Regulatory Focus™ > News Articles > Supreme Court Again Rules in Favor of Generic Pharmaceutical Industry, Supports Federal Preemption

Supreme Court Again Rules in Favor of Generic Pharmaceutical Industry, Supports Federal Preemption

Posted 25 June 2013 | By Alexander Gaffney, RAC

The current term of the US Supreme Court has already been a momentous one for the life sciences industry, having declared patents on naturally-occurring DNA invalid and legal settlement agreements commonly known as "pay for delay" agreements potentially illegal under federal competition law.

Now the court has released a third potentially landmark decision, Mutual Pharmaceutical Co. v. Bartlett, in which the justices have decided that when it comes to so-called "failure to warn" lawsuits, federal law trumps laws passed by states.

Background: General

In the US, pharmaceutical companies operate in a complex legal environment with numerous layers of governance between them and patients. The two primary types of laws are those enforced by the US federal government, and those enforced by the 50 individual US states.

This situation can create substantial barriers to effective - to say nothing of efficient - compliance. For example, if a federal law called for a particular standard to come into effect no sooner than 2017 but no later than 2018, but a state law said the same standard needed to come into effect no later than 2016, a company would be forced into one of three options: (1) Break the federal law, (2) Break the state law, (3) Comply with the federal law and cease doing business in a particular state.

While the latter scenario seems to make the most sense from a legal perspective, this can prove financially ruinous, especially if the state is a large one, such as in the case of California.

Background: Mutual v. Bartlett

The case of Mutual v. Bartlett starts with the Federal Food, Drug and Cosmetic Act (FD&C Act), which requires a pharmaceutical company to obtain approval for a new drug application (NDA) before being allowed to market the product. Similarly, generic pharmaceutical companies must submit an abbreviated new drug application (ANDA) to the US Food and Drug Administration (FDA) and obtain approval before being allowed to market the product.

The NDA holder has considerably more freedom in respect to what changes can be done to an application. If, for example, it becomes aware of new confirmed or potential safety issues, it can file a supplement to get the labeling for the drug updated.

A generic drug (and the ANDA application to which it is linked), on the other hand, is tied to a specific innovative drug. This means that if the NDA holder makes an approved change to the drug, the generic equivalent must make changes as well.

However, this relationship does not work on a reciprocal basis.

To cite another example:  If the sponsor of a generic drug is made aware of a rare but serious safety issue associated with the drug, it cannot update the safety labeling for either the innovative or the generic drug, as FDA regulations stipulate that they must be identical for the purposes of a particular claim.

This has resulted in continuing legal battles throughout the country. In 2011, for example, the Supreme Court found in Pliva v. Mensing that generic companies are responsible to communicate any adverse events discovered to FDA (a long-standing obligation required of all pharmaceutical companies), but that generic companies are not legally liable to third parties (i.e. injured plaintiffs) in state courts.

The Bartlett Decision

Mensing, to clarify, upheld that federal law preempted state law when it came to labeling. But that left open an additional aspect of the case: What about the design of the drug itself?

In Bartlett, the case revolves around a plaintiff who was prescribed the generic NSAID sulindac to treat shoulder pain. Clinoril was manufactured by Mutual Pharmaceutical. Soon after taking the drug, the plaintiff suffered what the court described as an "acute case of toxic epidermal necrolysis," severely and permanently disfiguring and nearly blinding her.

"The results were horrific. Sixty to sixty-five percent of the surface of respondent's body deteriorated, was burned off, or turned into an open wound," the justices recounted. "She spent months in a medically induced coma, underwent 12 eye surgeries, and was tube-fed for a year."

Notably, the label did not include a warning about the possibility of the condition that the plaintiff suffered. Lower courts found Mutual guilty of a failure to warn charge, and awarded the plaintiff $21 million in damages.

While the case was remarkably similar to the Mensing case, the key differentiator (as determined by the lower courts) was that if the product was inherently defective, the company would be able to comply with federal law by discontinuing the drug in its entirety, thereby avoiding any problems with state or federal preemption.

Federal Law Reigns Supreme

It was this understanding that the Bartlett decision was predicated on, with five of nine justices finding that the same preemption standard under Mensing held for design defects as well. The justices held that because the risk to patients was not "unreasonably dangerous" (under a standard of foreseeable risk) and that the design or labeling of the drug could not be changed to mitigate risk, Mutual was not under an obligation to remove the product from the market but was unable to simultaneously meet the standards of both state (New Hampshire, specifically) and federal law.

"Because it was impossible for Mutual to comply with both state and federal law, New Hampshire's warning-based design-defect cause of action is preempted with respect to FDA-approved drugs sold in interstate commerce," the decision, authored by Justice Samuel Alito, found.

 One interesting corollary to the decision is Alito's - and the rest of the judges' - obvious sympathies for the patient, whose injuries are described in fairly vivid detail in the Court's majority and minority opinion.

"The dreadful injuries from which products liabilities cases arise often engender passionate responses," Alito wrote. "Today is no exception, as Justice Sotomayor's dissent (hereinafter the dissent) illustrates."

And while the case "arises out of tragic circumstances," leading to "rare and devastating injuries," "sympathy for respondent does not relieve us of the responsibility of following the law," Alito concluded.

SCOTUS: Mutual v. Bartlett

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