Foreseeable Harm to Third Parties Keeps Claim Against Drug Makers Alive

Alabama's Supreme Court in January rendered an unusual and potentially far-reaching decision in a case pitting a consumer against several drug manufacturers. While its holding in Wyeth Inc. v. Weeks, 2013 Ala. LEXIS 2 (1/11/13), applies only to cases brought in Alabama, the court's decision may lead to that state's becoming the preferred forum for certain types of drug litigation: those in which a consumer is injured by a generic version of a patented name-brand medication. In addition, while not dispositive, that court's rationale might prove persuasive in other jurisdictions.

An Allegation of Fraud

The Weeks case was instituted by a man who suffered with acid reflux. He took the medication metoclopramide, a generic version of the drug Reglan, which is made by Wyeth LLC, Pfizer Inc. and Schwarz Pharma Inc. The drug products the plaintiff actually took were manufactured by generic drug makers Teva Pharmaceuticals and Actavis Elizabeth LLC. These allegedly caused him to develop the movement disorder tardive dyskinesia, which causes sufferers to make involuntary repetitive movements, like facial tics or rapid finger twitching.

The consumer and his wife alleged in their complaint that the three brand-name manufacturers of metoclopramide made false representations (or suppressed unfavorable information) about the drug in their literature and on the labels of their products, causing the plaintiff patient's doctor to be misinformed about the risks of the development of tardive dyskinesia. They claim that the brand-name producers of metoclopramide had a duty to warn the doctor, and that they breached that duty. As third parties injured by the purported fraud, misrepresentation and/or suppression of unfavorable medical evidence, they asserted that they were entitled to compensation for the alleged breach of duty.

Generic-Brand Manufacturers' Hands Are Tied

It is important to note that the plaintiffs were not able to bring their complaints against the manufacturers of the generic products the patient actually used and which directly caused his injuries, because of the U.S. Supreme Court's 2011 decision in Pliva v. Mensing, 131 S. Ct. 2567 (2011). In Pliva, the Court declared that because generic drug sellers are required by law to use the same warning labels approved by the U.S. Food and Drug Administration (FDA) for use on the name-brand equivalent drug products, they have no choice in what those labels say and so cannot be held liable under state law to consumers when the warnings and indications on those labels are inadequate. In such cases, federal law preempts any such state-law claims.

The Weeks brand-name defendants moved to dismiss, arguing that it was not their products that had harmed the plaintiffs. They further claimed that however the plaintiffs had pleaded the case, they were actually seeking damages based on product liability theory; as such, their state-law claims should be ruled preempted by federal law. And, finally, they asserted that they had no duty to warm the plaintiffs or the patient's doctor of the risks of using products sold not by them, but by their competitors.

The U.S. District Court for the Middle District of Alabama, Southern Division, is hearing the underlying case. But because the suit involves an Alabama plaintiff and Alabama substantive law applies, the district court certified this question to the State Supreme Court: Under Alabama law, may a drug company be held liable for fraud or misrepresentation (by misstatement or omission), based on statements it made in connection with the manufacture or distribution of a brand-name drug, by a plaintiff claiming physical injury from a generic drug manufactured and distributed by a different
company?

In other words, the State Supreme Court was asked to decide whether a brand-name manufacturer ' which creates the drug warning labels that, in accordance with federal law, must be approved by the FDA and used by sellers of both the name-brand and generic versions of the drugs ' can be held responsible for failure to warn a consumer of the risks of using a functionally identical product (the generic medication) even though it did not sell the product the consumer actually used?

The Alabama high court replied to the district court that Wyeth and the other name-brand drug manufacturers sued by the plaintiffs are subject to suit in accordance with Alabama law under the plaintiffs' pleaded theories. The majority stated in this regard:

In the context of inadequate warnings by the brand-name manufacturer placed on a prescription drug manufactured by a generic-drug manufacturer, it is not fundamentally unfair to hold the brand-name manufacturer liable for warnings on a product it did not produce because the manufacturing process is irrelevant to misrepresentation theories based, not on manufacturing defects in the product itself, but on information and warning deficiencies, when those alleged misrepresentations were drafted by the brand-name manufacturer and merely repeated by the generic manufacturer.

