The legal principle of federal preemption—in simple terms, that U.S. federal law overrides any conflicting state law—has assumed major significance to both manufacturers and consumers of generic prescription drugs. The stakes are made even higher by the prevalence of generic drugs today. The Food and Drug Administration reports that generic drugs account for nearly 80 percent of all prescriptions filled in the U.S., saving consumers an estimated $158 billion in 2010.
However, preemption is not as simple as it sounds. There can be complicated court battles over whether a federal law or regulation and a potentially overlapping state law actually conflict enough for the preemption doctrine to apply in a particular case. If not, the state law survives, and merely supplements the existing federal law. But when preemption is found to apply, the state law is nullified, and only federal law governs. The practical effect is that the preemption doctrine may determine whether a business is subject to—or immune from—a consumer’s product liability suit based on state law claims.
Further complicating the matter is the basic idea of generic drugs. They are intended to be exact replicas of the underlying brand name drug—just with a different name, and less expensive after the patent on the original brand name drug has expired. Under federal law, the companies that make generic drugs cannot alter the composition or warning label already approved by the FDA for the corresponding brand name drug.
That creates both a practical and policy problem when a consumer has been harmed by taking a generic drug. One possibility is to hold the maker of the generic drug liable for a personal injury claim brought by the consumer, even though the generic company cannot revise the underlying brand name drug. The main alternative is for the doctrine of federal preemption to provide a full legal defense for the drugmaker, on the grounds that the generic drug has already passed federal regulatory approval by the FDA. However, that approach may leave the consumer with no real remedy for legitimate injuries. That is the complex quandary addressed by the recent Supreme Court rulings.
Brand Name Versus Generic
In theory, a patient taking a brand name drug—as opposed to a generic—can sue the manufacturer for injuries resulting from taking the prescription drug. In certain instances, federal preemption may also be an issue there, as FDA approval is a federal government action that has some potential to preempt a product liability suit based on state law theories. (Typically, such a suit would allege that the drug was defective in some way, or that the drugmaker did not properly warn of all the potential negative side effects.)
But preemption does not block all lawsuits against makers of brand name drugs. In 2009, the Supreme Court allowed a claim against Wyeth for its brand name anti-nausea drug, Phenergan. In that case, Diana Levine developed gangrene after Phenergan was injected into her vein, forcing doctors to amputate her right hand and forearm. She sued Wyeth under state tort law, contending that Phenergan’s FDA-approved label did not adequately warn against the danger of one particular method of injecting the drug. State courts in Vermont awarded her $6.8 million in damages, and the U.S. Supreme Court upheld the verdict in 2009 in Wyeth v. Levine.
By a 6-3 vote in that case, the justices rejected Wyeth’s argument that Levine’s suit should be preempted by FDA approval of the drug’s warning label. The key fact was that the preemption argument in that case was based primarily on the FDA’s own administrative assertion of preemption, rather than a federal statute expressly calling for preemption of all state laws.
But only two years later, the Supreme Court found that federal preemption did in fact block similar product liability suits brought by patients taking a generic drug. Two patients sued the makers of metoclopramide, the generic version of the brand name drug Reglan. The plaintiffs alleged that they were harmed by one of the drug’s side effects, and that the generic drugmakers had not adequately warned of that possibility. Lower courts had rejected the companies’ preemption defense and allowed the suits to proceed. However, the Supreme Court on a 5-4 vote ruled that the plaintiffs’ suits were in fact precluded by preemption in PLIVA v. Mensing.
In that 2011 decision, the rationale of the justices in the majority (the five more conservative members of the court) was that federal law prevents makers of generic drugs from changing the warning label already approved by the FDA for the corresponding brand name drug. That meant it would be literally impossible to comply with both federal law (requiring the label to remain unchanged) and the applicable state law (imposing a duty to warn of dangers). Thus preemption was a valid and complete defense for the maker of the generic drug.
In dissent, the four more liberal justices argued for a narrower interpretation of the nebulous preemption doctrine, and seemed perplexed by the disparity in outcome for users of generic versus brand name drugs. “As a result of today’s decision,” Justice Sonia Sotomayor wrote for the dissenters, “whether a consumer harmed by inadequate warnings can obtain relief turns solely on the happenstance of whether her pharmacist filled her prescription with a brand-name or generic drug.”
