amicus brief, Kimmy and Larry McNair v. Johnson & Johnson ... · Estimates ofR&D Costs, 47 J....

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

No 17-0519

KIMlfYMCNAIRANDLARRYMCNAIR

Plaintiffs-Appellants

v

JOHNSON amp JOHNSON A FOREIGN CORPORATION JANSSEN PHARMACEUTICALS INC A FOREIGN CORPORATION

AND ORTHO-MCNEIL PHARMACEUTICAL INC A FOREIGN CORPORATION

Defendants-Respondents

On certified question from the United States Court ofAppeals for the Fourth Circuit Case No 15-1806

BRIEF OF AMICUS CURIAE PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA

Ancil G Ramey (WV BarNo 3013) Michael X Imbroscio (Pro Hac Vice pending) STEPTOE amp JOHNSON PLLC Paul W Schmidt (Pro Hac Vice pending) PO Box 2195 Gregory L Halperin (Pro Hac Vice pending) Huntington WV 25722 COVINGTON amp BURLING LLP Telephone (304) 526-8133 850 10th Street NW Facsimile (304) 933-8738 Washington DC 20001 ancilrameysteptoe-johnsoncom Telephone (202) 662-6000

Facsimile (202) 662-6291 Russell D Jessee (WV Bar No 10020) mimbrosciocovcom STEPTOE amp JOHNSON PLLC pschmidtcovcom 707 Virginia St E ghalperincovcom Charleston WV 25301 Telephone (304) 353-8000 Facsimile (304) 353-8180 russelljesseesteptoe-johnsoncom

Attorneys for Amicus Curiae Pharmaceutical December 142017 Research and Manufacturers ofAmerica

TABLE OF CONTENTS

STATEMENT OF AMICUS CURIAE 1

SUMMARY OF ARGUMENT 2

I Holding Innovators Liable for Generic Competitors Products Will Harm Innovation 4

A Innovator Companies Invest Immense Resources in Researching and Developing New Medicines 4

B Plaintiffs Proposed Duty Would Expose Innovator Companies to Limitless Liability 6

C Litigation Risk Disincentivizes Innovator Companies from Investing in Research and Development ofNew Medicines 9

II Holding Innovator Companies Liable for Injuries Allegedly Sustained from Their Generic Competitors Products Could Impair the Usefulness ofPharmaceutical Labeling and Impair Public Health 15

A Innovator Liability Could Encourage Companies to Warn of Speculative and Unsubstantiated Risks 15

B Innovator Liability Could Negatively Affect Safety Monitoring 16

C Innovators Already Have Ample Incentives to Adequately Warn of Known Risks Even After Generic Entry 19

III Innovator Liability is Fundamentally Unfair 20

A Generic Manufacturers Bear Almost None of the Costs of Researching and Developing Innovative Medicines 20

B Plaintiffs Innovator Liability Theory Would Unfairly Make Innovators Guarantors of Their Competitors Products 21

CONCLUSION 23

TABLE OF AUTHORITIES

Page(s)

Cases

Anselmo v Sanofi-Aventis Inc USA No 10-CV-77 2014 WL 8849464 (Kan Dist Ct Oct 132014) 7

In re Avandia Mktg Sales Practices amp Prod Dab Litig 817 F Supp 2d 535 (ED Pa 2011) 9

Barnhill v Teva Pharm USA Inc No CIV A 06-0282-CB-M 2007 WL 5787186 (SD Ala Apr 24 2007) 7

Colacicco v Apotex Inc 432 F Supp 2d 514 (ED Pa 2006) 7

Coleson v Janssen Pharm Inc No 115-CV-04792-RWS 2017 WL 1745508 (SDNY May 32017) 7

Crum v Equity Inns Inc 224 W Va 246 685 SE2d 219 (2009) 3

DaCosta v Novartis AG No CV 01-800-BR 2002 WL 31957424 (D Or Mar 1 2002) 8

In re Darvocet Darvon amp Propoxyphene Prod Dab Litig 756 F3d 917 (6th Cir 2014) 13

In re Darvocet Darvon and Propoxyphene Prod Dab Litig Master File No 211-md-2226 2012 WL 767595 (ED Ky Mar 72012) 17

Demahy v Actavis Inc 593 F3d 428 (5th Cir 2010) 22

Flynn v Am Home Prods Corp 627 NW2d 342 (Minn Ct App 2001) 8

Foster v Am Home Prods Corp 29 F3d 165 (4th Cir 1994) 7 22

Gaeta v Perrigo Pharm Co 630 F3d 1225 (9th Cir 2011) 22

Goldych v Eli Lilly amp Co No 504-CV-1477(GLSGJD) 2006 WL 2038436 (NDNY July 192006) 7

ii

Huck v Wyeth Inc 850 NW2d 353 (Iowa 2014) 13 21

Lyman v Pfizer Inc No 209-CV-262 2012 WL 2970627 (D Vt July 20 2012) 17

Mason v SmithKline Beecham Corp 596 F3d 387 (7th Cir 2010) 16

Mutual Pharm Co Inc v Bartlett 133 S Ct 2466 (2013) 4

Neely v Wolters Kluwer Health Inc 311 FRD 427 (ED Ky 2015) ~ 7

PLIVA Inc v Mensing 564 US 604 (2011) 1722

Robinson v McNeil Consumer Healthcare 615 F3d 861 (7th Cir 2010) 15

Rossi v Hoffmann-LaRoche No ATL-L690-05 2007 WL 7632318 (NJ Sup Ct Jan 3 2007) ~13

