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Massachusetts Supreme Judicial Court Recognizes ‘Innovator Liability’

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03.20.2018 | Legal Advisory

On March 16, 2018, in a matter of first impression in Massachusetts, the Supreme Judicial Court (“SJC”) joined a minority of states in recognizing a tort theory of “Innovator Liability” – namely, that brand-name drug manufacturers may be held liable for injuries allegedly caused by the use of a generic drug which was neither manufactured nor sold by the brand-name company.

In Rafferty v. Merck & Co., Inc., the SJC rejected the plaintiff’s negligence-based claim, but held that a consumer of a generic medication “may bring a common-law recklessness claim against the brand-name manufacturer if it intentionally failed to update the [warning] label on its drug, knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use.” Slip op. at 2-3. The SJC also rejected the plaintiff’s claim under the Massachusetts Consumer Protection Act, M.G.L. c. 93A, because the brand-name manufacturer neither advertised, offered to sell, nor sold the generic medication at issue, and therefore the alleged “unfair or deceptive act” did not occur in the conduct of “trade or commerce” as required by the statute. Slip op. at 38.

Key Takeaways

  • Impact of Federal Preemption

The lack of an available remedy against generic manufacturers due to federal preemption is at the heart of the SJC’s decision to create a remedy of Innovator Liability. Pursuant to the Federal Food, Drug, and Cosmetic Act, pharmaceutical manufacturers may not market drugs in interstate commerce without the approval of the U.S. Food and Drug Administration. 21 U.S.C. § 355(a). A manufacturer that seeks to market a new brand-name drug must submit a new drug application, establishing, among other things, that the proposed warning label for the drug is accurate and adequate. 21 U.S.C. § 355(b)(1), (d); 21 C.F.R. § 314.50(c)(2)(i), (d)(5)(v), (d)(5)(viii) (2017).

In contrast, pursuant to the Hatch-Waxman amendments to the Drug Price Competition and Patent Term Restoration Act, a manufacturer of a generic version of a brand-name medication need only submit an abbreviated new-drug application indicating that the generic drug is equivalent to its brand-name counterpart in certain key respects -- significantly, that the proposed warning label for the generic drug is the same as the label approved for the brand-name drug. 21 U.S.C. § 355(j)(2)(A)(v). 

Accordingly, “a manufacturer of a generic drug must provide its users with a warning label that is identical to the label of the brand-name counterpart.” Slip op. at 2 (citing PLIVA, Inc. v. Mensing, 564 U.S. 604, 613 (2011)). In light of a generic manufacturer’s inability to independently revise its warning label, the U.S. Supreme Court held in PLIVA, Inc. that state tort law claims against generic manufacturers arising out of failure to warn are preempted by federal regulations. PLIVA, Inc., 564 U.S. at 608-09.

  • Expansion of Innovator Liability

The SJC’s opinion is an attempt to strike a balance between traditional tort law principles and public policy concerns.

It is well-established under Massachusetts products liability law that (1) a plaintiff must prove the element of product identification, i.e. that the product at issue was manufactured, sold, or supplied by the defendant; and (2) a defendant cannot be held liable for failure to warn of risks created solely by the use or misuse of a product manufactured by an unrelated entity. See Mathers v. Midland-Ross Corp., 403 Mass. 688, 691 (1989); Mitchell v. Sky Climber, Inc., 396 Mass. 629, 631 (1986).

The SJC noted that “[h]ere, however, Rafferty did not bring a products liability claim… [i]nstead, he has brought a general negligence claim, relying on ‘a general principle of tort law’ that… every actor has a duty to exercise reasonable care to avoid physical harm to others… .” Slip op. at 13-14 (quoting Jupin v. Kask, 447 Mass. 141, 147 (2006)). The SJC further noted that it has “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.” Slip op. at 25.

The SJC concluded 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.” Slip op. at 29.  “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.” Id.

Accordingly, the SJC vacated the dismissal of plaintiff’s failure to warn claim and remanded the case to the Superior Court for determination as to “whether [plaintiff] has stated a failure to warn claim that meets the standard of a reckless disregard of an unreasonable risk of death or grave bodily injury… .” Slip op. at 35.

  • Business Impact

Massachusetts is one of the nation’s leaders in the pharmaceutical and biotechnology industries, but now joins the minority of states which recognize a form of Innovator Liability. Whether the growing split among states results in interest by the U.S. Supreme Court remains an open question. In the meantime, brand-name manufacturers subject to jurisdiction in Massachusetts may want to anticipate that plaintiffs will continue to test the limits of this novel theory of liability through expanded allegations in complaints and pre-trial discovery demands.

This advisory was prepared by Michael J. Leard, an associate in Nutter’s Litigation Department and member of its Products Liability Litigation practice group. For more information, please contact David L. Ferrera, Chair of the group, and/or Michael at 617.439.2000.

This advisory is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

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