Hoping to Slay Innovator Liability, Alabama Takes Another Stab at Weeks

Contributed by Natalie Blazer

It’s been more than two years since I wrote about the massive industry backlash following the Alabama Supreme Court’s decision in Wyeth Inc. v. Weeks, No. 1101397 (Ala. Jan. 11, 2013), and the topic of innovator liability is as hot as ever (at least to us here at the Monitor). Today we are reporting on the development that several states – and pharmaceutical companies – have long been waiting for: the Alabama legislature has passed a law that would reverse the controversial Weeks ruling.

As a refresher, the initial Weeks decision allowed a plaintiff injured using only generic drugs to sue the maker of the brand-name product, based on the so-called “innovator liability” theory. The United States District Court for the Middle District of Alabama, Southern Division had certified the following question to the Alabama Supreme Court:

“Under Alabama law, may a drug company be held liable for fraud or misrepresentation (by misstatement or omission), based on statements it made in connection with the manufacture or distribution of a brand-name drug, by a plaintiff claiming physical injury from a generic drug manufactured and distributed by a different company?”

The district court stated in its application that “certification is appropriate here to resolve the disagreement among the federal district courts within Alabama and to prevent both federal courts within the State and state courts around the country from having to make unnecessary Erie guesses about unsettled questions of Alabama law.”

The state supreme court answered the district court’s question in the affirmative, creating a firestorm among pharmaceutical companies (and their attorneys). Following the divisive ruling, the defendants in Weeks urged the court to reconsider its decision, and the court agreed.

So, in August 2014, the Alabama Supreme Court withdrew its January 2013 opinion, answered the district court’s question, and substituted a new opinion. In doing so, however, the Alabama Supreme Court did not change the basic outcome of Weeks. It merely expounded upon the reasoning behind that decision, placing emphasis on the United States Supreme Court’s decision in Pliva v. Mensing, as well as the “sui generis context” of prescription medication that involves “unprecedented federal regulation.” In its new opinion, the state’s highest court held:

“In the context of inadequate warnings by the brand-name manufacturer placed on a prescription drug manufactured by a generic manufacturer, it is not fundamentally unfair to hold the brand-name manufacturer liable for warnings on a product it did not produce because the manufacturing process is irrelevant to misrepresentation theories based, not on manufacturing defects in the product itself, but on information and warning deficiencies, when those alleged misrepresentations were drafted by the brand-name manufacturer and merely repeated, as allowed by the FDA, by the generic manufacturer.”

And further:

“The unique relationship between brand-name and generic drugs as a result of federal law and FDA regulations, combined with the learned-intermediary doctrine and the fact that representations regarding prescription drugs are made not to the plaintiff but to a third party, create the sui generis context in which we find prescription medication.”

Essentially the court focused on the fact that, until the FDA allows generic drug-makers to unilaterally change their warning labels (which the agency is currently taking into consideration), brand-name manufacturers continue to control those statements, and thus patients and doctors alike can rely on them to their detriment. For that reason, liability is premised “not as a result of a defect in the product itself but as a result of statements made by the brand-name manufacturer that Congress, through the FDA, has mandated be the same on the generic version of the brand-name drug,” the state supreme court said.

In upholding its earlier decision, the Alabama Supreme Court broke with more than 100 courts in 30 states and seven federal courts of appeal that have rejected theories of innovator liability. Apparently sensitive to its unique position, the final paragraph of the new opinion stated: “We are not turning products-liability law (or tort law for that matter) on its head, nor are we creating a new tort of “innovator liability” as has been suggested.” Regardless of how it was framed, though, the ruling left Alabama sticking out like a legal sore thumb.

Enter the Heart of Dixie legislature to accomplish what the state supreme court would not.

To wit, the law that passed last week contains a product identification requirement, which provides, in part: “In any civil action for personal injury, death, or property damage caused by a product, regardless of the type of claims alleged or the theory of liability asserted, the plaintiff must prove, among other elements, that the defendant designed, manufactured, sold, or leased the particular product the use of which is alleged to have caused the injury on which the claim is based, and not a similar or equivalent product.”

In other words, no more suing manufacturers of products you didn’t use.

Last week the measure was forwarded to Alabama Governor Robert Bentley (R) after passing the Alabama House by an 86-14 vote and clearing the Senate by a 32-0 vote, and the governor has said he plans to sign the bill after a full legal review. The measure would take effect six months after becoming law, and would cover civil suits filed after its effective date.

As our readers are surely aware, this law is not simply the case of a state legislature effecting localized change. Several other states, including Georgia, Missouri, Pennsylvania, New Jersey and Nebraska, have been watching Alabama for guidance on this issue. And even a handful of states’ laws, depending on what version of innovator liability they adopt (via the courts and/or legislation), could have enormous consequences for the pharmaceutical industry.

Several other developments are surely not far off either, including the much-anticipated move by the FDA to change its position on unilateral label changes by generic drug makers. That choice alone would naturally have a significant impact on the liability landscape for generic drug makers by potentially removing the protection of preemption against state law tort claims they currently enjoy for labeling claims. And although even a two-sentence cert denial from our nation’s highest court can create fervor among those paying attention, we will surely hear even more from SCOTUS on generic drug maker liability as more and more states grapple with this important issue.