Ending the Myth That Branded Drug Companies Cannot Benefit from Preemption

The Sixth Circuit carefully reviewed each of the three key Supreme Court cases. It explained that confusion had arisen because the Supreme Court found against preemption in Wyeth v. Levine, 555 U. S. 555 (2009), which was a brand-name drug case, but in favor of preemption in cases involving generic drugs, Pliva, Inc. v. Mensing, 131 S. Ct. 2567 (2011), and Mutual Pharmaceutical Company v. Bartlett, 133 S. CT. 2466 (2013). The Sixth Circuit clarified that courts should view ” Levine, Mensing and Bartlett as together stating the same test for impossibility preemption,” and that it is wrong to conclude that preemption “is limited to generic drugs.”

In Levine and Mensing, the Supreme Court applied the impossibility preemption doctrine to the issue of warning defect; namely whether FDA's approval of a drug's labeling preempts failure-to-warn claims. It concluded in Levine that the brand-name company, Wyeth, could have added a stronger warning about the administration of the drug at issue in the case under existing FDA regulations without pre-approval. It could have changed the labeling and then sought FDA's approval for that change. Thus, the Court concluded, it was not impossible for Wyeth to be held liable for inadequate warning in the state tort suit while it was following federal FDA law. The Court said, however, that when there is “clear evidence that the FDA would not have approved” the needed change, impossibility preemption would apply.

Mensing involved warning defect claims against a generic drug manufacturer. The Court found that PLIVA, the manufacturer of the generic drug, did not have the authority to change its label without prior FDA approval. FDA law required generics to carry the exact same labeling as the corresponding brand-name drug. The Court concluded that because it was impossible for PLIVA to independently adhere to this federal “sameness” obligation and change the label to address a judicial determination that the label was inadequate, the state failure-to-warn suit had to be preempted.

Finally, in Bartlett, the Supreme Court applied this preemption analysis to a design defect case for a generic drug. It held that the claim was preempted by federal drug law because, as in Mensing, it was impossible for the generic drug manufacturer to lawfully change the drug's design. Federal drug law requires the generic drug to have the same active ingredients, route of administration, dosage form and strength as the brand-name drug on which it is based. Further, the active chemical was incapable of being redesigned: Chemicals are what they are, so redesigning a chemical creates a different chemical.

To recap, the Supreme Court considered warning defect claims against both brand-name and generic drug manufacturers, but design defect claims only with respect to generic drugs. The Supreme Court of Pennsylvania added to the confusion as to whether design defect claims against manufacturers of brand-name drugs would be preempted when it ruled in the 2014 case Lance v. Wyeth that, under Pennsylvania tort law, a design defect claim over a brand-name drug could be maintained, but only if the court were to find that the drug was so hazardous that it was not worth taking for any patients. See Lance v. Wyeth, 85 A.3d 434 (Pa. 2014). The court did not address the issue of preemption, but the case was widely covered in the legal press.

The Yates Case and Impossibility Preemption in Drug Design Defect Cases

In Yates , the Sixth Circuit became the first federal appellate court to apply the U.S. Supreme Court's impossibility preemption analysis from Levine , Mensing and Bartlett to a design defect claim against the manufacturer of a brand-name rug. It found in favor of preemption. The case involved a plaintiff for whom anyone would have sympathy: Stephanie Yates was only 23-years-old when, according to her allegations, she had a stroke as a result of her use of an Ortho-Evra birth control patch.

Ms. Yates sued the manufacturer of Ortho-Evra under both warning and design defect theories. The Sixth Circuit quickly dismissed Ms. Yates' warning-based claims. The court found that “the risk of stroke was communicated in the prescribing information” and that there “is no genuine issue of material fact for a jury” on this issue. The defendant complied with the nuances of New York product liability law, which the Sixth Circuit looked to as law of the case.

The court then turned to Ms. Yates' design defect claim: that the defendant should have reduced the amount of estrogen in the drug. The court recognized that impossibility preemption is “a demanding defense,” but could apply equally to branded drugs as generic drugs, so long as the manufacturer of the branded drug could meet the doctrine's stringent standards. The court also appreciated that the doctrine applied regardless of whether a claim arises under product liability or a negligence theory.