To explain its position, the court noted that brand-name manufacturers have a duty to report to the FDA any serious or unexpected adverse health effects on consumers of their products (21 C.F.R. Section 314.80), and they must also submit annual reports that include safety information to the FDA (21 C.F.R. Section 314.81). Brand-name manufacturers also are authorized under the “Changes Being Effected” (CBE) rule to strengthen the warnings on their previously approved labels if new information about hazards of using their product are discovered (21 C.F.R. Section 314.70(c)(6)(iii)(A); the FDA will review those changes later on. This allows for the manufacturer to convey emergency notification to doctors of any newly discovered adverse effects not known at the time the drug was first labeled, including by sending so-called “Dear Doctor” letters to physicians.

These and other avenues are open to brand-name drug manufacturers that find they need to beef up their drug labels, but they are not open to generic drug marketers because, according to the FDA and the Pliva decision, any generic drug producer that increases or decreases the severity of the FDA-approved warnings placed on the equivalent brand-name drug products is in violation of 21 U.S.C. Section 355(j)(2)(A)(v) (requiring generic drug applicants to show that “the labeling proposed for the new drug is the same as the labeling approved for the listed drug.”)

With this legal background in mind, the court concluded that, “A brand-name manufacturer is well aware of the expiration of its patent and well aware that a generic version of the drug will be made when the patent expires. It is recognized that generic substitutions are allowed in all 50 states. A brand-name manufacturer could reasonably foresee that a physician prescribing a brand-name drug (or a generic drug) to a patient would rely on the warning drafted by the brand-name manufacturer even if the patient ultimately consumed the generic version of the drug.”

Conclusion

The Weeks decision is unique because the law in Alabama permits holding defendants liable to third parties if such parties have suffered injuries flowing from frauds perpetrated on others. In many other states, only the person actually lied to ' such as a doctor prescribing medication ' would be able to mount a cognizable case. Here, the allegation that the brand-name defendants in Weeks perpetrated a fraud on the plaintiff patient's doctor by mislabeling their products was enough for the Alabama's high court to conclude that the lawsuit should be permitted to go forward. Of course, the plaintiffs still must prove that an actual fraud occurred, and that their injuries were caused by that action, but the fact that they can now proceed is a significant development in the ongoing battle between drug manufacturers and consumers alleging injuries from using their products.

Janice G. Inman is Editor-in-Chief of this newsletter.

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Alabama's Supreme Court in January rendered an unusual and potentially far-reaching decision in a case pitting a consumer against several drug manufacturers. While its holding in Wyeth Inc. v. Weeks, 2013 Ala. LEXIS 2 (1/11/13), applies only to cases brought in Alabama, the court's decision may lead to that state's becoming the preferred forum for certain types of drug litigation: those in which a consumer is injured by a generic version of a patented name-brand medication. In addition, while not dispositive, that court's rationale might prove persuasive in other jurisdictions.

An Allegation of Fraud

The Weeks case was instituted by a man who suffered with acid reflux. He took the medication metoclopramide, a generic version of the drug Reglan, which is made by Wyeth LLC, Pfizer Inc. and Schwarz Pharma Inc. The drug products the plaintiff actually took were manufactured by generic drug makers Teva Pharmaceuticals and Actavis Elizabeth LLC. These allegedly caused him to develop the movement disorder tardive dyskinesia, which causes sufferers to make involuntary repetitive movements, like facial tics or rapid finger twitching.

The consumer and his wife alleged in their complaint that the three brand-name manufacturers of metoclopramide made false representations (or suppressed unfavorable information) about the drug in their literature and on the labels of their products, causing the plaintiff patient's doctor to be misinformed about the risks of the development of tardive dyskinesia. They claim that the brand-name producers of metoclopramide had a duty to warn the doctor, and that they breached that duty. As third parties injured by the purported fraud, misrepresentation and/or suppression of unfavorable medical evidence, they asserted that they were entitled to compensation for the alleged breach of duty.

Generic-Brand Manufacturers' Hands Are Tied

It is important to note that the plaintiffs were not able to bring their complaints against the manufacturers of the generic products the patient actually used and which directly caused his injuries, because of the U.S. Supreme Court's 2011 decision in Pliva v. Mensing , 131 S. Ct. 2567 (2011). In Pliva, the Court declared that because generic drug sellers are required by law to use the same warning labels approved by the U.S. Food and Drug Administration (FDA) for use on the name-brand equivalent drug products, they have no choice in what those labels say and so cannot be held liable under state law to consumers when the warnings and indications on those labels are inadequate. In such cases, federal law preempts any such state-law claims.

