T.H. v. Novartis: In Which California Gets An Innovator's FDA Label Liability Standard Wrong, If A Generic Consumer Sues...

The Massachusetts news of Friday reminded me that I am. . . deeply delinquent, in critically analyzing this truly unfortunate case -- out of California's highest state court, from around Christmas-time 2017. [But first, a little background by way of explaining the unusual state of affairs here. . . .]

Massachusetts, rightly I think, has held (as of Friday) that willful failures to protect patient safety (related to issues on updates of FDA mandated label warning copy) should be actionable -- that is a "knowing, or reckless disregard of important facts" standard. Not surprising. Due to a rather-wrinkly history on approving generics at FDA -- it turns out that generics must use the innovator's label copy without alteration or enlargement, as a condition of the approval of the same.

So -- only the innovator may negotiate with FDA about changes to the label -- and all label changes must be cleared through FDA staffers, once a drug (branded or generic) is on market.

In a surprisingly ill-informed opinion, in a case called T.H. v. Novartis (Cal. Sup. Ct., Case No. S-233898, December 21, 2017), however, the divided California Supreme Court held that (i) a "mere negligence" standard would apply when a generic consumer sued a branded manufacturer for injuries from drugs allegedly caused by inadequate label warnings; and (ii) more surprisingly, a duty of care would persist, even after the original innovator had sold the rights to the branded drug -- to an independent third party.

Let's attack the second part first: the entire FDA file jacket, on any drug -- once sold to a third party -- is transferred to the acquiror (and the acquiror takes over discussions with FDA, on this score -- that has always been true, since the 1970s). Some mention is made in the majority opinion that indemnity clauses in the transfer agreement are the answer to its ruling. I might ask. . . "why"?

Why is it a logical requirement that -- assuming a bona fide sale has occurred, to a third party purchaser for fair market, arms' length negotiated fair value -- the original seller is on the hook, even theoretically, for the label copy? That makes no sense -- and the dissent (by footnote) rightly compares it to prior cases [including one federal MDL, in which I sat for depositions for the defense (videotaped, and in front of perhaps 45 separate plaintiffs' lawyers -- including the irrepressible Ralph Knowles!) -- as a disclosure of interest, here]:

. . . .One example of tort liability leapfrogging scientific knowledge occurred in. . . . the early 1990s with breast implants. Despite little scientific evidence of an association, thousands of suits were filed across the country alleging silicone breast implants caused autoimmune disorders. (Bernstein, The Breast Implant Fiasco (1999) 87 Cal. L.Rev. 457, 477.) Eventually, several large-scale epidemiological studies conclusively refuted this proposition, finding no link between implants and systemic disease. (Id. at pp. 480-484.). . . .

And even so, the courts uniformly held -- in the 1990s -- that 3M (via Mentor) could not be held liable for alleged injuries, after it had sold the line to McGahn Medical (as to alleged injuries from devices implanted after the transaction had occured, at least), and transferred all its FDA filings and (importantly) terminated its ongoing insurance coverage for the product line.

So too, here -- requiring new indemnity clauses in M&A agreements to avoid the outcome of an illogical decision in California seems. . . silly. Why would the California court entertain an illogical outcome (and one not needed to reach the termination of the matter) -- and then in the same breath say effectively "industry may easily" draft around this absurd result, by a couple of paragraphs of clever language? What public good is there served? I dunno.

Now, to the first prong -- in contrast to the Massachusetts case, California effectively held that the innovators owe an ongoing duty of care, to even remote patients, ones who NEVER took the branded product -- but were only generic consumers -- in the updating, amendment, and general administration of the branded/innovator company's FDA label copy.

While I may actually agree that the innovator will in fact act with due care, since it will want to protect its branded franchise(s) -- and it is likely in pretty steady formal communication with FDA staffers, about emerging pharmacovigilance issues, and occasional updates to the label copy -- I do not see a need to impose a full-on duty of care, where the statute compels no such result.

I think it would be enough to say the law is only violated where, for example (as Massachusetts just did), an innovator intentionally refuses to update a label, to drive down/end sales of the generic, by frightening the generic maker into a voluntary withdrawal from the market, or something similar. But even that seems preposterous. Even if the innovator decides to exit the market, by sale or shut-down, I am certain FDA would (on its own) require label copy changes, as emerging longitudinal data in the experience of the generic company's prescribing patterns. . . suggested new- or newly-increasing risks.

So -- in my not so humble opinion, the California case from December got it wrong -- in almost every imaginable way.

Yet on this sunny Sunday morning -- I am grinning ear to ear, and have revised my masthead for the coming sweet 16 matchup, against Cincy, if my brackets hold true to form -- and this one win (RAMBLERS!) alone last night now guarantees that I will beat President Obama's bracket -- nine long years, a goal of mine:

to out-bracket-ologize (outdo). . . the Master. [Mr. Obama had Tennessee beating Loyola.]

Finally, in 2018, it seems. . . I have! Onward, shortly -- to a heavy weights workout, swim, sauna, steam and shave!

नमस्ते