Federal Preemption of State Product Liability Law: The Emerging Public Threat

By David Carnes, Staff Writer

February 1, 2016 – In recent years federal court decisions have greatly restricted the ability of a victim of a defective drug to win a lawsuit against the manufacturer if the drug has been approved by the U.S. Food and Drug Administration (FDA). Courts justify these decisions on the grounds of the FDA’s supreme federal authority to regulate drug safety. With the political will to do so, a determined Congress could act swiftly and decisively to reverse this distressing state of affairs.

I. Background

State Product Liability Law and Strict Liability

What legal options are available to someone who is harmed by a defective drug? The normal recourse is to file a lawsuit under state product liability law, or to threaten a lawsuit in order to force the defendant into a private settlement. The basic principles of product liability law are consistent nationwide. To win, a plaintiff must show that the product (whether a drug or some other type of product) is defective and unreasonably dangerous. The plaintiff may allege one or more of three different types of defects:

1. design defects
2. manufacturing defects
3. warning defects (a drug’s labeling failed to warn against use by pregnant women, for example)

Generally speaking, once a plaintiff establishes that one of the foregoing defects rendered the drug unreasonably dangerous and that this danger caused harm to the plaintiff, the defendant is subject to liability for the resulting harm. In effect, the defendant becomes the insurer of the safety of a defective drug. Strict product liability laws have triggered tremendous advances in public safety since they were first introduced decades ago.

A. Brand-Name Drugs vs. Generic Drugs.

Generic drug manufacturers subjected to product liability claims have been treated differently by the courts than brand name manufacturers, particularly in recent years. A brand-name drug, also known as an “innovator drug”, is a drug that is discovered, developed and marketed by a particular pharmaceutical company under patent protection. To market the drug, the company must test it extensively for safety and reliability to obtain approval from the FDA.

Although the process of developing a new drug usually requires an investment of hundreds of millions of dollars, a successful drug will allow a pharmaceutical company to recoup its costs and make a profit during the time that the patent is valid. Consider, for example, how much pharmaceutical giant Pfizer has earned from the sale of Viagra

Once the patent expires, other companies may manufacture the drug as a generic drug. The advantage enjoyed by a generic manufacturer lies in the fact that it need not invest large sums into developing the drug and securing FDA approval – it can sell the drug as long as it proves to the FDA that it is equivalent to the previously patented drug. This setup allows a smaller company to enter the pharmaceuticals market without undertaking immense investment.

II. The Problem

A. The Federal Preemption Doctrine

While product liability laws and drug safety laws have been passed by state legislatures, it is the FDA, a federal authority, that approves the release of a drug onto the market nationwide. When state laws and FDA rulings conflict, the question of federal preemption arises. Federal preemption doctrine can be used to invalidate a state law that conflicts with federal law.

B. The FDA Preemption Question

Suppose a plaintiff sues a pharmaceutical manufacturer under California product liability law, arguing that (i) the drug manufactured by the defendant caused her child to suffer a severe birth defect and (ii) the drug was defective because it failed to warn that it should not be taken by pregnant women.

The defendant pharmaceutical company might reply that (i) the drug was approved by the FDA based on thorough research and accurate information supplied by the defendant, (ii) the FDA approved the drug without requiring the warning demanded by the plaintiff, and (iii) the defendant is forbidden by law from changing the drug’s labeling without FDA permission; therefore, it was legally impossible for the defendant to label the drug in a manner that would have adequately warned the plaintiff of the dangers of use by pregnant women.

The defendant could then argue that under these circumstances, mandatory FDA labeling requirements constitute federal law, and since California labeling requirements conflicted with federal law (by requiring more extensive warnings), federal preemption invalidates California law, thereby defeating the plaintiff’s claim. This line of reasoning is based on a controversial theory of federal preemption known as “FDA preemption.”

So who would win this fictional case under current law? The answer depends on the extent to which FDA approval of a particular drug to be marketed in a particular way can interfere with a state’s attempt to enforce its own product liability law against a nationwide pharmaceutical manufacturer. The resolution of this issue is complex and still evolving in the federal courts.

