Dennis Raglin, a partner in Steptoe & Johnson LLP's Proposition 65 Practice Group was part of a national litigation team that recently achieved a significant victory for generic drug manufacturers in a case of first impression, establishing that Proposition 65 warnings are preempted by federal law for generic over-the-counter (OTC) drugs. Alameda County Superior Court Judge Winifred Smith on May 7, 2021 ruled that Plaintiffs' claims were preempted and sustained the demurrers of four generic manufacturers and two retailers without leave to amend. (Center for Environmental Health, et al. v. Perrigo Comp., et al., Docket No. RG20054985 (Super. Ct. Alameda County, May 7, 2021).)
Proposition 65's Listed Chemical in an OTC Drug
The OTC drug in question is Ranitidine, the generic equivalent of the heartburn medication Zantac. Ranitidine contains a chemical called N-nitrosodimethylamine (NDMA), which is listed by the state of California as a chemical that may cause cancer, pursuant to Proposition 65, the infamous toxics-right-to-know law (Health & Safety Code § 25249.6, et seq.) Because of the presence of this listed chemical in the drug, Proposition 65 requires that it carry a cancer warning unless the defendant can prove that exposure to the chemical is below the “safe harbor” level, which the state has determined is .04 ug/day, a miniscule amount.
Application of “Impossibility” Preemption to Excuse Proposition 65 Cancer Warnings on OTC Drugs
Plaintiff named both the brand and generic manufacturers of Ranitidine and their retail customers. Because Proposition 65 has a specific exemption for prescription drugs, all six Defendants demurred on the grounds that Proposition 65 warnings are preempted under federal law based on an exemption that provides that where federal law governs warnings “in a manner that preempts state authority” the law is preempted. (HSC § 25249.10.). The court found that this exemption applied given the regulation of OTC drugs by the Food Drug & Cosmetics Act (FDCA.) While the FDCA does include an express preemption provision that encompasses OTC drugs, it contains a provision specifically carving out and allowing the enforcement of Proposition 65, so while express preemption is not available, impossibility preemption is. (21 USC §§ 379r, 379r(c)(2).) Impossibility preemption is where the requirements of the state law conflict in a way that makes it impossible for a defendant to comply with both state and federal law.
OTC Drug Manufacturers Required to Follow Federal Law for Labeling
The court determined that it was impossible for the Defendants to comply with the FDCA and with Proposition 65. While a brand name drug manufacturer can change its labeling unilaterally without waiting for FDA approval, the revision must constitute a “major change” and there must be “reasonable evidence of a causal association” of the risk warned about with the drug. (21 CFR 314.70(c )(10)(iii).). In this case, impossibility preemption applied because there was not sufficient evidence of a risk from NDMA in Ranitidine to require the brand manufacturer to make such a unilateral change. The Plaintiff argued that the brand-name manufacturer could still comply with Proposition 65 without interfering with federal requirements by including the Proposition 65 warning in advertising, asserting that advertising is not labeling under the FDCA. The court rejected this novel interpretation. It did sustain with leave to amend the demurrer brought by the brand-name manufacturer on a limited scope – to the extent Plaintiff is able to plead there is “reasonable evidence of a causal association” with the drug containing NDMA, creating a duty to revise the labeling unilaterally without waiting for FDA approval. (21 CFR 201.57.)
The court sustained without leave to amend the demurrers by the generic manufacturers. Unlike brand manufacturers, under the FDCA they have no ability to change their labels because of their duty of “sameness,” which mandates that warning labels on generics be the same as the brand name drug. (21 USC 355(j)(10)(A)(iii); PLIVA v. Mensing (2011) 564 US 604.) Indeed, generics even face penalties if they do make unilateral changes to labeling that are not the same as that of a brand manufacturer. If the FDA determines that a generic manufacture's labeling is different than that of the brand manufacturer, it can withdraw the approval to sell the product. (21 CFR 314.150(b)(10).)
A Proposition 65 Warning in Whatever Form—Including Advertisements—is “Labeling” Under Federal Law
The court rejected Plaintiff's attempt to get around preemption by arguing that the FDCA is separate from advertising, and held that Proposition 65 warnings, in whatever form provided, are “warnings” within the definition of the Act. (21 USC 202.1(l); 321(m).)
As to the two retail Defendants, the court also sustained their demurrers without leave to amend given that they are not required to seek FDA approval for labeling, so it is irrelevant whether their labeling was the same as the generics or brand.
Significance of the Court's Order—Banning Future Proposition 65 Claims For OTC Products
The significance of this ruling is it appears to kill any future attempts to bring Proposition 65 actions against OTC drugs, at least as to generic manufacturers and retailers. The court's order significantly narrows the avenues for a plaintiff to plead a case against a brand manufacturer, and even if successful at surviving a demurrer, the Plaintiff would have an uphill battle to prevail based on the court's ruling.
This ruling also comes at a unique time as courts have been increasingly receptive to constitutional challenges to Proposition 65. There have been a few rulings in federal court over the last couple of years that have found, as to specific chemicals and products, that the warnings required by the law are either preempted and/or violate the First Amendment by compelling a defendant to carry a warning on its product that is not accurate or supported by the facts. Against this backdrop, it is likely the state and the Proposition 65 plaintiffs' bar are looking for ways to arrest any momentum on constitutional challenges. Therefore, an appeal would seem to be more likely than not.
Steptoe's experienced Proposition 65 team will continue to provide updates on material developments on this issue, and are available to discuss the case in more detail, or to review a Company's current compliance methods and discuss best practices.
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