The Weeks brand-name defendants moved to dismiss, arguing that it was not their products that had harmed the plaintiffs. They further claimed that however the plaintiffs had pleaded the case, they were actually seeking damages based on product liability theory; as such, their state-law claims should be ruled preempted by federal law. And, finally, they asserted that they had no duty to warm the plaintiffs or the patient's doctor of the risks of using products sold not by them, but by their competitors.

The U.S. District Court for the Middle District of Alabama, Southern Division, is hearing the underlying case. But because the suit involves an Alabama plaintiff and Alabama substantive law applies, the district court certified this question to the State Supreme Court: Under Alabama law, may a drug company be held liable for fraud or misrepresentation (by misstatement or omission), based on statements it made in connection with the manufacture or distribution of a brand-name drug, by a plaintiff claiming physical injury from a generic drug manufactured and distributed by a different
company?

In other words, the State Supreme Court was asked to decide whether a brand-name manufacturer ' which creates the drug warning labels that, in accordance with federal law, must be approved by the FDA and used by sellers of both the name-brand and generic versions of the drugs ' can be held responsible for failure to warn a consumer of the risks of using a functionally identical product (the generic medication) even though it did not sell the product the consumer actually used?

The Alabama high court replied to the district court that Wyeth and the other name-brand drug manufacturers sued by the plaintiffs are subject to suit in accordance with Alabama law under the plaintiffs' pleaded theories. The majority stated in this regard:

In the context of inadequate warnings by the brand-name manufacturer placed on a prescription drug manufactured by a generic-drug manufacturer, it is not fundamentally unfair to hold the brand-name manufacturer liable for warnings on a product it did not produce because the manufacturing process is irrelevant to misrepresentation theories based, not on manufacturing defects in the product itself, but on information and warning deficiencies, when those alleged misrepresentations were drafted by the brand-name manufacturer and merely repeated by the generic manufacturer.

To explain its position, the court noted that brand-name manufacturers have a duty to report to the FDA any serious or unexpected adverse health effects on consumers of their products (21 C.F.R. Section 314.80), and they must also submit annual reports that include safety information to the FDA (21 C.F.R. Section 314.81). Brand-name manufacturers also are authorized under the “Changes Being Effected” (CBE) rule to strengthen the warnings on their previously approved labels if new information about hazards of using their product are discovered (21 C.F.R. Section 314.70(c)(6)(iii)(A); the FDA will review those changes later on. This allows for the manufacturer to convey emergency notification to doctors of any newly discovered adverse effects not known at the time the drug was first labeled, including by sending so-called “Dear Doctor” letters to physicians.

These and other avenues are open to brand-name drug manufacturers that find they need to beef up their drug labels, but they are not open to generic drug marketers because, according to the FDA and the Pliva decision, any generic drug producer that increases or decreases the severity of the FDA-approved warnings placed on the equivalent brand-name drug products is in violation of 21 U.S.C. Section 355(j)(2)(A)(v) (requiring generic drug applicants to show that “the labeling proposed for the new drug is the same as the labeling approved for the listed drug.”)

With this legal background in mind, the court concluded that, “A brand-name manufacturer is well aware of the expiration of its patent and well aware that a generic version of the drug will be made when the patent expires. It is recognized that generic substitutions are allowed in all 50 states. A brand-name manufacturer could reasonably foresee that a physician prescribing a brand-name drug (or a generic drug) to a patient would rely on the warning drafted by the brand-name manufacturer even if the patient ultimately consumed the generic version of the drug.”

Conclusion

The Weeks decision is unique because the law in Alabama permits holding defendants liable to third parties if such parties have suffered injuries flowing from frauds perpetrated on others. In many other states, only the person actually lied to ' such as a doctor prescribing medication ' would be able to mount a cognizable case. Here, the allegation that the brand-name defendants in Weeks perpetrated a fraud on the plaintiff patient's doctor by mislabeling their products was enough for the Alabama's high court to conclude that the lawsuit should be permitted to go forward. Of course, the plaintiffs still must prove that an actual fraud occurred, and that their injuries were caused by that action, but the fact that they can now proceed is a significant development in the ongoing battle between drug manufacturers and consumers alleging injuries from using their products.

Janice G. Inman is Editor-in-Chief of this newsletter.

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