Brand-Name Drugmakers Liable for Poor Labels on Generics in California

SAN FRANCISCO (CN) — Brand-name pharmaceutical companies are on the hook for harm caused by defective labels on generic versions of their drugs, the California Supreme Court ruled Thursday.

The decision stems from a 2007 lawsuit against Novartis, where the mother of twin children born with autism claimed their developmental delays were caused by a generic version of terbutaline, which suppresses premature labor.

Novartis made Brethine, the name-brand version of the drug, and the mother said Novartis should have known that it posed a serious risk to brain development, based on studies of terbutaline in rats and humans.

Novartis claimed it had no control over the label in 2007, as it had sold the rights to Brethine to aaiPharma in 2001.

The San Diego County Superior Court found Novartis owed no duty to warn on terbutaline labels, but the Court of Appeal reversed, allowing the plaintiffs to amend their negligence claims.

Affirming Thursday, Justice Mariano-Florentino Cuellar wrote for the California Supreme Court’s decision for a 4-3 majority. A brand-name drugmaker “has the duty under California law to warn of the risks about which it knew or reasonably should have known, regardless of whether the consumer is prescribed the brand-name drug or its generic ‘bioequivalent,’” she said.

Brand-name drug manufacturers know or should know that any deficiencies in warning labels will be passed on to the labels for the generic versions, Cuellar added. They also know that many insurance companies insist on generic substitutes for brand names.

“Accordingly, it is entirely foreseeable that the warnings included (or not included) on the brand-name drug label would influence the dispensing of the generic drug, either because the generic is substituted by the pharmacist or the insurance company after the physician has prescribed the brand-name drug, or because the warning label on the generic drug is legally required to be identical to the label on the brand-name drug,” Cuellar wrote.

The plaintiff’s attorney Leslie Brueckner with Public Justice in Oakland did not immediately return a phone call seeking comment.

But on the firm’s website she called it a “watershed ruling.”

“The decision is hugely significant because it opens the courthouse doors to millions of generic drug victims who are injured by unsafe drugs,” Brueckner wrote. “Under current federal law, generic manufacturers are entirely immune from suit for injuries caused by their inadequate labels, because the brand-name manufacturers control the label. Despite this fact, most courts have refused to allow generic consumers to sue brand-name manufactured for injuries caused by mislabeled drugs, leaving them totally unprotected. Today’s decision rectifies that gross unfairness and gives consumers of generic drugs the right to seek justice for their injuries. It will also protect public health and safety, by giving brand-name manufacturers a strong incentive to update their labels when new risks emerge after their drugs go generic.”

The high court also found Novartis could be sued for negligence, despite divesting itself of Brethine six years earlier, if the harm caused by a deficient label was reasonably foreseeable

“The more substantial danger is that neither manufacturer will have sufficient incentive to update the label,” Cuellar wrote. “Unless there is warning label liability, it will be economically rational in some circumstances for a brand-name manufacturer to offload the drug to a successor rather than update the warning label.

“And if the brand-name manufacturer fails to update the label to disclose a known or knowable risk, economic interests and simple inertia may lead the successor manufacturer to the same strategy.”

Justices Ming Chin and Goodwin Liu concurred with Cuellar, as did Associate Justice of the Third District Court of Appeal Louis Mauro.

In a partial dissent joined by Chief Justice Tani Cantil-Sakauye and Justice Leondra Kruger, Justice Carol Corrigan said she was concerned that extending liability to predecessor manufacturers means they can be legally blamed for warning labels in perpetuity.

“Imposing a duty on predecessor manufacturers to warn about potential injuries that could result from successors’ products allocates costs to a party that has no ability to change the product’s labeling and thus no effective way to control the warnings given to consumers,” Corrigan wrote. “After divestiture, only the successor manufacturer has the ability to warn its customers about hazards.”

Corrigan added: “When a drug manufacturer acquires a new product line, it assumes the responsibility to update the warning label if and when reasonable evidence demonstrates a link to a serious health hazard. The majority’s foreseeability analysis glosses over this important legal obligation, noting that the successor would have no financial incentive to make a labeling change.”

Corrigan said the majority acknowledged that about half of the studies showing the effects of terbutaline on brain development happened after Novartis sold Brethine. And drug manufacturers lose the ability to monitor scientific developments on their products after they’re sold to other companies.

“There is no logical stopping point for such a duty,” Corrigan wrote.

Novartis attorney Eric Lasker was unavailable for comment Thursday.

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