On March 16, 2018, Massachusetts’s highest court , the Supreme Judicial Court, issued a ruling that we believe will increase the product liability risk exposure for pharmaceutical manufacturers in the state. In the case of Rafferty v. Merck & Co., SJC-12347 (March 16, 2018), the Supreme Judicial Court held that a user of a generic drug may not bring a simple negligence claim against the brand-name manufacturer for failure to warn, but the user could bring a failure to warn claim against the brand-name manufacturer if it could show that that the brand name manufacturer intentionally failed to update a label on its drug, “knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use.” The Supreme Judicial Court’s holding requires a plaintiff to show that the brand-name manufacturer’s actions were reckless, as opposed to only negligent, which is a more stringent standard to prove. The Court’s decision sought to balance protection for the consumers of generic drugs in light of the U.S. Supreme Court decision in Pliva Inc. v. Mensing,[1] while taking into account the burden on brand-name manufacturers. However, by its own admission, this latest decision from Massachusetts’s highest Court stands in the minority of courts that have ruled on this issue. The decision is an important one, however, because brand-name manufacturers can now be held liable to the users of the generic versions of its drug under a theory of reckless failure to warn. It will be interesting to see if other jurisdictions that have not addressed the issue will follow the Massachusetts high court.

The Massachusetts Supreme Judicial Court also concluded that a plaintiff who is injured by a generic drug due to a failure to warn cannot bring a claim against a brand-name manufacturer under c. 93A, the Massachusetts Consumer Protection Statute, where the brand-name manufacturer did not advertise, offer to sell, or sell the drug.

In Rafferty, plaintiff Brian Rafferty was prescribed finasteride by his physician to treat an enlarged prostate. Merck & Co., Inc. (Merck) is the manufacturer of Proscar, an FDA-approved brand-name version of the drug finasteride. Rafferty began to experience side effects. He weaned himself off the drug but the side effects continued and worsened. He was diagnosed with hypogodanism and androgen deficiency allegedly induced by the drug. At the time plaintiff was prescribed the generic version of finasteride, the product label warned of the potential for side effects, but represented that these side effects would resolve after discontinuing use of the drug. This generic label conformed to Merck’s label for Proscar, in accordance with federal law.

According to plaintiff, by the time he was prescribed finasteride, several reports and studies had already emerged suggesting that the side effects could in fact persist even after discontinuing use. He further alleged that Merck had changed the label for Proscar in certain foreign markets to include a warning about persistent side effects, but had not changed its label in the United States as of the time plaintiff had ingested the generic drug.

Plaintiff filed suit against Merck, alleging that, although he had never ingested Merck’s brand-name version of finasteride, Merck owed him a duty to warn of its dangers because, under Federal law, Merck controlled the label on the generic version that plaintiff did in fact ingest. The first sentence of the Court’s decision acknowledges that “[u]nder Federal law, a manufacturer of a generic drug must provide its users with a warning label that is identical to the label of the brand-name counterpart.” Plaintiff asserted a negligence claim for failure to warn and a claim for violation of M.G.L. c. 93A, Section 9 (the Massachusetts Consumer Protection Statute). Merck moved to dismiss and the judge allowed the motion. Thus, the trial court judge ruled, with respect to the negligence claim, that Merck owed no duty of care to plaintiff in part because Merck did not manufacture the finasteride that allegedly caused plaintiff’s injury. The judge further concluded that there could be no violation of the consumer protection statute where there was no duty of care owed to the consumer. Plaintiff appealed and the Supreme Judicial Court transferred the case from the Appeals Court on its own motion.

Plaintiff did not assert a products liability claim and did not contend that Merck owed him a duty to warn as a manufacturer. Rafferty conceded, as he must under Massachusetts’s prevailing law, that Merck owed him no duty to warn under the law of products liability as a manufacturer may be found liable for failure to warn only where the product that caused the injury was made by that manufacturer. As noted by the Court, plaintiff brought a general negligence claim pursuant to the standard articulated in Jupin v. Kask, 447 Mass. 141 (2006). However, as recognized in Jupin, “even where the requirements of negligence are satisfied, there may nevertheless be a public policy justification for declining to impose a duty of care where the ‘imposition of a precautionary duty is deemed to be either inadvisable or unworkable.’” In short, the existence of a duty is ultimately determined with reference to existing social values and customs, as well as social policy. Although this case was an “exception to the usual pattern” because the Hatch-Waxman amendments required that the warning label of a generic drug be identical to the warning label of its brand-name counterpart and because the U.S. Supreme Court interpreted the regulatory scheme in PLIVA (564 U.S. at 614-15) to forbid a generic drug manufacturer from independently revising its warning labels, the Court noted that it must nonetheless consider as a matter of public policy whether a duty should be imposed.

After analyzing the burden and potential chilling effect on drug innovation, the federal regulatory scheme, PLIVA’s holding and the need to protect consumers, the Supreme Judicial Court concluded “as a matter of public policy that allowing a generic drug consumer to bring a general negligence claim for failure to warn against a brand-name manufacturer poses too great a risk of chilling drug innovation, contrary to the public policy goals embodied in the Hatch-Waxman amendments.” However, it also concluded that “public policy is not served if generic drug consumers have no remedy for the failure of a brand-name manufacturer to warn in cases where such failure exceeds ordinary negligence, and rises to the level of recklessness.” Thus, the Court held that a “brand-name manufacturer that controls the contents of the label on a generic drug owes a duty to consumers of that generic drug not to act in reckless disregard of an unreasonable risk of death or grave bodily injury.” The court concluded that “this recklessness standard strikes the most appropriate balance between competing public policy interests, limiting liability for brand-name manufacturers while also providing remedies for the most serious injuries and deterring the most dangerous forms of conduct.” The Court acknowledged that by imposing a duty to warn generic consumers on brand-name manufacturers, it found itself in the minority of courts that have decided the issue. However, it is also the only court to limit the scope of liability to reckless disregard of the risk of death or grave bodily injury.

Finally, the Court held that where the failure to warn is with respect to a drug that Merck never advertised, offered to sell or sold, plaintiff could not assert a claim pursuant to the Massachusetts Consumer Protection Statute. In order to assert a claim pursuant to M.G.L. c. 93A, Section 9, a plaintiff must allege that the defendant committed an unfair or deceptive act or practice in the conduct of trade or commerce, causing injury to plaintiff. The act complained of must occur “in the conduct of any trade or commerce.” To satisfy the “trade or commerce” requirement in a failure to warn claim, it is not necessary that plaintiff purchase the product directly from the defendant – plaintiff need only have used the product (even if sold by another) and have been injured as a result of the defendant’s failure to warn. The Court held that “Merck’s alleged unfair and deceptive action – the failure to warn Rafferty of the side effects of the drug – was not taken in the course of “any trade or commerce” because it was not taken in the course of the advertising, offer to sell or sale of any Merck product.” Because c. 93A allows for attorneys’ fees and double / treble damages, which would not otherwise generally be recoverable pursuant to Massachusetts law absent the assertion of the c.93A claim, the dismissal and view of the Court vis-à-vis the c. 93A claim is a positive outcome from a defense perspective for those subject to potential liability under Massachusetts law.