Three years ago, when the U.S. Supreme Court agreed to consider whether Food and Drug Administration-approved labels on pharmaceuticals preclude state-law product liability claims, Jay Lefkowitz and Michael Shumsky of Kirkland & Ellis filed an amicus brief on behalf of the Generic Pharmaceutical Association. The generic drug manufacturers urged the Court to uphold the FDA’s exclusive right to decide whether drug labels are adequate, pointing out that generics have a particular interest in that result because they are forbidden, by the law regulating generic drugs, to depart from the FDA-approved warnings in their labeling.
The Supreme Court didn’t go the way the Kirkland lawyers wanted in that case, known as Wyeth v. Levine. The Justice concluded in 2009 that federal law doesn’t pre-empt state-law claims against brand name drug makers. But the amicus brief Lefkowitz and Shumsky filed in 2008 laid the groundwork for a related case the Court agreed to hear this term. In Pliva v. Mensing, the Justices considered exactly the question Kirkland had highlighted in 2008: Can generic drug manufacturers be held liable under state laws for failing to warn users about dangerous side effects when, by federal law, they are required to use labels the FDA has approved for the brand-name versions of their drugs?
This time around, Lefkowitz made the generics’ case directly to the Court at oral arguments in March. And this time, he convinced five Justices to agree with him. In a 5-to-4 ruling Thursday, the Supreme Court found that because federal law mandates the labels generics must use, plaintiffs cannot bring state law product liability suits alleging those labels are inadequate.
“This is a tremendous, tremendous win for the generics,” said Lefkowitz. “The Court hit the nail on the head: States can’t hold you responsible for using the warning the federal government requires you to use.”
Justice Clarence Thomas, writing for the majority, phrased it this way: “We find impossibility here. It was not lawful under federal law for the [generic] manufacturers to do what state law required of them. And even if they had fulfilled their federal duty to ask for FDA assistance, they would not have satisfied the requirements of state law. Thus, it was impossible for the [generic] manufacturers to comply with both their state-law duty to change the label and their federal law duty to keep the label the same.”
The ruling has the peculiar effect of leaving brand name drug manufacturers liable for claims the generics can now evade. Yet it was by no means a sure thing for the generics and their Kirkland lawyers. In the underlying cases, in which two women sued makers of generic versions of the brand-name drug Reglan after developing grave side effects, the U.S. Court of Appeals for the Eighth Circuit sided with the plaintiffs, finding that the generics should have advised the FDA to change the warning labels on their drugs. Kirkland petitioned the high court to review the Eighth Circuit’s ruling, even though there was no split in the federal appellate courts on generics’ liability. The Supreme Court took the case despite arguments from both the women suing the generics and the Obama Administration.
At the oral argument in March, Lefkowitz was just getting started when the Justices began grilling him: How is it that generic drug manufacturers could, in essence, avoid liability, though the Court had decided in Wyeth that brand manufacturers cannot?
The answer, Lefkowitz argued and the Court ultimately agreed, lies in the Hatch-Waxman Act, which governs the introduction of generic drugs to the market. Hatch-Waxman was designed to get lower-cost generic versions of brand name drugs to market quickly. So rather than have generic manufacturers undergo expensive safety testing, like their brand name counterparts, the law says that generics only have to show that their products are equivalent to the brand-name versions. They are then required to label their products with exactly the same labels the FDA has approved for the brand-name drug.
The women suing the generics, Gladys Mensing and Elizabeth Demahy, were represented at the Supreme Court by Louis Bogrod of the Center for Constitutional Litigation. In a conference call with reporters Thursday, Bogrod said that even after the oral argument, he was hopeful the Justices would uphold state-law liability for the generics. “We were confident we had three votes for our side,” he said. And of the three votes he wasn’t sure of—Justices Thomas, Stephen Breyer, and Anthony Kennedy—“all were on the right side in Levine.”
Bogrod argued that the generics have a responsibility to urge the FDA to change inadequate drug labels, even if the ultimate labeling decisions are made by the FDA in conjunction with brand manufacturers. The FDA, represented by Evan Kneedler of the U.S. Solicitor General’s office, agreed with that point. Bogrod said Thursday that he was particularly disturbed that the majority opinion “accepts the premise that the generics had a legal obligation to go to the FDA to seek stronger warnings,” yet “despite the fact that they had breached that obligation, the Court still found they are exempt” from state-court liability.
Kirkland partner Shumsky and Bogrod agreed that the Court’s ruling will have a dramatic effect on pharmaceutical product liability cases, though they obviously disagreed about whether that’s a good thing. Shumsky said in an e-mail that the decision will likely mean an end to thousands of pending cases against generics involving dozens of products in addition to generic Reglan. “At the end of the day, the real winners here are consumers,” he said. “They ultimately bear the costs associated with this kind of litigation, and today's result will significantly curtail unnecessary lawsuits and litigation abuse.”
Bogrod, on the other hand, lamented the “untenable”distinction the Court has drawn between brand and generic manufacturers, particularly because, according to him, 75 percent of American drug prescriptions are for generic versions of brand name drugs. “Three out of four patients in America just lost the right to sue,” he said. Bogrod said the only fix for plaintiffs will be a change in the Hatch-Waxman Act, but unless any legislative change is retroactive, he added, it will be too late for plaintiffs like Mensing and Demahy.
Kirkland, meanwhile, is gearing up to use its shiny new Supreme Court win in a series of cases in Las Vegas, where the generic manufacturer Teva faces claims that its labeling of the generic anesthetic Propofol contributed to a hepatitis outbreak. Teva brought Kirkland in for the appeal of a $500 million state-court verdict against the company and Baxter, which was the biggest verdict of 2010.
(Reporting by Alison Frankel)