West Virginia’s High Court Rejects Novel Theory of “Innovator Liability”

west vaShould the law recognize a plaintiff’s tort claims against a branded drug manufacturer when the drug that allegedly caused the plaintiff’s injuries was manufactured and sold by the defendant’s generic competitor? State and federal courts have been grappling with this novel question of “innovator liability” ever since the U.S. Supreme Court held, in Pliva and Bartlett, that such tort claims against generic manufacturers are preempted under federal law.

At bottom, innovator liability seeks to hold innovator drug manufacturers liable for injuries resulting from products they neither manufactured nor sold. Such “deep pocket jurisprudence,” as a recent Washington Legal Foundation paper by Shook Hardy & Bacon’s Victor Schwartz explains, marks a radical departure from long-settled principles of product liability premised on a naked policy decision that shifts financial responsibility onto a third party with the deepest pockets.

Although the highest courts of California and Massachusetts have both embraced a version of innovator liability, those jurisdictions are still glaring outliers among the many state and federal courts to have considered the question. Last week in McNair v. Johnson & Johnson, West Virginia joined the ever-growing consensus of jurisdictions to reject innovator liability. (WLF filed an amicus brief in the case in support of Johnson & Johnson).

The case arose from a suit by Larry and Kimmy McNair alleging that Mrs. McNair’s acute respiratory distress syndrome was caused by ingesting levofloxacin, an antibiotic drug marketed by Johnson & Johnson’s Janssen under the trade name Levaquin®. But discovery of the McNairs’ pharmacy records revealed that Mrs. McNair never took Levaquin®; rather, she took a generic version of levofloxacin previously prescribed to her husband and manufactured by a multinational pharmaceutical company based in India.

Nonetheless, on a certified question from the U.S. Court of Appeals for the Fourth Circuit, the McNairs urged the West Virginia Supreme Court of Appeals to retroactively impose liability on Defendants for injuries allegedly caused by a drug they never made or marketed.

In a narrow but comprehensive 3-to-2 ruling, the West Virginia high court refused to invent an unprecedented remedy for the McNairs by distorting West Virginia law. Concluding that innovator liability “would sever the connection between risk and reward,” the court reaffirmed that a plaintiff may not maintain any strict-product-liability action unless it could prove that “the defendant either manufactured or sold the product that allegedly injured the plaintiff.”

In so holding, the court cited several commonsense “policy considerations.” Because brand manufacturers receive no revenue from generic sales, the court explained, innovator liability would add “significant litigation costs … to the price of new drugs to the disadvantage of consumers.” Such increased costs “could stifle the development of new drugs, which would have negative health consequences for society.”

The McNair court rejected the plaintiffs’ call to alter the careful policy balance that Congress has watchfully maintained in the pharmaceutical market for decades. Echoing the judicial restraint evinced in the U.S. Supreme Court’s earlier decisions in Pliva and Bartlett, the majority emphasized that it is not for the judiciary to refashion a remedy for injured plaintiffs by distorting existing law, particularly in the context of a comprehensive federal regulatory scheme.

Because only Congress has the institutional capacity to fully accommodate the myriad of competing interests that are implicated in regulating prescription drugs, the court concluded that allowing non-expert judges and juries to second-guess that careful regulatory balance would severely undermine Congress’s preferred policy aims. At bottom, the court explained, “the proper remedy for consumers harmed by generic drugs rests with Congress or the FDA.”

The McNair decision is an encouraging sign for those stakeholders who feared that innovator liability might be prepared to run the table in favorable jurisdictions. It also is likely to raise interest in the Seventh Circuit’s upcoming decision in Dolin v. GlaxoSmithKline, which hinges on an interpretation (and application) of Illinois tort law.

Also published by Forbes.com on WLF’s contributor page.

One thought on “West Virginia’s High Court Rejects Novel Theory of “Innovator Liability”

  1. Pingback: Update: Federal District Court Rejects Minority View on Pharma “Innovator Liability” – The WLF Legal Pulse

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