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High court weighs generic drugmaker liability

Security guards walk the steps of the Supreme Court before Justice Elena Kagan's investiture ceremony in Washington, October 1, 2010. REUTER
Security guards walk the steps of the Supreme Court before Justice Elena Kagan's investiture ceremony in Washington, October 1, 2010. REUTER

By Lawrence Hurley

WASHINGTON (Reuters) - Supreme Court justices weighed on Tuesday whether makers of generic drugs already approved by the Food and Drug Administration can be held liable under state law for claims of design defects.

During a one-hour oral argument justices questioned whether federal law, in this case the requirement that generics have same design as the name-brand version, prevents plaintiffs from making such claims under state law.

Some justices signaled concern about juries making sweeping judgments about the effectiveness of drugs while others questioned how to differentiate the case from another case involving generics decided in 2011.

Mutual Pharmaceutical Co, a unit of URL Pharma, owned by Sun Pharmaceutical Industries, asked the nine-member court to overturn a $21 million jury award to Karen Bartlett, a New Hampshire woman who took Mutual's generic non-steroidal anti-inflammatory drug, sulindac, in 2004 after her doctor prescribed it for shoulder pain.

Bartlett, who attended Tuesday's argument, suffered a rare hypersensitivity reaction three weeks after she started taking it. Her skin began to peel off, leaving her with burn-like lesions over two-thirds of her body.

Mutual, backed by the Obama administration, says that federal law trumps state law claims likes those Bartlett made, pointing to the fact that the drug already had FDA approval.

Federal law requires generic drugs to have the same design as their brand-name equivalents, Mutual argues.

During the argument, the justices wrestled with the points of both the federal law in question, the Federal Food, Drug and Cosmetic Act, and the precise allegations made in the state lawsuit.

That was in part due to a 2011 Supreme Court precedent in a case called PLIVA v. Mensing, which limited consumers' ability to sue generic manufacturers over alleged injuries.

"UNREASONABLY DANGEROUS"

The court ruled then that generic drugmakers could not be sued for failing to warn about certain health risks because federal law requires brand-name and generic drugs to carry the same label.

Several justices sought to clarify whether the claims made by Bartlett were sufficiently different from those relating to labeling that are already limited.

Chief Justice John Roberts indicated that he saw some difference in Bartlett's claim due to the nature of the New Hampshire law, which imposes liability when a product is deemed "unreasonably dangerous."

The Supreme Court's cases, he said, have been "focused on the concern that the state is going to impose on the manufacturer a different duty than the federal government."

In contrast, the state law is, as Roberts put it, "if you do this, you're going to have to pay for the damage."

Several justices expressed concern, however, that the complicated decision-making process about the risk involved in taking a particular drug would be left to a jury.

Justice Antonin Scalia noted that the jury would have to weigh "what the cost-benefit analysis is for a very novel drug that unquestionably has some deleterious effects, but also can save some lives."

Roberts pointed out that any single jury is only dealing with the facts in the case before it.

The jury in Bartlett's case "didn't say that yes, you can market this drug, it benefits, you know, 99.9 percent of the people, but there is that 0.1 percent, and you're going to have to compensate that person," he said.

Instead, the jury decided, Roberts said, "the risks outweigh the benefits, period. So you should not market this at all."

The case is Mutual Pharmaceutical Company v. Bartlett, U.S. Supreme Court, No. 12-142.

For petitioner: Jay Lefkowitz of Kirkland & Ellis, argued.

For respondent: David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel.

For the federal government, amicus in support of petitioner: Anthony Yang, Department of Justice.

(Reporting by Lawrence Hurley and Terry Baynes; Editing by Howard Goller and Jackie Frank)

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