Drug Company Immunity A Possibility In North Carolina

May 23, 2011   

The North Carolina legislature is currently considering a bill that would provide immunity from lawsuits for drug companies in cases where the drug product in question had received FDA approval. If passed, North Carolina would be only the second state to provide such immunity for drug manufacturers. Michigan, which passed a similar law in 2005, was the first state to do so.

Prior to bringing a drug to market, drug manufacturers must receive FDA approval. During this approval process, the burden of establishing the safety and effectiveness of a drug is on the drug manufacturer. Traditionally, even after a drug has been approved for use, the law, both state tort law as well as federal regulatory law through the FDCA, has placed a continuing duty upon drug companies to warn its consumers of any potentially harmful effects of its products. Recent Supreme Court precedent has echoed this principle.

In Wyeth v. Levine, 129 S Ct 1187 (2009), the issue of whether FDA approval of a drug product was intended to preempt and prohibit contemporaneous state tort lawsuits was addressed by the United States Supreme Court. In Wyeth, the plaintiff filed tort action for negligence and strict product liability against a drug manufacturer in Vermont State Court alleging that the drug company had failed to include an adequate warning label describing the possible injuries which could occur from the injection of its drug product. In response, the drug manufacturer argued that the Plaintiffs failure-to-warn claims were preempted by federal law because: 1) it had received FDA approval for its products drug label; and 2) any state-law duty to provide stronger warnings would obstruct the purposes of the FDCA and federal drug labeling regulations because it would substitute a lay jurys decision about drug labeling for the expert judgment of the FDA.

In rejecting the drug manufacturers argument, the Court found that the FDCAs purpose was to bolster consumer protection and that Congress did not provide for federal remedies for consumers harmed by unsafe/ineffective drugs because state common law rights of action were already available. Further, unlike medical devices, Congress did not specifically provide for preemption of claims for drugs. Therefore, the Court found that “Congress did not intend FDA oversight to be the exclusive means of ensuring drug safety and effectiveness.”

However, if passed, HB 542 would provide immunity to drug manufacturers and sellers from product liability suits related to any drug sold or manufactured which first received FDA approval prior to production and sale. The only exceptions under the proposed bill are for cases where FDA approval was obtained through fraud or bribery. Such a law will have dramatic effects not only on the ability of consumers to hold drug companies accountable for selling dangerous or defective drugs but also on the State government itself bringing related claims.

An example of the likely effects of such legislation can be seen in a recent decision of the Michigan Court of Appeals interpreting a similar immunity statute under Michigan law. In Michigan v. Merck & Co. Inc., the Michigan Court of Appeals held that where the drug in question was approved by the FDA, the states suit to recover Medicaid money premised on fraud by the drug company in its representations regarding the safety and efficacy of the drug was barred under Michigan law. In that case, the court found that, though the suit was based on the Michigan Medicaid False Claims Act, the underlying allegations of the Complaint qualified the suit as a “product liability action” under Michigan law. As such, because 1) the States suit constituted a “product liability action” under Michigan law, 2) Mercks drug received FDA approval, and 3) that approval was not obtained through fraud or bribery, Merck qualified for immunity and the Court of Appeals remanded the case with orders to dismiss.

For more information regarding the drug approval process or for any questions regarding how your company can maintain FDA regulatory compliance, please contact us at contact@fidjlaw.com.