Pharmaceutical Product Liability - Morrison & Foerster

c55BLBK310-Edwards690July 24, 201016:55Trim: 246mm X 189mmChar Count Chapter 552-314, which states that the warranty that goodsshall be merchantable is implied in a contract fortheir sale if the seller is a merchant with respect togoods of that kind. Similarly, a retailer who did notmanufacture a product is nonetheless held to haveimpliedly warranted its merchantability by virtueof the fact that he or she has sold it, assuming thatthe person deals in goods of that kind. In addition,under UCC Section 2-315, a seller of goods mayalso implicitly warrant that goods are “fit for aparticular purpose” if the seller knows that thepurchaser wants the goods for a particular purpose,and the purchaser relies on the seller’s judgment topurchase the goods in question.NegligenceNegligence is a principle of tort law that may bedefined as the breach of a duty of care owed by oneparty, the defendant, to another party, the plaintiff,the breach of which results in damage to the plaintiff. The concept of duty of care serves to definethe interests protected by the tort of negligence bydetermining whether the type of damage sufferedby the plaintiff is actionable. The plaintiff must alsodemonstrate that there is a sufficient causal connection between the defendant’s negligence andthe damage incurred. The damage in question mayarise through malfeasance (a wrongful or illegalact) or nonfeasance (a wrongful or illegal failureto act) and may consist of personal injury or damage to property, categorized as pure economic lossunder civil law. Manufacturers, retailers, bailers(e.g., those who distribute pharmaceutical productson behalf of drug manufacturers), and other suppliers may be liable to plaintiffs under the principlesof negligence if they are found to have breached aduty of care.Types of product defectsUnder strict liability, a plaintiff in a product liabilitycase must prove that the product that caused injurywas defective, and that the defect made the productunreasonably dangerous. There are three types ofdefects that might cause injury and give rise tomanufacturer or supplier liability: manufacturingdefects, design defects, and failure-to-warn defects.Manufacturing defectsManufacturing defects involve a product where theparticular item that causes damage to the plaintiffis different from the design intended to be manufactured by the defendant, and the difference isattributable to the manufacturing process for theitem in question. However, very few pharmaceutical product liability claims allege manufacturingdefects because quality control standards are closelyregulated and have traditionally been extremelyhigh in the pharmaceutical industry (EuropeanFederation of Pharmaceutical Industries and Associations, 1999).Design defectsDesign defects involve a product where all similar items manufactured by the defendant are thesame, and they all bear a feature whose designis defective and unreasonably dangerous. Thesedesign defect claims often involve additional allegations of negligence on the part of the defendanteven though they may be based on strict liabilityprinciples in that the plaintiff often alleges thatthe manufacturer should have been aware of thesafety attributes of its design and, in failing to doso, breached its duty of care.Failure to warnFinally, failure-to-warn defects—also known asmarketing defects—are flaws in the way a productis marketed, such as improper labeling, insufficient instructions, or inadequate safety warnings.Recently, these type of claims are more commonlyreferred to as “failure to warn” and simply referto the legal premise that manufacturers and suppliers of products must give proper warnings ofthe dangers and risks of their products so thatconsumers can make informed decisions regardingwhether to use them. However, the success of anysuch claim depends not just on the adequacy ofthe warning in question, but also on the plaintiff’sown knowledge of the product. A negligent orintentional misrepresentation regarding a productmay also give rise to a product liability claim.

