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High Court Overturns Landmark Generic-Drug Liability Ruling

The U.S. Supreme Court on Monday reversed the First Circuit's holding that the user of a generic drug can bring a state-law design defect claim against its manufacturer, pointing out that generics makers cannot change a drug's design under federal law.

The high court held in a 5-4 decision that the appeals court was wrong to uphold a $21 million award to plaintiff Karen Bartlett, who suffered a near-fatal reaction after taking sulindac, a generic anti-inflammatory drug manufactured by Mutual Pharmaceutical Co. Inc.

The ruling marks the court's first major decision on generic-drug manufacturer liability since its Mensing decision in 2011, in which it held that federal law preempted state-law failure-to-warn claims against the companies.

Justice Samuel Alito wrote the majority opinion, which was joined by Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy.

According to the majority, New Hampshire law holds that courts should look at three factors when determining whether a product's risks outweigh its benefits: its usefulness to the public, the ability of its manufacturer to reduce its risks and the strength of its warning.

Because it could not alter the drug's design under the Federal Food, Drug and Cosmetic Act — which holds that the formulation of a generic drug must match that of its brand-name counterpart — Mutual could not increase its usefulness to the public or reduce its risks, the majority ruled. In addition, under the Mensing decision, it could not strengthen the product's labeling, it said.

"Because it was impossible for Mutual to comply with both state and federal law, New Hampshire's warning-based design-defect cause of action is preempted with respect to FDA-approved drugs sold in interstate commerce," the majority said.

The majority rejected the First Circuit's assertion that Mutual could have complied with federal and state law by withdrawing sulindac from the market altogether, saying the Supreme Court has rejected such logic in other preemption cases.

In one dissent, Justice Stephen Breyer, joined by Justice Elena Kagan, held that it is not impossible for a generic-drug maker to comply with conflicting federal and state law, because the company could withdraw the drug from the market or subject itself to damages under state law in court.

Justice Breyer said he "found no convincing reason to believe that removing this particular drug from New Hampshire's market, or requiring damage payments for it there, would be so harmful that it would seriously undercut the purposes of the federal statutory scheme."

The other dissent, authored by Justice Sonia Sotomayor and joined by Justice Ruth Bader Ginsburg, held that the majority misapplied the court's preemption principles.

The majority "appears to justify its revision of [Bartlett's] claim through an implicit and undefended assumption that federal law gives pharmaceutical companies a right to sell a federally approved drug free from common-law liability," Justice Sotomayor wrote.

Mutual is represented by Jay Lefkowitz, Michael McConnell, Michael Shumsky and John Crisham of Kirkland & Ellis LLP.

Bartlett is represented by David Frederick, Brendan Crimmins and Joshua Branson of Kellogg Huber Hansen Todd Evans & Figel PLLC; Keith Jensen of Jensen & Associates PLLC; and Steven Gordon and Christine Craig of Shaheen & Gordon PA.

The case is Mutual Pharmaceutical Co. Inc. v. Bartlett, case number 12-142, in the U.S. Supreme Court.