Introduction
The current regulations of the Food and Drug Administration (FDA) impose different requirements upon brand-name and generic drug manufacturers when it comes to changes in labeling to reflect newly discovered adverse effects and other drug safety information. These differences, in turn, have led to disparate results in how courts have applied the doctrine of preemption of tort lawsuits under state law. In Wyeth v. Levine, 555 U.S. 555 (2009), the Supreme Court of the United States held that a plaintiff’s state law failure to warn claim against a brand-name manufacturer was not preempted because it had the power and the duty under FDA regulations to change its warning unilaterally to reflect new risk information. Two years later, however, in PLIVA v. Mensing, 131 S. Ct. 2567 (2011), the Supreme Court reached the opposite conclusion when it came to generic drugs, holding that FDA regulations preempted state product liability claims against a generic drug manufacturer involving a failure to warn.
Recognizing that “from the perspective of [plaintiffs], finding preemption [in the case of generic drugs] but not in [brand-name drugs] makes little sense,” the Supreme Court in Mensing explained that removal of the uncertainty and unfairness of this regulatory anomaly to both injured consumers and drug manufacturers was the responsibility of Congress and the FDA,” which “retain the authority to change the law and regulations if they so desire.” So far, in response to the preemption decisions, the FDA, acting without Congress, has proposed new regulations. On November 13, 2013, the FDA issued proposed regulations that will create parity between brand-name and generic manufacturers for purposes of drug labeling requirements and possible tort liability and eliminate the justification for Pliva preemption. They also seek to improve protection of the public health by requiring greater disclosure of adverse drug effects from generic manufacturers.
The FDA initially delayed implementation of the proposed regulations until December 2014. Now, after more than two years of review of submitted comments, most of which have been intensely critical of the proposal, the FDA has again delayed implementation until sometime in the Fall of 2015. Moreover, the FDA has taken the extraordinary step of reopening the comment period for another two months and holding a public meeting to further consider both the proposed regulations, and alternate proposals endorsed by the generic drug industry. The FDA’s inordinate delay reflects the significant opposition that it has received and signals that there may be substantial problems ahead with the proposed regulations that the FDA may not be able to fix on its own without congressional involvement.
The Duty of Sameness and PLIVA Preemption
Congress enacted the Drug Price and Patent Term Restoration Act (commonly known as the Hatch-Waxman Act) in 1984 to create a faster and more economical approval process for generic drugs. As part of the abbreviated new drug approval process, a generic manufacturer only needs to prove that the drug is the bioequivalent of a brand-name drug and that it has identical labeling and warnings. The Hatch-Waxman Act’s requirement of identical drug labeling is known as the “duty of sameness.” The “duty of sameness,” however, runs only one way; it is pegged to the brand-name manufactured drug and its warning label. Compliance with this duty can be policed by the FDA rather easily because there is usually only one brand-name manufacturer but there may be several generic manufacturers of a drug. Since passage of the Hatch-Waxman Act, the vast majority of all prescriptions in the United States have been filled using generic drugs. Generic drugs also cost thirty to eighty percent less than their brand-name equivalents.
The “duty of sameness” is reflected in the FDA’s current drug labeling regulations. While both brand-name and generic manufacturers must monitor and report adverse drug events to the FDA, only brand-name manufacturers may unilaterally update their labels to reflect new risks or safety information through the changes being effected (CBE) process. Generic manufacturers must immediately update their labels to conform, but they cannot take the initiative in the CBE process. As a result, an opportunity to provide greater protection to the public health is lost because generic drug manufacturers – while aware of adverse effects and required to track and report them to the FDA – are not permitted to make immediate changes to their labels to warn the public about them. In PLIVA v. Mensing, the Supreme Court based its holding of preemption on the fact that, unlike brand-name manufacturers, generic manufacturers cannot independently revise their warning labels without violating the FDA’s labeling regulations.