Sloan v Wyeth No MRS-L-1183-04 2004 WL 5767103 (NJ Sup Ct Oct 132004)13

Stanley v Wyeth Inc 991 So2d 31 (La Ct App 2008) 8

Stevens v MFR Gaming Group Inc 237 W Va 531 788 SE2d 59 (2016) 3

Thomas v Hoffman-LaRoche Inc 949 F2d 806 (5th Cir 1992) 15

Tsavaris v Pfizer Inc 154 F Supp 3d 1327 (SD Fla 2016) 7

Wyeth Inc v Weeks 159 So3d 649 (Ala 2014 23

Wyeth v Levine 555 US 555 (2009) 8

In re Zofran (Ondansetron) Prods Liab Litig MDL No 115-md-2657-FDS 2017 WL 3448548 (D Mass Aug 4 2017) 8 22

III

In re Zolojt Litig No 14-C-7000 2017 WL 665299 (W Va Cir Ct 2017) 15

Statutes

21 USC sect 355(b) 4

21 USC sect 355(e)(3)19

21 USC sect 355(i)(2) 4

21 USC sect 355G)(2)(A)(iv) 20

21 USC sect 355(0)(3) 6

National Childhood Vaccine Injury Act of 1986 Pub L No 99-660 100 Stat 3743 12

Other Authorities

21 CFR sect 20157(c)(6)(i) 19

21 CFR sect 31220 4

21 CFR sect 31221 4

21 CFR sect 31223(a)(8) 4

21 CFR sect 31470 17 19

21 CFR sect 31480(b) 5

21 CFR sect 31481 (b)(2) 6

21 CFR sect 31492(a)(I) 20

21 CFR sect 314150 17

150 Congo Rec S8657-01 (daily ed July 22 2004) 16

44 Fed Reg 37434 (June 26 1979) 16

57 Fed Reg 17950 (Apr 28 1992) 9 20

73 Fed Reg 49603 (Aug 22 2008) 15 16

78 Fed Reg 67985 (Nov 13 2013) 18

IV

Admin Office of US Courts Table C-2A US District Courts--Civil Cases Commenced by Nature ofSuit During 12-Month Periods Ending June 30 2016 and 2017 httpwwwuscourtsgovsitesdefaultJfilesdata~tables stfj_c2_12312016pdf 6 7

Anna B Laakmann The Hatch-Waxman Acts Side Effects Precautionsfor Biosimilars 47 Loyola LA L Rev 917 (2014) 13

Carl Djerassi The Future ofBirth Control Wash Post (Sept 10 1989) 11

Charles Steenburg The Food and Drug Administrations Use ofPostmarketing (Phase IV) Study Requirements Exception to the Rule 61 Food amp Drug LJ 295 (2006) 6

Christian Nordqvist Generic Versions ofAntibiotic Levaquin (Levofloxacin) Approved by FDA Medical News Today (June 212011) httpsIwwwmedicalnewstodaycomlarticles229081php 21

Comment Resolving Drug Manufacturer Liability for Generic Drug Warning Label Defects 47 St Marys LJ 219 (2015) 15

David E Bernstein The Breast Implant Fiasco 87 Cal L Rev 457 (19~9) 10

Deborah R Hensler Has the Fat Lady Sung The Future ofMass Toxic Torts 26 Rev Litig 883 (2007) 7

HR Rep No 86-1861 2d Sess (1960) reprinted in 1960 USCCAN 2833 15

HR Rep No 98-857 pt 1 reprinted in 1984 USCCAN 2647 9 20

HR Rep No 99-908 (1986) reprinted in 1986 USCCAN 6344 12

Hannah Meisel Abbott Cant Escape Failure-To-Warn Claims in Depakote Suit (Oct 20 2017) httpsllwwwlaw360comlarticles976888abbott-can-tshyescape-failure-to-warn-claims-in-depakote-suit 9

Henry G Grabowski et aI Updated Trends in US Brand-Name and Generic Drug Competition 191 Med Econ 836 (2016) 16 21

Johnson amp Johnson 2012 Annual Report httpfilesshareholder comldownloadsJN J12233480279xOx644 7 601 85FDOCFF-2305-4A02-8294-2E47DOF31850JNJ2012annualreportpdf 21

