California's Supreme Court on Thursday ruled against Novartis in a decision that could have wider implications for whether brand-name or generic drugmakers should be held liable for warning consumers of risks in their drug labels.
In a departure from other recent rulings, the highest California court found that a brand-name drug manufacturer's duty to warn consumers does extend to a generic, but only because federal regulations currently require generic drugs to carry the same warning label as appears on the brand-name product.
The court said: "brand-name drug manufacturers have a duty to use
ordinary care in warning about the safety risks of their drugs, regardless of
whether the injured party (in reliance on the brand-name manufacturer’s warning)
was dispensed the brand-name or generic version of the drug. We also conclude
that a brand-name manufacturer’s sale of the rights to a drug does not, as a matter
of law, terminate its liability for injuries foreseeably and proximately caused by
deficiencies present in the warning label prior to the sale."
The ruling comes as the US Food and Drug Administration (FDA) has delayed the finalization of a contentious proposed rule from 2013 that would allow generic drugmakers to revise their product warning labels and depart from the labeling of their brand-name counterparts.
Novartis told Focus in an emailed statement: "Novartis is disappointed and
disagrees with the California Supreme Court’s decision to hold the Company
potentially responsible for injury allegedly caused by the use of another
manufacturer’s product after Novartis had sold the brand name product to a subsequent
manufacturer. Novartis is reviewing the opinion and will continue to
defend against the plaintiffs’ unfounded claims. It is important to note that the Court’s ruling is limited
to a preliminary legal question of what plaintiffs would need to show to
support their claim of responsibility, and the Court did not make any finding
that Novartis is liable in this case."
Plaintiffs in the case alleged that a generic drug's label, known as terbutaline, failed to warn about the risks to fetal brain development and falsely represented that the drug was safe for use by pregnant women.
They further claimed that Novartis's control over the brand-name drug's label, known as Brethine, rendered the company responsible for any deficiencies in the generic label since generic companies are obligated to use the brand-name drug manufacturer's label.
Novartis, however, contended that it did not need to update or maintain an accurate label because it did not manufacture the terbutaline that caused the plaintiffs' injuries. The company also explained how it had divested ownership of the brand-name drug several years before the plaintiffs' mother was prescribed the generic version.
But in deciding against Novartis, the court noted: "It is during the time Novartis owned the drug that both its legal duty and its power to discharge that duty converge. At that point, Novartis did have control over the warning label and could have modified it, without waiting for FDA approval, to warn of the risks to fetal brain development. Recognizing a brand-name drug manufacturer's potential responsibility for injuries proximately caused by deficiencies in its warning label –– regardless of whether the injury occurred before or after divestment — provides a further incentive to the brand-name manufacturer to update the label as soon as it knows (or should have known) of the unwarned risks."
The court also took issue with Novartis' claims that adding this new liability for brand-name drugmakers could hurt their ability to innovate: "We are equally unpersuaded by Novartis's contention that warning label liability would stifle innovation by substantially raising drug costs and chilling the development and marketing of new drugs. The logic buttressing this argument is far from self-evident. Warnings about a product's efficacy or danger may indeed risk diminishing its value to the manufacturer. Less obvious is the manufacturer's response to this predicament. One might just as easily assert that a drug company, after adding a new warning, will be incentivized to develop new and safer alternatives to the drug so that it can recapture the market for treatment of that disease."
The ruling sets up an interesting dilemma for FDA, particularly as Scott Gottlieb, prior to being named FDA commissioner, told Focus in 2016: "FDA needs to bear more responsibility for updating the labels of old generic drugs and can take on that role, rather than foisting it onto generic drug makers in a way that will not only increase generic costs and expose them to the same sort of failure to warn suits that plague branded companies, but will undermine the generic model by creating incongruities between the labelling of the same generic drug, solely by virtue of the manufacturer and what CBE [changes-being-effected] supplements they happened to file."
More recently, the generic drug industry group, known as the Association of Accessible Medicines, called on FDA to pull the proposed rule permanently. The latest regulatory agenda did not include the finalization of it.