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From Health Law Daily, December 27, 2017

Novartis could be liable for generic labels of branded drug it no longer owns

By Dietrich Knauth

In what the dissenting justice called "a more expansive, enduring liability on drug manufacturers than has been recognized elsewhere in tort law," the California Supreme Court held that Novartis, the original manufacturer of a brand-name drug, could potentially be liable under state law for negligent warning labels on a generic version of the drug. The court determined this despite Novartis having sold the rights to manufacture the brand-name drug to another company before the alleged injuries occurred (T.H. v. Novartis Pharmaceutical Corporation, December 21, 2017, Cuellar, M.).

Novartis was among the defendants sued by the parents of fraternal twins who allegedly suffered developmental disabilities and autism as a result of their mother's off-label use of terbutaline, a generic form of asthma drug Brethine®, to suppress premature labor during her pregnancy. Novartis sought a ruling that it could not be liable for negligent labeling, since its duty to maintain and update the label—which applied to both the name-brand and generic versions of the drug—was transferred to another company that had purchased the rights to produce the drug from Novartis. The California Supreme Court found that Novartis could be liable for negligent failure to warn about the drug’s risk to fetal brain development, since a label developed before the sale of the drug rights could foreseeably be relied upon by the purchaser of the rights.

The court first found that Novartis could be liable for negligent labeling of a generic bioequivalent to its name-brand drug, because generic drug manufacturers are legally obligated to use the exact same label used by the brand-name drug manufacturer. The majority found that Novartis's potential liability was not extinguished when it sold ownership of Brethine to aaiPharma Inc., six years before the alleged injury to the plaintiffs. While aaiPharma may also be liable for warning label deficiencies, the original manufacturer could be liable at the same time, because it is reasonably foreseeable that a successor drug manufacturer could continue to use the same label it inherited, the court found.

Partial dissent. In a concurring and dissenting opinion, Justice Corrigan pointed out that no other jurisdiction had recognized such an expansive theory of liability for a brand-name drug manufacturer’s duty to maintain a warning label for a drug it no longer owned. She also noted that the FDA regulations creating the "duty of sameness" are under review and subject to imminent change, based on a Proposed rule that would allow generic drug makers to revise their product warning labels and depart from the labeling of the brand-name drug (78 FR 67985, November 13, 2013). According to Corrigan, the majority's holding would unfairly put original manufacturers on the hook for updating labels based on scientific evidence that came to light only after selling the rights to a drug. The ruling could encourage undesirable outcomes, such as over-warning of potential harms before the science is in, and diminishing a successor manufacturer's incentive to update warning labels, since the original manufacturer could be on the hook for negligent labeling in perpetuity, she wrote.

The case is No. S233898.

Attorneys: Leslie A. Brueckner (Public Justice) for T.H. Joe G. Hollingsworth (Hollingsworth LLP) for Novartis Pharmaceuticals Corp.

Companies: Novartis Pharmaceuticals Corp.; aaiPharma Inc.

MainStory: TopStory CaseDecisions FDCActNews DrugBiologicNews GenericDrugNews LabelingNews PrescriptionDrugNews PLDrugNews SafetyNews CaliforniaNews

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