Feb 11, 2019
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Innovator Liability – Pandemonium Or Paper Tiger?

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Ever since innovator liability burst onto our consciousness a decade ago with the horrific decision in Conte v. Wyeth, 85 Cal. Rptr.3d 299 (Cal. App. 2008), we have had nightmares about the potential impact of this theory.  After all: (1) over 90% of all prescriptions these days are for generic drugs, and (2) plaintiffs claiming injury from generic drugs are largely prevented from suing their actual manufacturers due to preemption.  Even if generic drugs, by and large, generate less litigation per prescription than innovator drugs, due to their risks being better known over longer periods of use, imposing 100% of potential liability on less than 10% of the market, as innovator liability theories permit, would pose a massive threat to the innovator drug industry, and would send innovator drug prices skyrocketing.

Thus, we’ve manned the barricades against innovator liability since its inception.  The Blog maintains a comprehensive innovator liability scorecard, as well as an updated 50-state survey of innovator liability.  Appellate decisions on innovator liability – pro or con (thankfully, mostly con) have ranked highly on our annual top- and bottom-ten lists of the most significant cases of the year.  See 2018+1; 2018-1; 2017-1A; 2016-5; 2014+1; 2014+3; 2014-1; 2013+2; 2013-5; 2008-1.

But now we’re saying “woah,” at least a bit.  Two state high courts:  California in T.H. v. Novartis Pharmaceuticals Corp., 407 P.3d 18 (Cal. 2017), and Massachusetts in Rafferty v. Merck & Co., 92 N.E.3d 1205 (Mass. 2018), have allowed some form of innovator liability for a year or more, now.  We follow the legal press pretty closely on prescription medical product liability litigation issues, and we haven’t read anything about a flood of additional innovator liability cases – or even one − being filed in those states.  Indeed, we haven’t heard a peep out of the T.H. case itself since it was remanded after the California Supreme Court’s decision.  We checked with defense counsel, and no, T.H. hasn’t settled, but rather is proceeding towards trial in orderly fashion.

So what’s going on?  Has the existential threat of innovator liability turned into a paper tiger in practice?

We think the answer is, “hopefully.”  And that’s very good news for manufacturers of innovator drugs.  In retrospect, one of the reasons we experienced such a rash of innovator liability litigation after Mensing/Bartlett was that these preemption rulings left high and dry a lot of existing cases involving generic drugs.  In particular, the other side had been actively soliciting metoclopramide cases, so when the Supreme Court lowered the preemption boom, those lawyers were left like fish in a barrel – and innovator liability was one of the few tools at their disposal.  By now, in 2019, those metoclopramide cases have pretty much worked their way through the system.  We ran “metoclopramide” on Westlaw, and there hasn’t been a single trial court level metoclopramide decision of any sort on any topic since Raskas v. Teva Pharmaceuticals USA, Inc., 2018 WL 351820 (E.D. Mo. Jan. 8, 2018), over a year ago.

Nor has anything else significant taken the place of metoclopramide litigation.  Our innovator liability scorecard reflects only four decisions for all of 2018.  All four involved different drugs, and none was a metoclopramide case.  Entries into our generic preemption scorecard have also slowed dramatically.  Only eight cases involving generic preemption (that we’re aware of) were decided in all of 2018.  Every prior year, going back to Mensing in 2011, was well into double figures.  Nor are there really any targeted generic products any longer.  The eight generic preemption cases in 2018 involved seven drugs, with only amiodarone generating more than one judicial opinion.  Since our scorecards include every decision we find, both good and bad, they’re a pretty good indicator of what’s out there.

What we think this means is that preemption has been an excellent deterrent.  The other side doesn’t seem to be taking on many cases involving alleged injury from ingestion of generic drugs.  Seen any “bad drug” lawyer ads lately about generic drugs?  We haven’t either.  The post-Mensing onslaught of innovator liability claims wasn’t a portent, but was more of a last gasp.  That makes sense to us, too.  Innovator liability is another of these unusual theories of liability, like failure to update and failure to report adverse events to the FDA, that essentially didn’t exist in the absence of preemption.  Innovator liability lacks the simplicity and jury appeal of “they made it, they should pay” theories of strict liability and negligence.  All of the policy arguments that we’ve made against innovator liability have their jury-accessible equivalents, so this theory is another of these “bad” causes of action that plaintiffs pursue only when they have no other option.  It’s hard to prove liability, and harder to prove causation, so our opponents aren’t likely to bring innovator liability cases unless there’s some other significant incentive – usually in the form of big damages.

Thus, in terms of how innovator liability seems to be doing in practice, as opposed to theory, it’s looking more like a paper tiger than something that will actually pose an existential threat to our clients.  First of all, it remains an extreme minority theory.  As far as we know, not a single penny has ever been paid on a verdict based on innovator liability.  There are lots of other, less problematic, ways for our opponents to earn a living.  Short of some DES-like surprise latent injury from a popular generic drug, our best guess now is for innovator liability to be a one-off sort of claim asserted only in big damages/poor liability situations such as SJS/TENS cases.



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