c55BLBK310-EdwardsJuly 24, 201016:55Trim: 246mm X 189mmChar Count Pharmaceutical Product LiabilityLegal defenses in product liabilitycasesThe defenses available to manufacturers in productliability actions vary, depending on the jurisdictionin which the action is filed. However, certain legalprinciples commonly constitute a full or partialdefense to product liability actions. These broadlegal principles, among others, are: disclaimers,contributory negligence, and learned intermediaries.DisclaimersWith regard to product liability actions broughtunder the principles of warranty, a defendant mayassert a defense based on a disclaimer from awarranty associated with the purchase or use ofthe product in question. For example, in the USunder UCC Section 2-316(2), a seller of a productmay make a written disclaimer of the warrantyof merchantability if it is conspicuous. However,it should also be noted that the Magnuson–MossFederal Trade Commission Improvement Act of1974, 15 USC Section 2301, et seq., provides that,if a written warranty is given to a consumer, therecannot be any disclaimer of any implied warranty.Contributory negligenceA defense of contributory negligence asserts that aplaintiff who is him- or herself negligent in that heor she does not take reasonable care to protect himor herself from damage, and whose negligencecontributes proximately to his or her injuries, iseither entitled only to reduced recovery from hisor her damages, or in some countries and states, istotally barred from recovery (Heuston and Buckley,1992). In these cases, the plaintiff is held to thesame standard of care as the defendant, which isthat of a reasonable party similarly situated.Although a plaintiff’s contributory negligencewill be a defense in product liability actions broughtunder the principles of negligence, some courtshave agreed that in most actions brought under theprinciples of warranty or strict liability, contributory negligence may not be a viable defense—butthis varies from jurisdiction to jurisdiction. For691example, if a plaintiff’s contributory negligence liesin a failure to inspect the product or a failure tobecome aware of the danger from that product,virtually all courts agree that this is not a defense.However, if the plaintiff learns of the risk andvoluntarily assumes the risk in purchasing and/orusing the product, contributory negligence may bea defense to strict liability. Similarly, if the plaintiff’s contributory negligence consists of his or herabnormal use or misuse of the product in question,this may be a defense to strict liability, dependingon the degree of foreseeability of the abnormal useor misuse.Learned intermediariesPharmaceutical manufacturers often rely on the“learned intermediary” defense, which asserts thatif the manufacturer properly warned or instructeda physician (the “learned intermediary”) who thenprescribes the drug to a plaintiff, liability may notbe imposed. However, liability may be imposed incircumstances such as “direct-to-consumer” advertising, which may be held to have diluted otherwarnings made by the manufacturer.It should be noted that until 2009, regulatorycompliance or “preemption” was frequently usedby pharmaceutical manufacturers as a defense inproduct liability cases. In the US, the general rulehad originally been that, unless Congress intendedto preempt the states from requiring stricter ordifferent warnings, the defendant’s compliancewith regulatory requirements did not precludeliability (McCartney and Rheingold, 1996). However, several states, such as New Jersey, enactedstatutes that allowed regulatory compliance as avalid defense in pharmaceutical product liabilityactions (N.J. Code Section 2A:58C-4). A handfulof other states also adopted modified versions of aregulatory compliance defense which, for example,barred punitive damages for drugs approved by theFDA or created a rebuttable presumption of nonliability in light of FDA approval (Lifton and Bufano,2004). However, in a landmark decision handeddown by the US Supreme Court in 2009, the Courtheld that the labeling approval by the FDA may notpreempt state laws or shield companies from legal

