Another Skirmish in the Preemption War: Does FDA Approval Trump Strict Liability?

Next Tuesday, the Supreme Court will hear oral arguments in Mutual Pharmaceutical Co. v. Bartlett, a case that raises once again the troubling question of whether federal regulatory agencies should trump local juries in common law tort actions.  The precise question at issue is whether the fact that the federal Food and Drug Administration (FDA) approved a name-brand drug many years ago precludes a state court jury from holding the manufacturer of the generic version of that drug strictly liable for damages to patients caused by marketing the drug. 

The plaintiff in this case, Karen Bartlett, visited her doctor in December 2004 complaining of shoulder pain.  Her doctor prescribed Clinoril, one of many non-steroidal anti-inflammatory drugs (NSAID) that are commonly used to treat arthritis, bursitis, and other painful conditions.  When Ms. Bartlett’s pharmacist filled the prescription, however, it gave her the generic version of the drug sulindac, rather than the brand-name drug.  Under federal law, the generic version of sulindac had to be chemically and biologically equivalent to the brand-name version that had been approved by the FDA.

Not long thereafter, Ms. Bartlett developed a horrific disease called SJS/TEN, which caused massive burns over 60-65 percent of her body.  For the next year, her life was, in the words of her surgeon, a “hell on earth” as she spent 100 days in five hospitals and several months in a medically induced coma.  During this time she was fed by tube, suffered two septic shock episodes, endured twelve eye surgeries, and became legally blind.  Although she survived, she is severely disfigured, cannot eat normally due to esophageal burns, cannot have sexual relations, and cannot engage in aerobic activities because of burns to her lungs. 

Not long after Ms. Bartlett suffered her debilitating injuries, FDA required manufacturers of all NSAID drugs to include an additional warning on their labels concerning the risk of adverse dermatological effects, including SJS/TEN.  The drug remains on the market.

Ms. Bartlett sued Mutual Pharmaceutical Company, the manufacturer of the generic sulindac she had taken. At her 14-day trial in a New Hampshire court, Ms. Bartlett’s lawyers presented evidence showing that the risks posed by sulindac outweighed its modest pain-killing benefits.  Although all NSAID drugs pose some risk of contracting SJS/TEN, the attorneys showed that FDA had received more adverse event reports from doctors and hospitals related to sulindac than to any of the other NSAID drugs on the market.  An expert for Ms. Bartlett testified that Tylenol and aspirin were equally effective in treating shoulder pain but posed no risk of SJS/TEN.  Surprisingly, Mutual’s lawyers decided not to call any witnesses at the trial, thereby essentially conceding the truth of relevant facts as provided by Ms. Bartlett’s attorneys.

At the end of the trial, the judge told the jury to find Mutual liable if it concluded that the sulindac that Ms. Bartlett took was a defective product that was unreasonably dangerous, even with the modest warning that the manufacturer placed on the label.  Furthermore, the jury could find that the drug was defectively designed if the magnitude of the danger that it presented to the user outweighed its utility or usefulness.  The jury found that sulindac was in fact defectively designed, and it awarded Ms. Bartlett $21.06 million in actual damages.  The judge did not permit the jury to award any punitive damages.

Throughout the litigation, Mutual took the position that a jury could not hold it liable for the terrible damages Ms. Bartlett suffered because the entire lawsuit was preempted by the federal Food, Drug and Cosmetics Act (FDCA) as amended by the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch/Waxman Act”). 

The FDCA provides that a drug may not be marketed in interstate commerce if FDA has not approved the drug and its label.  The test for approval is whether the drug is safe and effective. 

The Hatch/Waxman Act creates an abbreviated approval process for generic drugs under which the generic drug manufacturer does not have to provide scientific studies demonstrating the safeness and effectiveness of the drug.  It need only persuade FDA that the active ingredient in its drug is chemically and biologically equivalent to the active ingredient in the previously approved brand-name drug and that the label is identical to the brand-name label.