The court dismissed the design defect claim under the impossibility preemption doctrine, stating that the manufacturer of branded drugs cannot change a drug's formula without FDA's pre-approval. The underlying issue with design claims in the pharmaceutical context is that drugs do not fit the traditional standards ' namely, reasonable alternative design or risk-utility test ' that apply in design defect claims. Medicines are not mechanical products such as lawnmowers, where manufacturers can change designs to render products safer. Redesigning a drug creates an entirely different drug, which would not have FDA approval. See Restatement of Torts 2d.Sectoin 402(a), comment K. This is why lawsuits against drug companies have largely focused on whether the directions and warnings accompanying a drug adequately describe the drug's risks.

Federal drug law backs up this premise. Under FDA regulations, the manufacturer of a brand-name drug is prohibited from making “major changes” to it after receiving the FDA's approval for the drug. As a result, the court concluded, “defendants could not have altered the dosage of estrogen in Ortho-Evra without submission to the FDA and the agency's 'approval prior to distribution of the product made using the change.'” Yates at *18 ((citing 21 C.F.R. ' 314.70(b)(2)(i)). Thus, as in Mensing and Bartlett, it would be impossible for the manufacturer to change the drug to address a court finding that the drug had a defective design and follow FDA drug law.

Plaintiff's counsel then argued that reducing the dosage should be categorized as a minor, not “major” change, but the Sixth Circuit properly disagreed. The court explained that the minor changes that do not require prior notification include trivial issues such as the color of the product, size or shape of the container, and a change in the container closure system. Changing the dosage level of the active ingredient, by contrast, is a major change requiring prior-approval. Thus, “to the extent Yates argues that defendants should have altered the formation of [the drug], we find this claim clearly preempted.” Id . at *19.

Once a drug has been approved, it is impossible for a company to comply wih both the FDA regulations and state law requirements to change its design. Design defect claims must yield to federal drug law.

Design Defect Claims

The plaintiff's counsel in Yates also made the enterprising argument that if impossibility preemption bars post-approval design modifications, then the plaintiff should be able to allege, under a design defect theory, that the company should have designed a safer drug in the first instance. Her counsel posited that there is no federal law prohibiting companies from submitting approval for a “safer design,” nor was there evidence here that FDA would have prohibited defendants from submitting such a design. Therefore, the design defect standards of reasonable alternative design and risk utility could be applied before FDA approval, when a product could have been made that would not have harmed the plaintiff.

The Sixth Circuit also dispatched this argument, calling such a pre-approval duty “too attenuated.” Id. As the court explained, “To imagine such a pre-approval duty exists, we would have to speculate that had defendants designed [the drug] differently, the FDA would have approved the alternative design. Next we would have to assume that Yates would have selected this method of birth control. Further yet, we would have to suppose that this alternative design would not have caused Yates to suffer a stroke. This is several steps too far.” Id. at *19-20. “[W]e are unable to conceive of any coherent pre-approval duty that defendants would have owed to Yates when it was developing [this drug.]“

Finally, the Sixth Circuit wisely rejected the design defect argument that the defendant could have prevented the harm to Ms. Yates by not manufacturing the drug at all. The court, citing the U.S. Supreme Court in Bartlett, explained that this “stop selling rationale is incompatible with ' preemption jurisprudence, which presumes that an actor seeking to satisfy both his federal- and state-law obligations is not required to cease acting altogether in order to avoid liability.” Id. at *21 (internal quotations omitted). The FDA, not courts in product liability litigation, should decide which drugs should or should not be sold in the United States.

Courts Can Benefit from Yates

Tort law is generally the domain of state law. When a person brings a product liability claim ' including against a prescription drug manufacturer in federal court ' it is subject to state tort law. Here, the law of New York applied. Federal preemption, however, is a matter of constitutional law. As the Sixth Circuit recognized, federal preemption supersedes state tort law when it is impossible to comply with obligations under both federal regulatory law and a finding of defect under state product liability law. It does not matter whether the manufacturer sells branded or generic drugs. Whether in federal or state court, judges can and should employ the sound reasoning in Yates.

Victor E. Schwartz, a member of this newsletter's Board of Editors, and Phil S. Goldberg are partners in the Public Policy Group in the Washington, DC, office of Shook Hardy & Bacon, L.L.P.