Some Courts’ Application of PLIVA Preemption Has Created Confusion
Courts have struggled over how to respond to PLIVA preemption, and their decisions reflect deep uncertainty and lack of agreement as to its proper scope. Because of PLIVA preemption, generic manufacturers are effectively immune from lawsuits based on violations of their duty to warn consumers about adverse drug effects. In search of a remedy after PLIVA, some plaintiffs who have been injured as a result of ingesting generic drugs have attempted to sue brand-name manufacturers by pursuing dubious legal theories that would turn “tort law upside down.” Huck v. Wyeth, Inc., 850 N.W. 2d 353, 369 (Iowa 2014). For example, a very small minority of courts have accepted the “innovator liability” theory, which allows plaintiffs to bring claims against brand-name manufacturers for injuries suffered as a result of ingesting generic drugs. The legal theory is based on the brand-name manufacturer’s sole responsibility for the content of the label under current FDA regulations even if it did not produce the drug that was ingested. Wyeth, Inc. v.Weeks, 2014 Ala. LEXIS 109 (Ala. Aug. 15, 2014). The vast majority of courts, however, have rejected the “innovator liability” theory.
Other courts have taken an entirely different approach, deciding to increase the scope of PLIVA preemption in failure-to-update warnings cases. They have held that claims against generic drug manufacturers for failing immediately to update their labels to conform with brand-name changes are not actionable under state law. For example, in Morris v.PLIVA, Inc., 713 F.3d 774 (5th Cir. 2013), the generic drug manufacturer did not update its label after an FDA-ordered update in 2004. The Fifth Circuit ruled that plaintiff’s failure-to-update claim was preempted because “a claim that [the generic drug manufacturer] breached a federal labeling obligation sounds exclusively in federal (not state law) and is preempted.” Id. at 777. A majority of courts, however, have held that such failure-to-update claims are not preempted. E.g., Franzman v.Wyeth, Inc., 2014 Mo. App. LEXIS 902 (Mo. Ct. App. Aug. 26, 2014); In re Reglan Litig., 2014 N.J. Super. Unpub. LEXIS 2664 (N.J. App. Div. Nov. 12, 2014).
In short, the current drug labeling regulatory scheme, as interpreted by the courts in the wake of PLIVA, continues to cause uncertainty with respect to potential tort liability.
The FDA’s Proposed Regulations
The FDA’s proposed regulations create parity between brand-name and generic drug manufacturers by requiring generic drug manufacturers unilaterally to revise their drug labeling to reflect newly-discovered risk information. Generic drug manufacturers are required to notify brandname manufacturers of the proposed labeling revision and provide substantiating documentation. The brand-name manufacturer must submit a revised label to the FDA indicating whether it supports the generic manufacturer’s changes. The FDA will then review the data presented in support of the proposed label change and determine whether to require all manufacturers to conform their labeling. Once the FDA reviews and approves a drug labeling update all other generic manufacturers of the same drug must update their labeling within thirty days. The FDA also plans to post all proposed CBE changes on the internet as soon as they are received.
The FDA’s proposed regulations are a “game changer” with respect to potential tort liability of generic drug manufacturers. They will remove the central reason for the Supreme Court’s holding in PLIVA and allow failure to warn lawsuits to proceed against generic drug manufacturers.
As a result, there will be less incentive for creative plaintiffs’ counsel to pursue dubious legal theories such as “innovator liability.” The proposed regulations will also limit failure to update claims against generic manufacturers by setting a thirty-day deadline to submit conforming labels after the FDA approves a CBE label change.
The proposed FDA regulations will accomplish the goal of creating “parity” between generic and brand-name drug manufacturers with respect to the duty of sameness and failure to warn lawsuits. The regulations will also eliminate the current inequality between generic and brand-name drug manufacturers’ legal liability and ensure that consumers who are harmed by a drug have legal remedy against the manufacturer that produced it.
The FDA’s Delay Signals Serious Problems Ahead for the Proposed Regulations
Despite the positive aspects of the proposed regulations, the FDA’s delay in issuing them highlights some serious flaws as to their possible effects on the public health and the FDA’s authority to implement the regulations. The FDA has acknowledged that the reason for the recently announced nine-month delay in implementing the proposed regulations is the unexpected volume of “public input” which it has received “from various stakeholders during the comment period” and its need to review and consider “all of the comments received as we develop the final rule.” The comments that the FDA is “reviewing and considering” include vehement opposition and alternate proposals from representatives of the generics drug industry, especially the Generic Pharmaceutical Association, and members of Congress.
