Friday, November 07, 2008

Generic Drug - Pioneer Liability

We've just been informed of a California appellate decision, Conte v. Wyeth, that effectively stands product liability law on its head. It involves a suit over a generic drug, but the plaintiffs sued the pioneer manufacturer of the original product as well.

The prescribing doctor denied reading any of the generic manufacturer's warnings but was wishy-washy about whether he might have read the pioneer manufacturer's labeling at some point in the more distant past.

Well, since the dawn of product liability, we thought we knew the answer to that question. You can only sue the manufacturer of the product that injured you. Only the manufacturer made a profit from selling the product, and only the manufacturer controls the safety of the product it makes, so only the manufacturer can be liable.

Black letter law (and sound public policy), right?

Not in California.

Utilizing a "negligent misrepresentation" theory as an end run around decades of product liability precedent, the Conte court holds that, as long as it's "foreseeable" that somebody might rely on its negligently incorrect information, there can be liability - with no limitation as to time or "special relationship" or anything else - owed to essentially anybody in the world (or at least in California).

If it stands, the implications of the Conte decision could be worse than Sindell market share liabilty (another ill-considered California legal "innovation"), because there's no effective limitation on the scope of the theory, only "foreseeability," which amounts to no limitation at all. It's also a terrible place to put liability as a matter of jurisprudence, because it created a huge "free rider" problem in that pioneer manufacturers are stuck with liability for generic products that, not only do they not get any profit from, but whose sales are detrimentally affected by the generic product.

Look for misrepresentation claims to skyrocket in California. Look for contribution/indemnity claims brought by pioneer manufacturers against generics to proliferate as well.

It's the Hatfields versus the McCoys all over again.

What's really going on is the preemption argument which this rationale allowed the court to dodge. Whatever the merits of preemption in the context of generic drugs, we've thought for some time that, as a practical matter, if the generic manufacturers' preemption argument wins, that necessarily puts more pressure on the product identification requirement that protects pioneer manufacturers from liability in such cases. Judges, being human beings, don't like putting large numbers of plaintiffs entirely out of court.

Well that pressure just sprung a big leak in California.

4 comments:

businessjohn said...

The Generic Website has a page dedicated to Generic Drugs. Not a lot of content there right now from what I can tell, but it might be interesting. http://www.genericwebsite.com/drugs.htm.

Soronel Haetir said...

I know you guys wouldn't like this answer, but here goes.

Assuming a case where pre-emption does not apply such as withheld information by the pioneer. Patient takes drug manufactured by generic, how you establish which generic manufacturer I'm not sure. Generic manufacturer then turns around and sues pioneer based on fraud theory because they relied on the represantation, rather than the doc or patient.

Bruce Nye said...

While it is tempting to view this as another "Californians are all a bunch of crazies" decision, as a matter of pure legal analysis, it isn't that far off base. California, like most states, follows a Palsgraf analysis (at least in part) for establishing legal duty, and it's hard to quarrel with the foreseeability of the physician relying on Wyeth's labeling, prescribing it and the pharmacist filling it with the generic bioequivalent. If we are going to argue that the courts should interpret existing law, not create their own, sometimes we have to take the bad with the good.

On the other hand, it is an outrageous result. . . . .

More here: http://www.calbizlit.com/
cal_biz_lit/2008/11/
court-of-appeal-stands-
product-liability-law-on-head.html

Soronel Haetir said...

Another option, make the doctors liable to the drug companies for mis-prescribing, mal-administration etc. Wouldn't that be a lovely world.