c55BLBK310-Edwards692July 24, 201016:55Trim: 246mm X 189mmChar Count Chapter 55damages as part of liability claims (Wyeth v. Levine,129 S. Ct. 1187 (2009)).cations resulting from jurisdictional issues, maintaining records for different regulatory agencies,and compliance or noncompliance with regulatoryrequirements in different marketing venues.International issuesIn recent years, pharmaceutical companies havefaced increased litigation from overseas claimantsbecause of the international differences in productliability laws that make them easier targets in theUS. Such differences include the absence of discovery mechanisms, jury trials, legal contingencyfees, and variations in the learned intermediarydoctrines in many foreign jurisdictions. Lawsuitsare also being filed in the US because foreign partiesclaim they cannot get justice or adequate compensation in their own country—for example, theymay claim that they do not have a claim under theirown nation’s laws or that they are unable to havetheir case heard for many years. The concept offorum non conveniens developed in the US (andother so-called “common law” jurisdictions such asAustralia and New Zealand1 ) as a device thatpermitted US courts to return cases to foreign jurisdictions when litigation in the US was determinedto be inconvenient or a foreign jurisdiction wasdeemed to be a more appropriate forum.The plaintiffs’ bar also has become increasinglysophisticated in using global regulatory inconsistencies to their clients’ advantage during discovery and at trial. During the course of litigation,pharmaceutical companies are now routinely facedwith discovery requests, designed to identify documents and data relating to their dealings withforeign regulatory agencies. Plaintiffs’ counsel regularly point to differences in labeling and productdesign resulting from pharmaceutical companies’compliance with foreign regulations as evidenceof “defectiveness” in similar or identical productsmarketed in the US (Moore and Cullen, 1999).Thus, in overview, the global marketing of pharmaceuticals has had significant product liability impli-1 The concept of forum non conveniens is generally notrecognized in most non-US jurisdictions that are based on“civil law”—e.g., many nations in the European UnionLandmark casesIn contrast to the ostensibly uniform framework ofproduct liability law that defines drug-induced tort,the history of high-profile pharmaceutical injurylitigation shows that the practical prosecution ofdrug-related injury claims is broadly varied as itreflects the many possible types of drug-inducedinjuries. Although the breadth of potential harmsfrom the use of pharmaceuticals is, in theory, limitless, adverse drug effects generally fall into one ofseven groups (Dukes, Mildred, and Swartz, 1998):r toxic effects, where the drug causes an undesiredpharmacologic effect on the body;r allergic effects, where the drug has an unpredictably severe or harmful effect on hypersensitiveindividuals;r dependence, where users of the drug develop apsychological or physiologic need for the drug;r indirect injury, where the drug interferes withmental or physical functions, resulting in collateralinjuries;r interactions, where ingesting the drug in thecontext of other drugs or foods causes injury;r inefficacy, where the drug fails to perform itsintended function;r socially adverse effects, where a drug (usually anantibiotic) is overused by a population of patients,resulting in the rise and spread of resistant microorganisms.The following discussion of two high-profileproduct liability cases shows how plaintiffs, corporations, attorneys, and courts have applied productliability jurisprudence to varied types of pharmacological injury and the impact of product liabilitymatters on the laws and regulations governingpharmaceutical products.ThalidomideThe drug thalidomide caused one of the most vividand widely publicized tragedies in the history of

c55BLBK310-EdwardsJuly 24, 201016:55Trim: 246mm X 189mmChar Count Pharmaceutical Product Liabilitymedicine (Bernstein, 1997).2 Thalidomide was firstsynthesized in West Germany in 1953 by CibaA.G., but it was initially abandoned after tests inlaboratory animals revealed neither a beneficialnor a toxic effect. A few years later, chemists atanother West German pharmaceutical company,Chemie Grunenthal A.G., deduced from thalidomide’s chemical structure that it might have ananticonvulsant effect, and they experimented withgiving thalidomide to epileptics. Ensuing studiesrevealed thalidomide to be ineffective anticonvulsant, but showed that it acted as a mild hypnoticor sedative. On the basis of these data, ChemieGrunenthal A.G. brought thalidomide to marketunder the trade name Contergan in October 1957(Robertson, 1972). Thalidomide was an early success and the drug soon