Design Defect Claims
While that 2011 PLIVA ruling effectively blocked the “failure-to-warn” theory for consumers of generic drugs, that decision did not necessarily address another variety of product liability suit – one contending that the generic drug had a design defect. That was the argument used in a case decided by the Supreme Court in June 2013.
In what the Supreme Court readily acknowledged was a “tragic” case, plaintiff Karen Bartlett was prescribed a nonsteroidal anti-inflammatory drug (NSAID) for shoulder pain in 2004. The doctor wrote the prescription for a brand name drug called Clinoril, but the pharmacy filled it with the generic sulindac, manufactured by Mutual Pharmaceutical Co.
Bartlett then suffered a rare side effect that caused burns or deterioration of her skin over nearly two-thirds of her body. She was placed in a medically induced coma, and has been left nearly blind despite undergoing twelve eye surgeries. This severe skin condition, called toxic epidermal necrolysis, was not specifically listed on the warning label as a side effect for Clinoril or sulindac when Bartlett took the drug in 2004, though the FDA recommended adding that explicit wording in 2005.
In Bartlett’s suit under New Hampshire state law governing design defects in products, a jury awarded her more than $21 million in damages. A federal appeals court upheld the award, finding that the Supreme Court’s 2011 PLIVA ruling on failure-to-warn cases did not apply to this different claim of design defect. The appeals court reasoned that Mutual Pharmaceutical could have decided not to sell sulindac at all, and thus could have complied with both state law regarding design defects, and federal law preventing a generic drug company from independently changing the warning label of the brand name drug.
The Supreme Court disagreed, following the same 5-4 split that had decided the PLIVA case two years earlier. In the 2013 case of Mutual Pharmaceutical Co. v. Bartlett, the five more conservative justices (generally speaking, the more business-friendly justices) ruled that preemption also applied to this case, while the four more liberal justices (typically more consumer-friendly) would have allowed Mutual to be held liable for Bartlett’s injuries.
The majority ruling once again found preemption applied because it would be impossible for Mutual to comply with both state and federal law. As the generic manufacturer could not legally redesign the brand name drug, the majority explained, the only way to reduce its risk and thus avoid design defect liability under New Hampshire law was to revise the warning label. Yet that action was also precluded by federal law. The majority opinion rejected the lower court’s alternative of Mutual not selling sulindac at all, believing that requiring such a drastic remedy would undermine at least part of the long-established federal preemption doctrine.
The justices in the majority were not without sympathy to the injured plaintiff, but felt the outcome was dictated by preemption. “The dreadful injuries from which products liabilities cases arise often engender passionate responses,” Justice Samuel Alito wrote in the court’s opinion. “But sympathy … does not relieve us of the responsibility of following the law.”
The four dissenters (in two separate dissenting opinions) contended that it was not literally impossible to comply with both state and federal law, as Mutual could have chosen either to quit selling sulindac specifically in New Hampshire, or to pay compensation to injured victims in that state when juries determined they had been harmed by its generic drug.
The dissenters acknowledged that there would be an incentive for Mutual to change the label, if that were allowed. But New Hampshire state law only created an incentive to that effect, and did not specifically require any action that was prohibited by federal law. As a result, the state and federal laws did not have to conflict. In essence, both dissenting opinions argued for a narrower interpretation of the preemption doctrine—one that would allow New Hampshire product liability law to supplement the federal regulatory scheme.
Justice Sotomayor’s dissent in the 2013 case contended that the majority ruling treats “the FDA as the sole guardian of drug safety.” Therein lies the policy debate. Should FDA approval be enough to protect generic drug companies from product liability suits? Or should state product liability law be available to provide additional safeguards against the possibility of unreasonably dangerous drugs—as well as a means of compensating the rare but severe case of a patient who suffers grievous injuries after taking a drug?
There are arguments to be made for both sides. Logically, it is difficult to justify holding generic drugmakers liable for products that they cannot legally alter. Moreover, if generic makers were to face an endless array of suits for their products, and under varying legal standards in 50 different states, ultimately the cost of the cheaper generics could rise significantly. That could have significant implications for both consumers, and for Medicare and other government programs that pay the costs of many generic drugs.
