding that the branded manufacturer has liability for generics, but only for grossly negligent or reckless labeling that ignores an unreasonable risk of death or grave bodily harm.

It remains to be seen whether this expansion of so-called innovator liability for branded-drug manufacturers, which has the real potential to increase long-term litigation costs, will remain the minority view among courts, or whether it portends a shift in favor of increased liability risks for branded-drug makers.

 

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