The Massachusetts Supreme Court has recognized a narrow window of innovator liability against manufacturers of brand-name pharmaceuticals in Rafferty v. Merck & Co., SJC-12347, slip op. (Mass. March 16, 2018). The opinion has significant implications for pharmaceutical manufacturers.
In its March 16 decision, the Massachusetts Supreme Court held that brand-name manufacturers that control the contents of the label owe a duty to consumers of that generic medication not to act in reckless disregard of an unreasonable risk of death or grave bodily injury. (Slip Op. at 29.) The Court limited brand-name manufacturer's liability for failure to warn only "where such failure exceeds ordinary negligence, and rises to the level of recklessness." (Slip Op. at 28-29.)
Merck manufactures Proscar, a medication used to treat benign prostatic hyperplasia in persons with an enlarged prostate. The plaintiff took finasteride, a generic form of Proscar, to treat his enlarged prostate. Shortly after starting finasteride, the plaintiff alleged he experienced side effects causing sexual dysfunction, including erectile dysfunction and decrease in libido. He weaned himself off the medication a few months later, but the side effects allegedly continued and worsened after discontinuing the medication. He was diagnosed with finasteride-induced hypogonadism and androgen-deficiency, which he alleges will require indefinite treatment. At the time he was prescribed finasteride, the label warned of the potential for sexual dysfunction side effects while taking the medication, but represented that that they would resolve after discontinuing use of the medication. The complaint asserted claims for negligent failure to warn and violation of G.L. code 93A, §9.
Merck moved to dismiss the complaint. The superior court granted Merck's motion to dismiss, holding that because Merck did not manufacture the medication that caused the plaintiff's alleged injuries, Merck could not be liable for failing to warn of those injuries. The court also dismissed the plaintiff's 93A consumer protection claim, holding that there could be no liability where there was no duty of care owed to the consumer.
The Massachusetts Supreme Court took up the issue on its own motion. The Court analyzed the principles of negligence and foreseeability, concluding that the case of a generic manufacturer operating under the FDA regulations is the "special circumstance" where a duty to warn extends beyond the traditional, foreseeable consumer: "Because the Hatch-Waxman amendments to the act require that the warning label of a generic drug be identical to the warning label of its brand-name counterpart, and because the United States Supreme Court in PLIVA, 564 U.S. at 614-615, interpreted the resulting regulatory scheme to forbid a generic drug manufacturer from independently revising its warning labels, duty to warn claims involving generic drugs are potentially viable as general negligence claims, although not as products liability claims. With generic drugs, it is not merely foreseeable but certain that the warning label provided by the brand-name manufacturer will be identical to the warning label provided by the generic manufacturer, and moreover that it will be relied on, not only by users of its own product, but also by users of the generic product." (Slip Op. at 17, underline in original.)
The Court considered three reasons why the burden could be substantial, and perhaps inequitable, for brand-name manufacturers if it expanded their duty to warn generic consumers, specifically that (1) the costs would be incurred after the brand-name manufacturer faces generic competition, and the brand-name manufacturer already will have "suffered a precipitous decline in sales"; (2) sales of generic forms of the medication may continue indefinitely and exceed sales of the brand-name medication; and (3) there is no mechanism for the generic manufacturer to shoulder the costs of litigation or any damages award. (Slip Op. at 20-22.) But, the Court weighed those concerns against the reality that if the brand-name manufacturer could not be sued for "failure to warn generic drug consumers, we would leave those consumers with no chance of obtaining compensation for their injuries because the generic manufacturers are already immune from State law claims." (Slip Op. at 24.)
Reconciling these two competing policy considerations, the Court carved out a path for a plaintiff to sue a brand-name manufacturer for failing to warn the generic medication consumer where the allegations rise beyond ordinary negligence to the level of recklessness. "[W]e 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 … 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." (Slip Op. at 28-29.) The Court later reiterated the new standard under Massachusetts law: "a brand-name manufacturer that intentionally fails to update the label on its drug to warn of an unreasonable risk of death or grave bodily injury, where the manufacturer knows of this risk or knows of facts that would disclose this risk to any reasonable person, will be held responsible for the resulting harm." (Slip Op. at 31.)
In light of this new standard, the Court vacated the dismissal of Rafferty's complaint, allowing him to "allege facts supporting a finding that Merck acted recklessly, not just negligently." (Slip Op. at 36.) The Court affirmed dismissal of his 93A claim. In doing so, it held that one of the elements of the claim, specifically that an unfair or deceptive act occurred in the conduct of trade or commerce, is not met where the alleged act – failing to warn of side effects – was not done in the course of Merck's trade or commerce, where the plaintiff ingested another manufacturer's medication.
The Court's decision in Rafferty v. Merck & Co. is significant in its potential to expand brand-name manufacturer liability for warnings-based claims. The vast majority of states have declined to adopt innovator liability claims, making Massachusetts among a small number of desirable fora for plaintiffs alleging injury by a generic drug. Notably, however, the Court's holding is limited to reckless failure to warn (as opposed to ordinary negligence). Additionally, the decision involved an evaluation of warnings-based claims at the pleading stage.
Learn more about the implications of this decision by contacting either of the authors.