On the other hand, when many consumers are encouraged—if not outright required in some cases—to use generic drugs, it seems harsh to say that they have no way to recover for severe physical injuries caused by those drugs. Further, the mere threat of liability in the most egregious cases could encourage generic drug companies to strive even more to reduce the risks involved in the products they sell. After all, some rarer side effects may not become known until a drug has been used for many years—when generic versions likely dominate the market. That approach might prove advantageous for public health as a whole, as well as for individual consumers.
So how can this generic drugs quandary be resolved? One possibility would be an express statement from Congress on whether it intends for state lawsuits to be preempted by the federal regulatory process for generic drugs. The hardest preemption cases for the courts to decide occur when Congress has not directly stated its intent on preemption in a statute, meaning judges are forced to apply various theories of “implied preemption.”
But any congressional action is highly unlikely, considering current partisan divides in Congress and the likely battle between business interests and consumer groups that would erupt over any effort to legislate on the issue. Theoretically, the FDA might change its own view on the applicability of the preemption doctrine to state lawsuits. However, the FDA’s administrative interpretation could not override contrary language in statutes already passed by Congress, and courts would not be obliged to follow the FDA’s own preference in other cases.
A more viable option, now under active consideration, would be for the FDA to change its rules and allow generic drug companies to revise their products’ warning labels. In November 2013, several months after the latest Supreme Court ruling on preemption, the FDA issued the details of a proposed rule to that effect. Public comments on the proposal will be taken and considered before the FDA decides whether to adopt it.
Under the FDA’s proposal, which references the recent Supreme Court decisions, generic drug companies would be able to revise the labels on their products on a temporary basis, while the FDA considered the changes being proposed. If the rule is adopted, this process could provide new safety information and warnings to consumers taking generic drugs.
However, giving makers of generic drugs that authority could also have the effect of eliminating much, if not all, of the federal preemption defense now available to them, as it would no longer be impossible for the generic makers to change their labels. That could result in generic drug companies being held liable for injuries due to risks that they had not warned against.
The FDA’s proposal is drawing both praise and criticism, depending on one’s point of view. Even if it is ultimately adopted, opponents of the idea will likely challenge its validity in the courts, contending that it is beyond the FDA’s authority because it could implicitly violate a federal statute governing the use of generic drugs.
As a result, any final resolution on the FDA’s regulatory proposal will take time. Moreover, even a detailed and court-approved FDA rule could leave some questions and circumstances unresolved.
Regrettably, like so many other health policy issues today, there is no easy solution to the question of liability for injuries produced by generic drugs. Yet it is a matter that needs to be addressed, and in a manner that will be practical and equitable to both sides of the contentious issue. The problem is not just a generic one—but one that could affect the health and wallets of both consumers and drug companies.
 The concept of federal preemption is based on Article VI, Clause 2 of the U.S. Constitution, stating: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof … shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”
 Facts about Generic Drugs, U.S. Food and Drug Administration, available at http://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/UnderstandingGenericDrugs/ucm167991.htm
 For a fuller discussion of the various types of federal preemption that might apply in a particular case, see
Larry Bumgardner, The Viability of Federal Preemption Doctrine as a Defense to Lawsuits Against the Business World, Journal of Global Commerce Research, Vol. 3, No. 5 (2012), at 57-68.
 Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act), Pub. L. No. 98-417, 98 Stat. 1585.
 Wyeth v. Levine, 555 U.S. 555 (2009).
 PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011).
 Id. at 2583 (Sotomayor, J., dissenting).
 Bartlett v. Mut. Pharm. Co., 678 F.3d 30 (1st Cir. 2012).
 Mut. Pharm. Co. v. Bartlett, 133 S. Ct. 2466 (2013).
 Id. at 2478.
 Id. at 2493 (Sotomayor, J., dissenting).
 Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products, Federal Register, Nov. 13, 2013, available at https://www.federalregister.gov/articles/2013/11/13/2013-26799/supplemental-applications-proposing-labeling-changes-for-approved-drugs-and-biological-products.