Causation, and not deep pockets, should dictate liability

Today we filed this amicus brief asking the California Supreme Court to overturn the flawed decision in T.H. v. Novartis, which would essentially impose never-ending tort liability on brand-name drug manufacturers for injuries caused by their generic counterparts.  By adopting an expansive theory of liability, the law threatens to drive up the cost of doing business—possibly deterring useful medications from coming to market.

In this case, the Court of Appeal held that a brand pharmaceutical manufacturer was liable to a plaintiff that consumed a generic version of the drug—years after the generic manufacturer left the market and sold the production rights to someone else.  Under the theory of “innovator liability,” the court held that it was foreseeable a user of a generic drug might rely on the original brand manufacturer’s label when taking the generic product.

As we argue in our brief, that decision has no connection to any conceivable rationale normally employed in tort.  Generally, tort law exists to deter unreasonably dangerous behavior, and to compensate wrongful injuries.  But there can be no deterrence where an injury occurs after the generic manufacturer sells the production rights to someone else, and relinquishes control over how the drug is produced and labeled.  Only those entities that can monitor, label, test, or otherwise control a product have an incentive to make that product safer.  The decision is also unfair, because it imposes never-ending liability for statements that generic manufacturers make.  Not even leaving the market and selling the production rights to someone else will relieve a brand drug company from liability.

Expansive theories of tort liability drive up the cost of doing business, thereby raising prices and deterring useful enterprises. That result is especially unfortunate in the context of pharmaceuticals.  The court’s never-ending theory of liability may deter potentially life-saving drugs from coming to market, or becoming overly expensive once they are developed.

But the effects won’t be limited to pharmaceuticals.  Any name-brand company that faces competition by a knock-off brand now risks innovator liability, even after it leaves the market. A consumer of Mr. Pibb can now sue the parent company of Dr. Pepper for statements it made on its can, even if it no longer produces Dr. Pepper.  A person who uses a knockoff replacement head for a Swiffer can sue Swiffer, a user of a generic tissue brand can sue Kleenex, and so on.

Almost every court to consider “innovator liability” has rejected the theory.  We’ll see if the California Supreme Court shows the same reluctance to extend tort liability in a way that impedes such an important economic enterprise.