Neither statute contains an express preemption clause specifying whether Congress intended for the statute to preempt state regulation of FDA-approved drugs.  According to Mutual’s lawyers, that did not matter, because the statutes impliedly preempted not just state regulations but also state common law claims.  They maintained that it was impossible for Mutual to comply with both the federal requirements and the duty that New Hampshire common law implicitly put on drug manufacturers to market non-defective products.

In the 2009 case of Wyeth v. Levine, the Supreme Court held that common law claims against drug manufacturers based on their failure to provide an adequate warning were not preempted, because the manufacturer was free to revise the label in light of information that came to light after the drug’s approval.  It was therefore not impossible for the company to comply with both the federal labeling requirement and the state common law duty to provide an adequate warning on the label. 

Two years later, however, the Court held in Pliva, Inc. v. Mensing that a common law failure to warn claim against the manufacturer of a generic drug was preempted because the generic drug manufacturer did not have the option of changing the warnings on its label, which had to be identical to the warnings on the brand-name label.

Mutual now argues that Ms. Barrett’s claim that sulindac was defectively designed is preempted, because Mutual did not have the option of changing any of the relevant characteristics of its drug.  The characteristics of its generic drug had to be chemically and biologically equivalent to those of Merck’s brand-name version of the drug, which Merck marketed under the name “Clinoril.”  It was therefore, Mutual maintains, impossible to comply with both the federal requirement that its version of sulindac be equivalent to Clinoril and the implicit state common law duty to market a differently designed drug.

Ms. Barrett’s lawyers have several persuasive responses to this argument.  First, they note that New Hampshire’s tort law imposes strict liability on the manufacturer of a defective product; the plaintiff in New Hampshire does not have to prove that the defendant violated any particular duty to the plaintiff in order to recover.  The plaintiff may prevail merely upon a showing that the product itself was defectively designed and that the product caused the plaintiff’s injuries. 

The theory here is that on those (hopefully rare) occasions when the inevitable accident occurs, the victim will at least receive some compensation for medical expenses, lost work time, and pain and suffering.  Anticipating those rare accidents, the manufacturer will raise the price of the product to set aside a reserve or purchase insurance, and the inevitable loss to the individual will be spread across all of the consumers.  It is better, under this view, that we all pay a bit more for our drugs so that the unfortunate few who, like Ms. Bartlett, suffer debilitating adverse side effects are not forced to endure devastating economic loss.

The only duty that New Hampshire common law places on the manufacturer of a defective product is to compensate the persons who, through no fault of their own, have been injured by the product.  Ms. Barrett’s attorneys argued that it was by no means impossible for Mutual to comply with the federal drug design requirements and to pay damages to Ms. Barrett; it just didn’t want to.

Ms. Barrett’s attorneys also argued that even if New Hampshire common law did impose a duty on Mutual to design the product in a particular way, it was not impossible to comply with the federal design requirements, because Mutual could have simply stopped selling the product.  Federal law does not obligate the manufacturer of a generic drug to sell the product; it just prohibits the manufacturer from selling a generic drug that is not chemically and biologically equivalent to the brand-name product.  If Mutual did not want to bear the risk that it would have to compensate consumers who were injured by its drug, it did not have to market the drug.

Both of these responses make a great deal of sense, and they are consistent with the Supreme Court’s oft-stated presumption that Congress did not intend to preempt state law when it failed to include an express preemption clause in the relevant statute.

In a move that shocked many observers, the Department of Justice filed an amicus curiae brief in the Supreme Court litigation in support of the drug company.  Invoking another branch of implied preemption jurisprudence, the Justice Department argued that allowing the claim to go forward would present an “obstacle” to the attainment of the Hatch/Waxman Act’s goal of making low-priced generic drugs widely available to consumers.  It maintained that “the assurance that FDA approval provides for market participants would be undermined by ad-hoc reconsiderations on a State-by-State and lawsuit-by-lawsuit basis.”