Generic industry representatives have attacked the FDA’s proposed regulations on the grounds, among others, that the additional scientific analysis and testing, surveillance, updating of warnings and reporting obligations and the expense of expected added litigation would result in significantly higher costs being passed along to the consumer, thereby thwarting the savings intended by the Hatch-Waxman Act. The FDA proposal does not indicate whether the FDA undertook a serious cost/benefit analysis before publishing the regulations for comment.
The FDA claims the proposed regulations will enhance protection of the public health by requiring generic drug manufacturers to use the CBE process, resulting in greater disclosure of adverse drug effects. At the same time, however, members of Congress have voiced concern that the immediate effect of the FDA proposal, if implemented, is that for at least some period of time before FDA approval, there will be multiple warning labels issued by generic drug manufacturers (as well as the brand-name manufacturer) for the same drug, thereby undermining the “duty of sameness,” creating consumer confusion and diminishing rather than protecting consumer safety, contrary to the aims of the Hatch-Waxman Act.
Industry opposition has also focused on the authority of the FDA to promulgate the proposed regulations on its own without congressional intervention. The proposed regulations appear to contradict the explicit language of the Hatch-Waxman Act whose “duty of sameness” bars a generic drug manufacturer from changing its drug label without prior FDA approval. Thus, to make generic drugs subject to the CBE process, as the FDA regulations propose, Congress would first have to amend the Hatch-Waxman Act to ensure the FDA has the required statutory authority. The attendant legislative process would involve hearings before Congress concerning the appropriate cost/benefit analysis and changes in drug policy – matters that the FDA is not well equipped to assess on its own. By working in tandem, the FDA and Congress REGULATORY could comprehensively address the problems associated with PLIVA preemption and drug labeling through a combination of legislation and regulation. So far, Congress, however, has not considered amending the Hatch-Waxman Act and does not appear likely to do so for the foreseeable future. Nevertheless, the FDA would be well advised to exhaust every effort to coordinate its efforts with Congress rather than proceed into this regulatory minefield on its own.
Further, in the proposed regulations, the FDA has sought to replace the statutory “duty of sameness” with its own version of “parity” between generic and brand-name drug manufacturers. But, these are not the same concepts at all. “Sameness” refers to the bioequivalence and labeling of the “brand-name drug. “Parity,” on the other hand, refers to equal treatment between generic and brand-name drug manufacturers when it comes to the application of preemption by the courts. The FDA unambiguously acknowledged in the text of the proposed regulations that it specifically intended to eliminate or alter PLIVA preemption: “If the proposed regulatory change is adopted, it may eliminate the preemption of certain failure-to-warn claims with respect to generic drugs.” Traditionally, however, the FDA has studiously avoided considerations of changing potential tort liability as justification for issuing or amending its regulations. This time, however, it appears that the FDA has done exactly what it has previously avoided. The FDA’s stated objective of removing preemption makes the proposed regulations particularly vulnerable to legal challenge by the generic drug industry. Such a lawsuit, which has already been threatened, will certainly lead to further delay in the implementation of the proposed regulations. The FDA is sufficiently concerned about the threat of litigation by the generic drug industry that it has decided to consider its alternate proposals.
Conclusion
The fate of the FDA’s proposed regulations will be closely monitored by all interested parties over the coming months. Based on the comments already submitted, the FDA will be severely challenged in its attempt to reconcile diametrically opposed positions and it will have to make very difficult and contentious policy choices and compromises affecting both drug safety and health care costs. Further delay is likely to ensue as the FDA broadens the scope of its study to consider alternate proposals endorsed by the generic drug industry. Meanwhile, the pressure for some kind of change in FDA regulations is increasing. Together, the FDA’s current regulatory framework and PLIVA preemption impose unequal costs of compliance and unequal risks of potential tort liability upon drug manufacturers. Neither generic nor brand-name manufacturers nor injured consumers can be sure of the scope of potential tort liability in any given state. The current regulatory FDA anomaly also reduces the level of protection of the public health because generic drug manufacturers – while aware of adverse effects and required to track and report them to the FDA – are not permitted to make immediate changes to their labels to warn the public about them.
Maloney is a partner in the New York City office of Zuber, Lawler & Del Duca LLP, where he focuses on complex commercial litigation, including product and pharmaceutical liability. Lazerowitz is an associate in the real estate litigation department of Goldberg Weprin Finkel Goldstein LLP, in New York City.