C. FDA Preemption in Warning Defect Cases

The 2009 U.S. Supreme Court (SCOTUS) case Wyeth v. Levine set the precedent that federal preemption does not shield brand name pharmaceutical companies from liability for defective FDA-approved drug labeling, even though pharmaceutical companies generally lack the authority to change drug labeling without FDA approval. SCOTUS did carve out one exception — a brand name pharmaceutical company can raise the shield of FDA preemption if it provides clear evidence that the FDA would have rejected any effective labeling changes that the company might otherwise have proposed.

In the 2011 case Pliva v. Mensing, SCOTUS was more generous to manufacturers of generic pharmaceuticals than it had been to brand name manufacturers by allowing the FDA preemption doctrine to shield generic manufacturers from product liability for defective FDA-approved warnings.

D. FDA Preemption in Design Defect Cases

Judicial guidance concerning FDA preemption is considerably sparser when it comes to design defects. In the December 2015 case Yates v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., the U.S. Court of Appeals for the Sixth Circuit ruled that under most circumstances, FDA preemption does shield brand name pharmaceutical companies from state product liability lawsuits filed over FDA-approved design defects, regardless of whether these defects arise before or after FDA approval (a safer alternative design becomes available only after FDA approval, for example, thereby rendering the old design “unreasonably” dangerous in light of the existence of a safer alternative).

Since the U.S. Court of Appeals for the Sixth Circuit lacks nationwide jurisdiction (the Sixth Circuit includes Kentucky, Tennessee, Ohio and part of Michigan), and since its decisions can be overruled by SCOTUS decisions, the question of FDA preemption in design defect cases has yet to be conclusively resolved.

E. What FDA Preemption Doesn’t Cover

Even FDA preemption will not shield a pharmaceutical manufacturer from all state product liability claims. A plaintiff can still win a defective drug product liability claim in cases where:

• The company marketed the drug for uses not approved by the FDA
• The company manufactured the drug in a manner that was inconsistent with its FDA-approved design (a manufacturing defect)
• The company’s instructions or labeling failed to conform to FDA requirements

Moreover, even when a plaintiff’s claim is FDA-preempted, the FDA still has the right to fine the company – and history shows that the FDA is not at all shy about exercising this right, to the tune of billions of dollars in some cases. This much, at least, protects the public by deterring pharmaceutical companies from placing profits over public safety.

III. The Solution

Congress could enact a clear federal statute based on the Supremacy Clause of the U.S. Constitution that completely eliminates FDA preemption for both brand name and generic manufacturers. Should outright elimination of FDA preemption prove to be politically impossible, following are two needed exceptions that would at least mitigate the harm to the public that is currently being perpetrated by the federal courts:

A. “Fraud on the FDA”

Currently, some (but not all) courts hold that claims against manufacturers of FDA-approved drugs are preempted even if the plaintiffs allege that the defendant secured FDA approval through fraud (by withholding evidence of adverse drug reactions, for example). A new statute could clear up this legal muddle by unambiguously permitting plaintiffs to win a product liability lawsuit over an FDA-approved drug by proving that the defendant defrauded the FDA prior to the drug’s approval. Examples of fraud on the FDA could include intentional manipulation or hiding adverse data from the FDA during the drug approval process.

B. “After-Acquired Information”

A second exception that could be included in this proposed new federal statute would allow a plaintiff to recover full damages in case after-acquired information showed an FDA-approved product to be unreasonably dangerous. Such an exception could cover two circumstances:  (i) fraud committed by the defendant after FDA approval – by withholding adverse after-acquired information from the FDA, for example, and (ii) adverse information about a drug is obtained by a third party after FDA approval (even if the defendant had no way of knowing about it).

In response to pharmaceutical company objections that part (ii) of the after-acquired data exception turns them into insurers of the safety of consumers regardless of their lack of fault, the appropriate response would be that this was exactly the original intent of state product liability law before its application to defective drug claims was gutted by the federal courts.

Although the constitutionality of the above-proposed federal statute would probably be challenged in court by a pharmaceutical company at some point, if it was drafted carefully enough it might be capable of surviving a well-funded legal onslaught. Otherwise, it might be necessary to elect officials who will appoint federal judges with more concern for public safety than today’s complacent federal judges tend to exhibit.