SAN FRANCISCO (Legal Newsline) – A split California Supreme Court has ruled drug maker Novartis can be liable warning labels on the generic version of a drug - even though it did not manufacture it.

The court ruled against the company in a 4-3 vote Dec. 21 and upheld a court of appeals decision. Justice Mariano-Florentino Cuéllar wrote the majority opinion with justices Ming Chin, Goodwin Liu and Louis Mauro concurring. Mauro was assigned to the case from the Court of Appeal, 3rd Appellate District.

Justice Carol Corrigan wrote the dissenting opinion with Chief Justice Tani Gorre Cantil-Sakauye and Justice Leondra Kruger concurring.

The ruling comes in a lawsuit against the company by the children of a woman who was prescribed terbutaline, a generic form of the brand-name drug Brethine, while she was pregnant.

In the lawsuit, the plaintiffs argued that the drug caused the children to suffer brain injuries and that Novartis did not warn users about potential dangers.

For its part, Novartis maintained that it sold its rights to the drug years ago and with that, it no longer was liable for issues related to generic versions.

In the majority opinion, Cuéllar wrote that in an effort to determine "whether to create an exception to a brand-name drug manufacturer’s duty to warn, the majority balanced the constellation of factors" set out in Rowland v. Christian.

“Three of those factors — foreseeability, the certainty of the injury, and the closeness of the connection between the plaintiff and the defendant — address the foreseeability of the relevant injury,” he wrote.

In a review of the federal regulatory scheme and analysis of all the Rowland factors, the court said it was moved to maintain “that a brand-name drug manufacturer has the duty under California law to warn of the risks about which it knew or reasonably should have known, regardless of whether the consumer is prescribed the brand- name drug or its generic ‘bioequivalent.’”

Moreover, the court also said a key consideration under California law is the foreseeability of physical harm. 

“Novartis could reasonably have foreseen that deficiencies in its Brethine label could mislead physicians about the safety of terbutaline, Brethine’s generic bioequivalent, which was legally required to bear an identical label,” Cuéllar wrote.

And while the majority noted that Novartis made a strong case, it noted the drug maker didn’t presume to interpret California law.

“Yet it is California law that we must construe and apply in this case,” Cuéllar wrote. “In doing so, we find that brand-name drug manufacturers have a duty to use ordinary care in warning about the safety risks of their drugs, regardless of whether the injured party (in reliance on the brand-name manufacturer’s warning) was dispensed the brand-name or generic version of the drug,” he concluded. 

“We also conclude that a brand-name manufacturer’s sale of the rights to a drug does not, as a matter of law, terminate its liability for injuries foreseeably and proximately caused by deficiencies present in the warning label prior to the sale. We therefore affirm the court of appeal.”

As part of the dissenting opinion, Corrigan noted that the court accepted the majority’s holding “that a brand-name drug manufacturer’s duty to warn extends to consumers of a generic bioequivalent, but only because federal regulations currently require that generic drugs carry the same warning label as appears on the brand-name product.”

However, the dissenting opinion noted the majority’s second holding "would extend indefinitely a drug maker’s duty to warn the customers of its successor," even after the drug maker sold the rights of the drug.

Corrigan also noted that no special feature of Food and Drug Administration law or practice warrants this rule.

Moreover, the "plaintiffs’ theory of 'predecessor liability' represents a substantial and unprecedented expansion of tort duties," Corrigan wrote.

“The majority cites no case holding a predecessor manufacturer liable for failing to warn about injuries caused by its successor’s product,” Corrigan noted. 

“Indeed, it appears that predecessor liability for failure to warn has never before been recognized by any court, in any jurisdiction. To the extent the theory has been raised, courts across the country have universally rejected it.”

Corrigan also wrote that despite assurances from the majority that drug manufacturers can “entirely avoid” perpetual liability through insurance or indemnity agreements, “there is no precedent for coverage against claims arising from another company’s product.”

“The high cost of insuring against the majority’s extension of the liability will almost certainly drive up the prices for prescriptions,” Corrigan concluded. 

“Although I join the majority’s decision to affirm Conte v. Wyeth Inc., I dissent from its holding that predecessor manufacturers have a duty to warn their successors’ customers about risks of a product they no longer make or sell.”

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