The U.S. Supreme Court decided Mutual Pharmaceutical Co. v. Bartlett this morning and it was another win for manufacturers of generic pharmaceuticals - once again thanks to "impossiblity preemption". The case had been appealed from the First Circuit which had held that strict liability schemes like New Hampshire’s (where the case originated) are about compensation and not regulation. Accordingly a generic drug manufacturer who complied with federal laws that specified a drug’s molecular structure and the warnings that go with it could still be subject to state tort liability schemes designed to redistribute losses caused by the drug so long as the manufacturer was free not to sell it in the first place.
Noting that New Hampshire’s courts have repeatedly declared that “liability without negligence is not liability without fault” the Supreme Court determined that New Hampshire law imposes a duty to design products, including drugs, so that their utility outweighs their risks and to “ameliorate” the risk-utility profile with warnings. Imposing duties which if breached trigger adverse consequences is obviously a form of regulating conduct and so the Court concluded that the First Circuit was simply wrong about the philosophy at the heart of New Hampshire’s strict liability jurisprudence (and put off for another day addressing the question of what to do if confronted with a state's pure redistribution / no-fault scheme).
Since the manufacturer could not simultaneously provide only the FDA-mandated warning and a different warning in New Hampshire, and because a molecule cannot be redesigned without turning it into something else, the Court determined that this case triggered “impossibility preemption” – a form of implied preemption. The Court held that in such cases an actor is not required to “cease acting altogether”. Instead, the state law is held to be “without effect”; falling to the Supremacy Clause. Mutual, having established that its product was as designed and carried the mandated warning, prevailed.
The dissenters tried to thread the needle but failed. They usually argue that state tort liability systems complement federal regulatory efforts but here needed to finesse the conflicting regulations problem. So, the FDA regulations were cast as mandates and New Hampshire’s tort laws as “incentives” so that it was not impossible for Mutual to comply with both because it was only required to comply with one, the federal, and was free to “exit the market” in New Hampshire or pay the price of doing business there. The idea is that states ought to be free to decide that some products (effectively) cannot be sold within their borders. From our perspective that argument only makes sense if you take the view that the FDA's approval of generic sulindac (the drug at issue) was akin to "Bag O'Glass" having been approved by the CPSC.