“Federal law explicitly conveys to the brand-name manufacturer — and only that manufacturer — the responsibility to provide an adequate warning label for both generic terbutaline and its brand-name equivalent, Brethine. Only the brand-name drug manufacturer has unilateral authority to modify the drug’s label by adding to or strengthening a warning. Generic drug manufacturers are required to follow the brand-name manufacturer’s label to the letter. Accordingly, the manufacturer of Brethine controlled both the form and content of the terbutaline warning label….
“Novartis complains next that it is unfair to subject a brand-name drug manufacturer to liability for harm caused by a competitor’s product—a product from which the brand-name manufacturer derives no revenues or profit. But the plaintiffs’ claim here is not that terbutaline is defectively designed or inherently dangerous. It is that terbutaline’s warning label failed to mention the risk to fetal brain development, and that Novartis was responsible for the deficient label…. The public interest in adequate drug warnings, in short, is just as acute when the brand-name drug manufacturer has an effective monopoly over the warning label as it was when the brand-name manufacturer had a monopoly over the entire market for the drug….
“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. Indeed, the pharmaceutical industry raised a similar objection in Carlin to the imposition of strict liability for the failure to warn about the known or reasonably scientifically knowable dangers of a drug. We found no clear or sufficient basis for concluding that research and development will inevitably decrease as a consequence of imposing liability for failure to warn of known or knowable risks — nor has Novartis offered any evidence that drug innovation has declined in the 21 years since Carlin was decided. Carlin therefore saw no reason to depart from our conclusion … that the manufacturer should bear the costs, in terms of preventable injury or death, of its own failure to provide adequate warnings of known or reasonably scientifically knowable risks. The same is true here. When it comes to choosing whether the cost of an injury involving prescription medication should be borne by an innocent plaintiff or a negligent defendant, our case law has routinely held that the latter should bear the cost.”
T.H. v. Novartis Pharmaceuticals, No.S233898, 2017 WL 6521684 (Cal. Dec. 21, 2017).