In a recent case, Hadley v. Wyeth Laboratories, Inc., the Texas Court of Appeals held that a physician is not entitled to indemnity from the drug's manufacturer for expenses he incurred defending a lawsuit for prescribing a defective drug under the Texas Product Liability Act. Under the Act, a manufacturer is required to indemnify an innocent seller for losses the seller incurs as a result of a products liability action. The court narrowly construed the term seller and held that physicians are not entitled to indemnification because they are not sellers of the drug. Rather, the essential nature of a physician's relationship with a patient was a professional medical one. The physician in the case argued that he "placed [the drug] in the stream of commerce" and should be treated as a seller. The court, however, held that the physician did not place the drug into commerce for a commercial purpose; rather, he did so as a part of the provision of professional medical services.
Physicians and other professional providers, under this decision, will not be entitled to statutory manufacturer indemnity for the cost of defending products liability cases for products they prescribe to patients. However, while not referenced in this case, the products liability statutes also provide that in a products liability action alleging that an injury was caused by a failure to provide adequate warnings or information with regard to a pharmaceutical product, healthcare providers benefit from a rebuttable presumption that they generally are not liable with respect to the allegations involving failure to provide adequate warnings or information, if labeling conformed to federal law.