Supreme Court of Massachusetts Holds that a Brand Manufacturer Can Be Liable for Failure to Warn Doctors and Patients Injured by Generic Forms of the Drug, where the Conduct is Not Merely Negligent, but Reckless

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“Where failure to warn claims are brought by consumers of a manufacturer’s own product, the risk of injury can be insured by the manufacturer and distributed among the public as a cost of doing business…. But if consumers of generic drugs were allowed to recover damages for a brand-name manufacturer’s negligent failure to warn, it would be far more difficult for the manufacturer to shoulder these costs, for three reasons. First, these costs would not be incurred until after the brand-name manufacturer’s patent monopoly expires and generic competitors enter the market, at which point the brand-name manufacturer will have suffered a precipitous decline in sales of its product…. Second, because prices drop with generic drug competition, the sales of generic drugs may exceed the sales generated during the patent monopoly period, and may even continue indefinitely, long after the brand-name manufacturer has moved on to focus on other patented products…. Third, because the United States Supreme Court ruled that Federal preemption bars any generic drug consumer from bringing a failure to warn claim against any generic manufacturer, all such claims would be brought only against the brand-name manufacturer that drafted the warning label, leaving the brand-name manufacturer without any ability to share the costs of litigation, or of a damage award or settlement, with the generic manufacturer. Therefore, although brand-name manufacturers are in the best position, because of their Federal labeling responsibilities, to prevent an injury arising from the inaccurate or inadequate warning on a generic drug, they are not in the best position to bear its costs….

“Meanwhile, imposing such a duty on brand-name manufacturers would have undeniable benefits. We can be confident that, if brand-name manufacturers owed generic drug consumers a duty to warn, they would have a greater financial incentive to revise their warnings through the change being effected process where new information demonstrates the need to do so, in order to prevent failure to warn suits. Without such a duty, the only threat of a failure to warn suit would be from consumers of the brand-name drug who, once the patent has expired and generic drugs enter the market, might comprise as little as ten per cent or less of the market for such drugs. As a result, no one — neither the generic manufacturer nor the brand-name manufacturer — would have a complete incentive to maintain safe labels for the overwhelming share of prescription drugs dispensed….

“We also recognize that, if we were to shield brand-name manufacturers entirely from liability for the failure to warn generic drug consumers, we would leave those consumers with no chance of obtaining compensation for their injuries because generic manufacturers are already immune from State law claims….

“The need to deter failures to warn, and to compensate for the resulting harm, is especially urgent where the failure is not merely inadvertent and the risk of harm is most serious. In other types of cases where we have circumscribed liability for public policy reasons, we have nevertheless consistently recognized that there is a certain core duty — a certain irreducible minimum duty of care, owed to all persons — that as a matter of public policy cannot be abrogated: that is, the duty not to intentionally or recklessly cause harm to others….

“Having weighed these considerations, we conclude as a matter of public policy that allowing a generic drug consumer to bring a general negligence claim for failure to warn against a brand-name manufacturer poses too great a risk of chilling drug innovation, contrary to the public policy goals embodied in the Hatch-Waxman amendments. But we also conclude that public policy is not served if generic drug consumers have no remedy for the failure of a brand-name manufacturer to warn in cases where such failure exceeds ordinary negligence, and rises to the level of recklessness. In cases where, for instance, a brand-name manufacturer learns that its drug is repeatedly causing death or serious injury, or causes birth defects when used by pregnant mothers, and still fails to warn consumers of this danger, public policy does not dictate that these consumers be left with no remedy when those risks are realized, or that the manufacturer have little financial incentive to reveal these risks. We therefore hold that a brand-name manufacturer that controls the contents of the label on a generic drug owes a duty to consumers of that generic drug not to act in reckless disregard of an unreasonable risk of death or grave bodily injury. This recklessness standard strikes the most appropriate balance between competing public policy interests, limiting liability for brand-name manufacturers while also providing remedies for the most serious injuries and deterring the most dangerous forms of conduct.”

Rafferty v. Merck, No.12347, 2018 WL 1354064 (Mass. March 16, 2018).

 

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