This position is particularly disturbing because it presumes that the role of FDA is to “assure” manufacturers of generic drugs a stable market with no risk of having to compensate innocent victims who suffer the sometimes gruesome side-effects of their products.  Yet, at the same time that it is providing market assurance to manufacturers of generic drugs, the government is forcing the consumers of those drugs to endure the uncertainty of not knowing whether the FDA-approved drug they are taking will cure their affliction or afflict them with some terrible disease like SJS/TEN.

During the past decade, drug manufacturers have withdrawn dozens of drugs from the market because FDA approved them too hastily.  For example, the NSAID drug Bextra was withdrawn in 2005 after FDA belatedly concluded that it had caused many cases of SJS/TEN in unsuspecting victims. 

At the very least, this experience demonstrates that the FDA drug approval process is far from perfect.  Because the clinical trials upon which FDA bases its decision to approve a brand-name drug are incapable of detecting rare side-effects, the public often learns of the drug’s capacity to cause such effects after thousands or even millions of patients have taken the drug.  But that is, of course, too late for the unfortunate patients, like Ms. Barrett, who suffered the side effects before the drug had its label changed.  Now, the very government that failed to protect Ms. Barrett is taking the position that she cannot assert her common law right to compensation under New Hampshire law.

The government’s brief took the position that the FDCA would not preempt a design defect claim if the plaintiff proved that the manufacturer knew or should have known of new and scientifically significant evidence that rendered the drug “misbranded” under federal law.  That turns out to be a very difficult test for plaintiffs to meet because it requires them to prove that the defendants knowingly or negligently failed to provide FDA with critical information regarding the safety of their drugs.  That is a far cry from the showing required by New Hampshire law -- that the drug was defective and that it caused the plaintiff’s harm.

At the outset of his first term, President Obama issued a memorandum to the federal agencies instructing them to adhere strictly to an executive order on federalism issued by President Clinton in 1999.  Among other things, that executive order provides that in the absence of an express preemption provision in the relevant statute, federal agencies should preempt state law in regulations “only when the exercise of State authority directly conflicts with the exercise of Federal authority under the Federal statute or there is clear evidence to conclude that the Congress intended the agency to have the authority to preempt State law.”

The state of New Hampshire’s common law requirement that generic drug manufacturers compensate persons who are harmed by defective generic drugs does not even remotely conflict with FDA’s exercise of its authority to protect the public from drugs that are not safe and effective.  It is therefore hard to see how the Justice Department’s amicus brief is consistent with the federalism executive order or President Obama’s instructions.

The ultimate irony in this case is that a Supreme Court holding that Ms. Barrett’s claim is preempted will not advance the Hatch/Waxman’s policy of encouraging greater use of generic drugs, but will in fact undermine that policy.  If Mutual prevails, a future doctor and her patient will know that if they agree that the patient should take a brand-name drug, the patient will still be able to sue the manufacturer for compensation if the patient suffers from an unanticipated side effect.  They will also know that if the patient takes a generic drug, the patient will not be able to sue the manufacturer.  This knowledge may motivate both the doctor and the patient to go with the brand-name drug.  We could wind up with a two-tiered system in which generic drugs are disfavored not because they are less efficacious or more dangerous, but because their manufacturers cannot be sued when patients suffer horrible unanticipated side effects.

The Supreme Court has an opportunity to strike a blow for the freedom of generic drug manufacturers to harm their customers, or to allow the courts of New Hampshire to apply the common law principles that have evolved over many decades to meet that state’s conceptions of economic and social justice.  The outcome will say a lot about where the justices come out on two of the most pressing political debates of the twenty-first century -- federal power vs. state power and economic freedom vs. corporate accountability.

Thomas McGarity is the author of The Preemption War: When Federal Bureaucracies Trump Local Juries and Freedom to Harm: The Lasting Legacy of the Laissez Faire Revival.