T.H. v. Novartis Pharmaceuticals Corporation
4 Cal. 5th 145, 407 P.3d 18, 226 Cal. Rptr. 3d 336 (2017)
Rule of Law:
A brand-name drug manufacturer's duty to warn of its drug's known or reasonably knowable risks extends to consumers injured by a generic version of the drug. This liability for a deficient warning label is not automatically extinguished as a matter of law when the manufacturer sells the rights to the drug to a successor company.
Facts:
- Novartis Pharmaceuticals Corporation (Novartis) manufactured the brand-name drug Brethine and was solely responsible for the content of its warning label.
- Studies emerged over several years indicating that terbutaline, the active ingredient in Brethine, posed a serious risk to fetal brain development when used off-label to prevent premature labor.
- While it owned the rights to Brethine, Novartis allegedly knew or should have known of these risks but failed to update the Brethine warning label to include them.
- In December 2001, Novartis sold its New Drug Application (NDA) for Brethine to aaiPharma Inc., which continued to use the same warning label.
- In 2007, J.H., the plaintiffs' mother, was prescribed generic terbutaline to suppress premature labor.
- The generic terbutaline J.H. ingested was required by federal law to bear the same warning label as Brethine, which was the label originally created by Novartis.
- Plaintiffs T.H. and C.H. were later diagnosed with developmental delays and autism, which they allege was caused by their in utero exposure to terbutaline.
Procedural Posture:
- Plaintiffs T.H. and C.H., through their guardian, sued Novartis in California superior court (trial court).
- Novartis filed a demurrer, arguing it owed no duty of care to the plaintiffs.
- The trial court sustained the demurrer without leave to amend, dismissing the claims against Novartis.
- Plaintiffs appealed to the California Court of Appeal.
- The Court of Appeal, as the intermediate appellate court, reversed the trial court's judgment and directed the trial court to grant plaintiffs leave to amend.
- Novartis (as petitioner) successfully petitioned the Supreme Court of California for review.
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Issue:
Does a brand-name drug manufacturer's duty of care in crafting a warning label extend to individuals who are injured by a generic bioequivalent of the drug, even when the injury occurs years after the brand-name manufacturer has sold its rights in the drug to a successor manufacturer?
Opinions:
Majority - Cuéllar, J.
Yes. A brand-name drug manufacturer owes a duty of care to those who may be injured by deficiencies in its warning label, regardless of whether the consumer is prescribed the brand-name drug or its generic bioequivalent, and that liability is not automatically terminated by the sale of the drug to a successor. The court reasoned that under federal law, the brand-name manufacturer has exclusive, unilateral authority to create and strengthen the drug's warning label, and generic manufacturers have a 'duty of sameness' to copy that label verbatim. Therefore, it is entirely foreseeable to a brand-name manufacturer that a deficient label will be perpetuated on the generic product and cause harm. Applying the Rowland v. Christian factors, the court found that foreseeability, moral blame, and the policy of preventing harm all supported imposing a duty, while the burden on the manufacturer was minimal as it was already obligated to maintain an adequate label. The court further held that liability for this negligence does not end upon selling the drug line, as it was foreseeable a successor might continue using the deficient label for the same economic reasons the predecessor did; the passage of time affects causation, not the existence of the underlying duty.
Concurring and dissenting - Corrigan, J.
Partially yes, but mostly no. The opinion concurs that a brand-name manufacturer's duty extends to users of generic drugs because federal law gives the brand-name manufacturer sole control over the warning label. However, the opinion dissents from the majority's creation of 'predecessor liability,' arguing that a manufacturer's duty should terminate upon the sale of the drug line. Once the rights are sold, the predecessor manufacturer loses all ability and legal authority to change the warning label; that power and responsibility transfers entirely to the successor. Imposing a duty that is impossible to discharge is contrary to tort principles, creates a risk of perpetual and unpredictable liability, and disincentivizes successor companies from performing their own duty to keep labels updated. This holding is an unprecedented expansion of tort law that no other jurisdiction has recognized.
Analysis:
This decision significantly expands the scope of duty for brand-name pharmaceutical manufacturers in California, establishing that liability follows the label, not just the pill. By grounding the duty in the manufacturer's exclusive control over the label's content under federal law, the court made the specific producer of the ingested drug irrelevant. The more novel and impactful holding is the extension of this duty post-divestiture, creating a form of predecessor liability for failure to warn. This will likely alter corporate transactions involving drug lines, increasing the importance of due diligence and comprehensive indemnification agreements to account for this long-tail liability risk.
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