United States: Massachusetts Supreme Judicial Court Allows Innovator Liability Claims To Proceed Under A Recklessness Standard

Today, the Massachusetts Supreme Judicial Court made an important ruling concerning innovator liability with respect to pharmaceuticals. Though precluding negligence and traditional product liability claims against brand-name manufacturers, Chief Justice Gants held that claims alleging intentional, reckless conduct are permitted. Specifically, the Court stated that a brand name manufacturer "that controls the contents of the label on a generic drug owes a duty to consumers of that generic drug not to act in reckless disregard of an unreasonable risk of death or grave bodily injury." The decision in Rafferty v. Merck reversed the trial court's decision and puts Massachusetts squarely in the minority of jurisdictions that allow innovator liability claims. Furthermore, Massachusetts is the first jurisdiction to limit the scope of liability arising under this duty by narrowly focusing the inquiry to "reckless disregard of the risk of death or grave bodily harm." Separately, the SJC affirmed the trial court's decision to dismiss the plaintiff's Chapter 93A claim because the alleged unfair and deceptive action—the alleged failure to warn—was not taken in the course of "any trade or commerce" because it was not taken in the course of advertising, offer to sell, or sale of any Merck product.

Case Background

Merck is the manufacturer of Proscar, an FDA-approved, brand-name version of the drug finastride. The drug is approved to treat benign prostatic hyperplasia in persons with an enlarged prostrate. The plaintiff was prescribed the generic version of the drug in August 2010. Shortly thereafter, as alleged in the complaint, plaintiff began experiencing side effects causing sexual dysfunction. In October 2010, plaintiff stopped taking the drug, but his side effects continued.  At the time the drug was prescribed to plaintiff, the drug label warned of the potential for side effects related to sexual dysfunction, but represented that these side effects would resolve when the drug was discontinued.

Plaintiff alleged that by the time he was taking the drug, several reports and studies had found that the sexual side effects associated with the drug could persist after it was discontinued.  Plaintiff further alleged that by 2008, Merck had changed the label in some foreign markets to include a warning about persistent erectile dysfunction. The US label was not changed to include those warnings when plaintiff ingested the drug. 

In 2013, plaintiff filed suit against Merck in Massachusetts Superior Court asserting claims of negligence for failure to warn and violation of Chapter 93A. The case was removed to Federal Court but later remanded to the Superior Court. The Superior Court granted Merck's motion to dismiss finding that "a plaintiff who sues a particular manufacturer for product liability generally must be able to prove that the product which it is claimed caused the injury can be traced to the specific manufacturer"1 and that a manufacturer cannot be held liable "for failure to warn of risks created solely in the use or misuse of the product of another manufacturer."2 Plaintiff appealed, and the SJC transferred the case from the Appeals Court on its own motion.

SJC Sets "Recklessness" Standard for Innovator Liability Claims

The first issue on appeal was whether a plaintiff who alleges that he was injured from his use of a generic drug, because of a failure to warn of the drug's side effects, may bring a common-law general negligence claim against a branded drug manufacturer. The SJC agreed with the lower court that a plaintiff may not bring a negligence claim against the brand-name manufacturer for a failure to warn.  However, the SJC further held that a plaintiff "may bring a common-law recklessness claim against the brand-name manufacturer if it intentionally failed to update the label on its drug, knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use." The SJC remanded the case to the Superior Court, with instructions that plaintiff be granted leave to amend his complaint.

Under the Supreme Court's decision in PLIVA v. Mensing,sup>3 state tort law claims against generic manufacturers arising out of a failure to warn are preempted by federal drug regulations. As the SJC commented, "the practical consequence is that a consumer who suffers injury arising from an inaccurate or inadequate drug warning label can sue the manufacturer for damages caused by his or her injury only if the consumer ingested a brand-name version of the drug—but not if the consumer ingested the generic version." The SJC, clearly troubled by this consequence, described in its decision the current regulatory framework and the legal principles, and outlined the various public policies considered, including the goal of developing and marketing new and efficacious drugs, the burden of cost to the branded manufacturer, the financial incentive to companies to update their labels, and allowing injured consumers to obtain compensation for their injuries. According to the SJC, to bar claims against brand-name manufacturers "would be especially troubling given that... generic drugs represent close to ninety percent of the prescription drug market, and many drug consumers do not even have a choice under State generic substitution laws whether they receive a brand-name or generic drug when they fill a prescription."

After weighing the various public policy considerations, the SJC wrote:

We conclude as a matter of public policy that allowing a generic drug consumer to bring a general negligence claim for failure to warn against a brand-name manufacturer poses too great a risk of chilling drug innovation, contrary to the public policy goals embodied in the Hatch-Waxman amendments. But we also conclude that public policy is not served if generic drug consumers have no remedy for the failure of a brand-name manufacturer to warn in cases where such failure exceeds ordinary negligence, and rises to the level of recklessness.... We therefore hold that a brand-name manufacturer that controls the contents of the label on a generic drug owes a duty to consumers of that generic drug not to act in reckless disregard of an unreasonable risk of death or grave bodily injury. This recklessness standard strikes the most appropriate balance between competing public policy interests, limiting liability for brand-name manufacturers while also providing remedies for the most serious injuries and deterring the most dangerous forms of conduct. 

Under this standard, "a brand name manufacturer that intentionally fails to update the label on its drug to warn of an unreasonable risk of death or grave bodily injury, where the manufacturer knows of this risk or knows of facts that would disclose this risk to any reasonable person, will be held responsible for the resulting harm."

Conclusion

Pharmaceutical companies and practitioners must be aware that Massachusetts is now one of only a few jurisdictions that allow innovator liability claims to proceed against brand-name drug manufacturers. This ruling will likely lead to a large number of new claims being filed in Massachusetts, and while innovator liability claims were previously very susceptible to being dismissed at the pleadings stage, the recklessness standard articulated by the SJC will likely make judgment on the pleadings much more difficult and lead to significant discovery costs for drug manufacturers. In order to limit liability exposure, brand-name drug manufacturers should continue to monitor safety signals and work with the FDA to update drug warnings when appropriate under federal regulations.

Footnotes 

1 Citing Mathers v. Midland-Ross Corp., 403 Mass. 688, 691 (1989)

2 Citing Mitchell v. Sky Climber, Inc.,  396 Mass. 629, 631 (1986)

3 PLIVA v. Mensing, 564 U.S. 604 (2011)

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