Monday, September 09, 2013
Schubert v. Genzyme Corp.: Drug Manufacturers Are under No Affirmative Duty to Sell Their Drugs
In this recent case, Schubert v. Genzyme Corp., Case No. 2:12CV587DAK (D. Ut. Sept. 4, 2013), the defendant, Genzyme, manufactured a drug called Fabrazyme, an enzyme replacement that is used by patients who have difficulty metabolizing their lipids. Genzyme experienced a shortage of the drug after it found a virus contamination at its manufacturing facility. So Genzyme rationed its supply to the market. The plaintiff’s husband received only about 70% of his ordinary dose and eventually died. Slip Op. at 2-3. Afterward, plaintiff sued and claimed that the defendant failed to use reasonable care to ensure an adequate supply of Fabrazyme.
Unfortunate as the circumstances of this and other cases like it may be, the court reached the only conclusion it could. Genzyme was under no affirmative duty to supply the drug. While Utah, like many jurisdictions, will at times impose a duty and perhaps liability upon a defendant who has acted and brought about certain consequences (called malfeasance), it will not do so for a mere failure to act (nonfeasance) absent some sort of special relationship. And plaintiff’s negligence claim, at bottom, was about a failure to act, whether she claimed that Genzyme didn’t supply the drug at all or didn’t supply enough:
[T]he court finds no distinction between the duty of a company that exits the market altogether and a company that does not supply enough product to meet full market demand. In both instances, the harm is the shortage of the medication and it is an act of nonfeasance. Genzyme should not be penalized for producing as much of the product as it could.
Slip Op. at 9-10.
Plaintiff tried to work her way around this result by arguing that Genzyme’s wrongdoing was not that it failed to act but, instead, that it engaged in affirmative wrongdoing by allowing the contamination at its manufacturing facility and then supplying the market with an insufficient amount of Fabrazyme. To us, this argument seems to be nothing more than a convoluted way to describe a failure to act. The court went beyond this point, however, and addressed policy reasons why plaintiff’s claim couldn’t stand, particularly with a company so heavily regulated by the FDA:
[E]ven if Genzyme’s failure to produce sufficient quantities of Fabrazyme was deemed to be an affirmative act of misfeasance, the court finds that public policy considerations would weigh heavily against finding a duty. . . . .
Pharmaceutical manufacturing is heavily regulated by federal law and there is no statutory duty placed on a manufacturer to ensure a continued supply of any given pharmaceutical. . . .
There is no federal law requiring a manufacturer to produce amounts sufficient to meet all potential demand. In such a heavily regulated industry, if such a duty was deemed necessary, the governing regulators would have imposed it. Moreover, it is more appropriate for such governing regulators to create such a duty than for this court to do so.
Slip Op. at 10-11.
There are also fairly straight-forward public interest reasons why requiring a drug manufacturer to meet market demand or face liability would be counterproductive and unnecessary. Such a rule would discourage companies from developing the drug and entering the market in the first place for fear of facing tremendous liability if it were to later try to exit the market. It also would ignore the already existing market forces that give companies incentive to meet market demand:
Imposing such a duty would prevent a manufacturer from ever ceasing production, require it to predict all potential demand, and further require it to maintain large stockpiles to prevent any shortages in case of production problems. Such an onerous rule is contrary to public policy because it creates an enormous disincentive for potential providers of pharmaceuticals from entering the market in the first place and could stifle development of new therapies. There are already strong incentives for pharmaceutical companies to supply drugs to all who may need them. There is also an incentive to maintain good relationships and a good reputation with doctors, hospitals, and distributors by consistently meeting demand. From a business perspective, it is in the company’s best interest to meet demand in order to be profitable and maintain customers. Despite these strong incentives to meet supply, a variety of factors can cause a company not to meet demand. There are technical challenges posed by producing biologic therapies. These cannot always be controlled despite a company’s best efforts. . . . In light of the unavoidable nature of manufacturing and supply issues, a rule requiring manufacturers to forever supply a therapeutic or preventative treatment to everyone who is or may be prescribed it, regardless of the cost or feasibility of doing so, would create a significant disincentive to manufacturers that is against the public interest.
Slip Op. 11-12.
Now, plaintiff didn’t lose all her claims. The court gave her the opportunity, for now, to proceed with a claim that the lower dose of Fabrazyme was more harmful than no dose at all, as well as a claim that Genzyme failed to warn about risks related to the lower dose. We have no idea whether those claims are viable.