On June 24, the United States Supreme Court announced its decision in Mutual Pharmaceutical Co., Inc. v. Bartlett that state law design-defect claims focusing on labeling of generic drugs are preempted by federal law. In many ways, the Bartlett decision can be seen as a major victory for generic drug manufacturers, which now enjoy far more protection from state law product liability suits. However, the Court did leave open some questions about tort liability for generic drug manufacturers.

In its holding, the Court analyzed the clash between New Hampshire tort law, which the Court concluded imposes a duty on manufacturers to ensure that their products are not “unreasonably dangerous,” and the federal Hatch-Waxman Act, which requires that the generic version of a name-brand pharmaceutical be chemically identical and bioequivalent to the name-brand version and that it carry the same labeling as that approved for the name-brand version. The Court reasoned that it would be impossible for a generic drug manufacturer to abide by both the state law (requiring it to alter the formula or labeling of a product to prevent “unreasonable danger”) and the federal law (forbidding the same). Accordingly, the Court held that because under the Supremacy Clause federal law pre-empts state law where they conflict, the New Hampshire standard could not be enforced.

The Court also dismissed the “stop-selling theory.” Recalling its decision in PLIVA, Inc. v. Mensing, the Bartlett Court acknowledged that a generic manufacturer could abide by both federal and state law by not selling its product within states where state law clashes with federal law or by not manufacturing its product at all. However, the Court argued that this sweeping solution is no solution at all, asserting that pre-emption cases have never required that an actor stop acting “to satisfy both his federal- and state-law obligations.” Moreover, the Court argued that impossibility pre-emption would be virtually meaningless if a claim of impossibility could be defeated by “the option of ceasing to act.”

Bartlett follows closely the Court’s holding in PLIVA (that federal drug law pre-empts state law and bars claims for inadequate warning) and extends that holding to claims brought for design defects. In doing so, Bartlett effectively bars product liability suits against generic drug manufacturers for anything other than manufacturing defects. While this bar has profoundly negative implications for potential plaintiffs, it largely benefits consumers on the whole. Because the Court’s decision reinforces the limitations on alterations to formula and packaging placed on generic drug manufacturers by the Hatch-Waxman Act, it further facilitates access to affordable generic drugs. Moreover, the reduced likelihood of being called to defend costly product liability suits also likely lowers the overall cost of doing business for generic drug manufactures, which again means greater access to affordable prescription drugs for consumers.

However, Bartlett does leave open some questions from PLIVA about a generic drug manufacturer’s duty to propose alterations to the formula or labeling of pharmaceuticals. In PLIVA, the Court highlighted the duty of generic drug manufacturers to propose changes to warnings as soon as there is reasonable evidence of a serious hazard associated with the drug. The PLIVA Court, however, chose not to address the question of whether that duty had been breached. Similarly, the Bartlett decisions fails to address the nature and extent of the duty generic drug manufactures might have to propose alterations and as such may still leave room for suits brought against generic drug manufacturers under tort theories other than product liability such as negligence. Moreover, while they are few and far between, some courts have allowed liability to be levied upon name brand manufacturers for harm done by corresponding generics, presenting another issue that the Bartlett Court chose not to address.

Our Insight.  Your Advantage.  All in all, the Bartlett decision can be seen as a victory for generic drug manufacturers for whom the product liability picture is much clearer and much brighter.

Porter Durham