became a favorite sleeping tablet for over-the-counter consumers and inhealthcare institutions. Promoted as a safe tranquilizer, suggested uses of thalidomide includedmild depression, flu, stomach disorders, menstrualtensio, and even stage fright (Allen, 1997). Also anantiemetic, Contergan was commonly prescribedfor the nausea of pregnancy (Sherman and Strauss,1986; cf. Burley, 1986).Although thalidomide had shown no toxicityto laboratory animals when tested by Ciba andChemie Grunenthal A.G., potentially irreversibleperipheral polyneuritis was soon identified inpatients following long-term use of thalidomide(Crawford, 1994). Other reported toxicity symptoms included severe constipation, dizziness, hangover, loss of memory, and hypotension (D’Arcy,1994). Chemie Grunenthal A.G. initially defendedthalidomide as a safe product and attributed thereports to overdosage and prolonged use. A pharmacologist at the FDA, Dr Frances Kelsey, saw2 Bernstein notes that thalidomide quickly entered thelexicon as a metaphor for poison and evil. “For years Ihave heard the word Wait!,” wrote Martin Luther King Jrin his famous Letter from Birmingham City Jail (1963). “Itrings in the ear of every Negro with a piercing familiarity.This ‘Wait’ has almost always meant ‘Never.’ It has beena tranquilizing thalidomide, relieving the emotional stressfor a moment, only to give birth to an ill-formed infant offrustration.” (emphasis added)693reports of these adverse effects and requestedmore data from the drug’s manufacturers to showthat it was safe (see D’Arcy, 1994).3 In whathas been heralded as “one of the FDA’s finesthours” (see D’Arcy, 1994), Dr Kelsey withheld FDAapproval of thalidomide—a decision that was subsequently validated as the reports of neurotoxicitywere confirmed and even more troubling reportsarose concerning thalidomide’s adverse effects onfetuses. In 1961, physicians in Germany realizedwith alarm that the growing number of otherwiserare severe congenital malformations, includingphocomelia (defective development of limbs) andamelia (absence of limbs), could be attributed to theuse by women of even a single dose of thalidomideduring the critical first few weeks of their pregnancy (Wiedemann, 1961). In subsequent years, itbecame clear that thalidomide was one of the mostpotent teratogens in the medical pharmacopoiea.Almost 100% of women who took thalidomideduring the sensitive period (days 21–36 of gestation) produced malformed infants (D’Arcy, 1994).The spectrum of malformations was also notable forits breadth. In addition to phocomelia and amelia,so-called “thalidomide babies” suffered from spinalcord defects, cleft lip or palate, absent or abnormalexternal ears, and heart, renal, gastrointestinal, orurogenital malformations (D’Arcy, 1994; see alsoUS HHS, 1997). Before the epidemic ran its course,over 12,000 infants were born with deformitiesattributable to thalidomide (Flaherty, 1984; Sherman and Strauss, 1986; see also Szeinberg andSheba, 19684 ).Not surprisingly, the thalidomide episodespawned numerous lawsuits based on strictproduct liability, defective design, negligence,and other theories of liability (Cook, Doyle,and Jabbari, 1991; Dworkin, 1979). Some ofthese cases settled for substantial sums of money3 Dr Kelsey was particularly conscious of the potentiallyharmful effects of drugs on fetuses after working on amalaria project during World War II in which quinine(another teratogen) was studied4 Szeinberg and Sheba (1968) estimates that 10,000deformed babies were born in Germany, 1,000 in Japan,400 in England, and 280 in Scandinavian countries

c55BLBK310-Edwards694July 24, 201016:55Trim: 246mm X 189mmChar Count Chapter 55(Waterhouse, 1995). However, the true legallegacy of the thalidomide episode was to focusthe attention of lawmakers and scientists on thepotential risks of all medications. The thalidomideepisode is generally credited with promoting theinstitution of stronger and more effective drugregulations worldwide. In the US, the thalidomidetragedy is credited with helping to win passageof the 1962 Kefauver-Harris Amendment to theFederal Food, Drug, and Cosmetic Act, whichintroduced or strengthened requirements for drugmanufacturers to demonstrate the safety andefficacy of their drugs prior to market approval.The German Pharmaceutical Law of 1976 and theJapanese Drug Side-Effect Injury Relief Fund Act of1979 were also indirect products of the thalidomideexperience (Bernstein, 1997). Drug manufacturersin Sweden