Generic Drugs and the New Normal in Pharma Litigation

Daily Journal — Patricia Zlaket

Patricia Zlaket from CaseyGerry on Vimeo.

Last year was especially tough for plaintiffs/consumers in the world of pharmaceutical litigation.

The United States Supreme Court decision in PLIVA, Inc., et al. v. Mensing, 131 S.Ct. 2567 (2011) gave more power to drug companies, while appearing to give plaintiffs little recourse for injury or death caused by a generic pharmaceutical product. The ruling has significant consequence for attorneys who practice pharmaceutical litigation – limiting the cases they can accept.

Justice Clarence Thomas, writing for the pro-business five justice majority, concluded that federal drug regulations applicable to generic drug manufacturers directly conflict with, and thus pre-empt, state laws that permit claims against generic manufacturers.

The impact of this decision is far reaching. Despite the fact that generics currently dominate the drug market, this decision largely takes those manufacturers off the hook when it comes to warnings, and for the time being, may prevent a consumer from bringing a lawsuit against a generic manufacturer. In addition, the majority in PLIVA concluded that “federal drug regulations, as interpreted by the FDA, prevented the (generic) manufacturers from independently changing their generic drugs’ safety labels.”

A manufacturer seeking federal approval to market a new drug must prove it is safe and effective, and the proposed label must be accurate and adequate. But the rules for generic drugs differ. In 1984, Congress enacted the Hatch-Waxman Amendments, which allow a generic drug manufacturer to gain FDA approval simply by showing that its drug is equivalent to an already-approved brand-name drug, and that the safety and efficacy labeling proposed for its drug is the same as that approved for the brand-name drug. By eliminating the need for generic manufacturers to independently prove their drugs’ safety and efficacy, the Hatch-Waxman Amendments allow generic manufacturers to bring drugs to market much less expensively. However, the generic manufacturer is bound by the warnings the brand-name manufacturer places on its label. This is always the case, regardless of what the generic manufacturer might learn about the dangers of the drug. And state law may not be of help because of federal pre-emption.

The PLIVA ruling did not resolve the issue of whether the FDA regulations create a duty for generic manufacturers to request a revision of the labeling if the manufacturer believes the labeling is not as current or accurate as it should be; pre-emption alone ultimately was the focus of the Court’s decision.

When actual statistics are considered, the implications of this decision are truly staggering. According to the Congressional Budget Office, generic drugs save consumers an estimated $8 to $10 billion a year at retail pharmacies – additional billions are saved when hospitals use generics.

Generics have long offered a generally safe, cost-effective  alternative to many brand-name drugs. Indeed, only a generation after they entered the U.S. market, generics now represent nearly 70 percent of all filled prescriptions. The Congressional Budget Office estimated a savings in 2007 of $33 billion just for Medicare Part D and its beneficiaries. Add to that the rest of the pharmaceutical buying population, and the savings are even more significant. A report released last summer by IMS Health, a market research firm, concluded that generic drug use saved the American health care system more than $824 billion over the past decade.

Pharmaceuticals have never been more prevalent or promoted more than they are today – adding to the irony of the current situation. Consumers are bombarded with more pharmaceutical advertising than ever before. We are lured by the promise of freedom from depression, ADHD, incontinence, overactive prostate, underactive tear ducts, high cholesterol and the like. We are also encouraged to use the cheaper forms of all of these drugs to save money and support generic manufacturers.

Despite the fact that generics have become the norm, the PLIVA ruling advanced the interest of the drug companies, not consumers. The legal changes literally happened overnight – altering the landscape of the industry just as quickly.

Not only is it a difficult time for plaintiffs who have suffered injuries as a result of taking a generic drug; in light of  these recent legal changes, attorneys specializing in pharmaceuticals have had to readjust their thinking in deciding which cases they can successfully litigate. Many attorneys have had to reject a number of pharmaceutical cases as a result of PLIVA, largely because there is no one to hold legally responsible. And many courts have refused to allow cases against generic drug manufacturers to go forward.

Because of this decision, some consumers are fighting back. On August 29, 2011, the national, non-profit consumer advocacy organization Public Citizen took action in an attempt to revise the current post-market regulations to bring them “in line with the realities of the pharmaceutical market and help ensure that drug labeling provides adequate warnings to patients based on information that comes to light after the drug is approved for marketing.”

According to Public Citizen, under current FDA regulations, generic manufacturers cannot update their products’ labeling, even if they become aware of a potential risk not stated in the labeling. In contrast, brand-name drug manufacturers can update warnings and precautions on product labeling before getting FDA approval. Dr. Sidney Wolfe, director of Public Citizen Health Research Group, has commented that “Drug safety would benefit if generic manufacturers – who already have access to real-world information about adverse events – could use FDA procedures currently in place for brand-name manufacturers to revise labeling to warn of risks. Filling this regulatory gap would help protect patients.”

Other consumer advocate groups, as well as legal organizations, have weighed in on this decision. “Patients will now be taking generic drugs at their own risk,” said American Association for Justice (AAJ) former president Gibson Vance. “It is absurd that doctors and patients will have to make medical decisions knowing that only brand-name drug manufacturers – not generics – can be held accountable for their drugs’ dangerous side-effects.” He added, “Congress and the Food and Drug Administration need to quickly address the huge legal disparity between brand-name and generic drugs. Today’s decision sends a dangerous and expensive message to patients: you are safer taking brand-name drugs.”

 Justice Sonia Sotomayor, dissenting in PLIVA, noted that the decision “leads to so many absurd consequences.” Fortunately, groups like Public Citizen and AAJ agree, and they are making their voices heard. Also helping shift the picture are state court judges across the nation whose interpretations of PLIVA challenge the assumed meaning of the decision.

Judge Sandra Moss, presiding over the Reglan litigation in Philadelphia, denied generic drug manufacturers’ motions to dismiss plaintiffs’ state law claims alleging injuries caused by metoclopramide, the generic form of Reglan. Moss held that these manufacturers failed to meet the “heavy burden” Pennsylvania law imposed to show that these plaintiffs have no possible legal recovery. (In re Reglan/Metoclopramide Litig., No. 11090904 (Pa., Phila. Co. Com. Pleas Nov. 18, 2011).) The plaintiffs offered “a number of reasons why Mensing does not foreclose failure-to-warn claims, many of which have been recognized by other state courts since that decision was delivered,” Moss said.

The recent April 2012 ruling in Judge Richard Kramer’s San Francisco court further demonstrates that PLIVA has left open a doorway for potential recovery for victims of injury caused by generic drugs. In Otterstrom v. Mutual Pharmaceutical Co., Judge Kramer ruled that PLIVA does not dictate what specific claims are pre-empted or precluded, but merely that a state law cannot require a generic manufacturer to provide anything other than what is in the brand label. These considered rulings, along with the work of consumer advocates, challenge the presumed interpretation and overall impact of PLIVA.

Looking forward, consumers and plaintiffs’ attorneys can depend on trial judges to continue to recognize PLIVA’s limitations, and that new legislation can balance the situation. Consumers should not only be able to trust the safety of the products they take; they also need to be able to  trust the process of consumer protection when those products fail.

Patricia L. Zlaket is an associate attorney with San Diego-based Casey Gerry Schenk Francavilla Blatt & Penfield LLP, and a member of its pharmaceutical and medical device litigation practice team.