adopted voluntary regulations, and druglegislation in Canada was tightened in accordancewith the stricter laws and regulations in the US.The experience with thalidomide resulted in agenerally safer pharmaceutical market in manyparts of the world.Diethylstilbestrol (DES)DES is a synthetic analog of estrogen, first manufactured in the United Kingdom in 1937. Theinventor’s altruistic decision not to patent DESled to the drug’s manufacture by more than 300companies (Ferguson, 1996), a fact that substantially impacted later legal actions. The therapeuticbenefits of DES were largely theoretical at thetime of its introduction, with few if any rigorousclinical trials performed to evaluate its efficacy.Nevertheless, physicians and industry began to promote the use of DES to prevent miscarriages andgenerally improve the outcomes of pregnancies.The FDA approved DES in 1947 for the preventionof early miscarriage. Despite early evidence thatDES did not prevent miscarriage or other pregnancy complications (Schrager and Potter, 2004),DES came into wide use, due largely to supportby physicians and industry, approval by the FDA,and low cost (partly attributable to the competitionbetween many manufacturers). It is estimated thatbetween 3 and 4 million women ingested DESin the US alone, with 20,000 to 100,000 fetusesexposed to DES in utero, each year, for 20 years(Dutton, 1988).Beginning approximately 15 years after the peakof DES use, doctors found that female children ofmothers who had taken DES during their gestation tended to develop preneoplastic vaginal andcervical changes in adolescence or adulthood. Anassociation between in utero DES exposure andvaginal clear cell adenocarcinoma was documented(Schrager and Potter, 2004). Male and female DESchildren also showed an increased incidence offertility disturbances after puberty (Dukes, Mildred,and Swartz, 1998). In 1984, the World HealthOrganization estimated that hundreds of thousands of pregnancies, especially in the US and TheNetherlands, were potentially affected (Buitendijk,1984).Since the early 1980s, thousands of pharmaceutical product liability cases have been brought againstthe manufacturers of DES. These plaintiffs had astronger strict liability design defect claim thanthose for thalidomide because DES, marketed toprevent miscarriages, had no demonstrable clinicalbenefit. In Barker v. Lull Engineering Co. (1978),a California court adopted a “risk–benefit” testto assess whether a product was defective. Thistest for defectiveness required a court to weigh adrug’s benefits against its potential risks, in light ofevidence that the drug could have been designedmore safely, or that other drugs were available thatconfer similar benefits with less risk. A drug withlittle or no demonstrable therapeutic benefit, likeDES, was far more likely to be found defective indesign under the Barker risk–benefit test.An interesting aspect of the DES story has beenthe alleged impact of DES on multiple generationswith a single exposure. Unlike thalidomide’s teratogenicity, which affects only fetuses exposed duringgestation, DES is thought by some potentially toaffect three generations—the woman who originally took the DES, the daughter of that woman,and the granddaughter of that woman. Womenwho took DES while they were pregnant have aslightly elevated risk of developing breast cancer,which is more likely to occur after the age of50 (Schrager and Potter, 2004). Their daughterswho were exposed in utero have an increased risk

c55BLBK310-EdwardsJuly 24, 201016:55Trim: 246mm X 189mmChar Count Pharmaceutical Product Liabilityof vaginal and cervical clear cell adenocarcinoma,which is more likely to develop between 17 to 22years of age (Schrager and Potter, 2004). It hasbeen asserted that the grandchildren of womenwho took DES are also at increased risk for certain conditions. In one case, Enright v. Eli Lilly &Co. (1991), the plaintiff claimed that her cerebralpalsy resulted from deformities in the reproductivesystem of her mother, which had been caused byher grandmother’s ingestion of DES during pregnancy. Stressing the need to limit manufacturers’exposure to tort liability, the New York State Courtof Appeals decide

Europe, prompting pharmaceutical companies to lobby vigorously for tort reform. (Nace et al., 1997). The liability burden on pharmaceutical companies has been described as grossly disproportionate to their sales in comparison with other manufacturing industries (The Progress & Freedom Fo