Jon Duke et al A Quantitative Analysis ofAdverse Events and Overwarning in Drug Labeling 171 Archives of Intemal Med 944 (2011) httpjamanetworkcomljoumalsj amaintemalmedicinefullarticle487051 16

v

Joseph Sanders From Science to Evidence The Testimony on Causation in the Bendectin Cases 46 Stan L Rev 1 (1993) 10

Joseph A DiMasi et al Innovation in the Pharmaceutical Industry New Estimates ofRampD Costs 47 J Health Econ 20 (2016) 5

Lars Noah Adding Insult to Injury Payingfor Harms Caused by a Competitors Copycat Product 45 Tort Trial amp Ins Prac LJ 673 (2010) 13

Lars Noah Triage in the Nations Medicine Cabinet The Puzzling Scarcity of Vaccines and Other Drugs 54 SC L Rev 371 (2002) 10

Levaquin FDA Drug Approval Package httpswwwaccessdatafdagov drugsatfda_docsnda98020634s04cfin 22

Linda A Willett Litigation as an Alternative to Regulation Problems Created by Follow-on Lawsuits with Multiple Outcomes 18 Geo J Legal Ethics 1477 (2005) 11

NJ Courts Multicounty Litigation https wwwjudiciarystatenjusattomeysmcllindexhtml (last visited Dec 11 2017) 7

Natl Research Council Comm on Contraceptive Dev amp Inst of Med Div of Intl Health Developing New Contraceptives Obstacles and Opportunities (Luidi Mastroianni et al eds 1990) httpswwwnapeduJreadJI450 11

News Release Food amp Drug Admin FDA Approves Diclegisfor Pregnant Women Experiencing Nausea and Vomiting (Apr 82013) 10

Nina Nuangchamnong amp Jennifer Niebyl Doxylamine Succinate-Pyridoxine Hydrochloride (Diclegis) for the Management ofNausea and Vomiting in Pregnancy An Overview 6 Intl J Womens Health 401 (2014) httpswwwncbLnlmnihgovpmcarticleslPMC3990370pdflijwh-6-401pdf 10

PhRMA amp Battelle Biopharmaceutical Industry-Sponsored Clinical Trials Impact on State Economies (2015) httpphrma-docsphrmaorgsites defaultlfilespdflbiopharmaceutical-industry-sponsored-clinical-trials-impactshyon-state-economiespdf 5

PhRMA 2016 Profile Biopharmaceutical Research Industry (2016) httpphrmaorgsitesdefaultlfilespdfbiopharmaceutical-industry-profilepdf 5

PhRMA Annual Membership Survey (2016) httpphpna-docsphrmaorgsites defaultlfilespdflannual-membership-survey-resultspdf 6

VI

PhRMA Biopharmaceuticals in Perspective Spring 2017 (2017) httpphrma-docs phrmaorglfiles dmfilelBiopharmaceuticals-in-Perspectiveshy2017pdf 1 5

PhRMA Biopharmaceutical Research amp Development The Process Behind New Medicines (2015) httpwwwphrmaorglsitesdefaultlfilespdf rd_brochure_022307pdf 4 5

PhRMA Modernizing Drug Discovery Development and Approval (2016) httpphrma-docsphrmaorglsitesdefaultlfilespdfproactive-policy-drugshydiscoverypdf 4

PhRMA Prescription Medicines International Costs in Context (2017) httpphrmadocsphrmaorgidownloadcfinobjectid=IEB3F3BO-02B7shylIE784190050569A4B6 14 18

Richard A Epstein Legal Liability for Medical Innovation 8 Cardozo L Rev 1139 (1987) 10

Robert Brent Medical Social and Legal Implications ofTreating Nausea and Vomiting ofPregnancy 186 Am 1 Obstetrics amp Gynecology S262 (2002) 10

S Rep No1 04-69 (1995) 11

Samantha Koopman Hidden Risks ofTaking Generic Drugs over Brand Name The Impact ofDrug Labeling Regulations on Injured Consumers and the Pharmaceutical Industry 34 1 Natl Assn Admin L Judiciary 112 (2014) 13

Stephen D Sugarman Cases in Vaccine Court - Legal Battles Over Vaccines and Autism 357 N Eng J Med 1275 (2007) 12

US Dept of Health and Human Servs Expanding the Use ofGeneric Drugs (2010) https aspehhsgovsystemifilespdpoundl76151ibpdf 20

US Food amp Drug Admin Guidance for Industry Good Pharmacovigilance Practices and Pharmacoepidemiologic Assessment (2005) httpswwwfdagovdownloadsdrugs guidancecomplianceregulatoryinformation guidancesucm071696 pdf 17

US Food amp Drug Admin Reports Received and Reports Entered into FAERS by Year (last updated Nov 2015) httpwwwfdagovDrugs GuidanceComplianceRegulatoryInformationSurveillance AdverseDrugEffectsucm070434htm 5

US Judicial Panel on Multidistrict Litig MDL Statistics Report-Distribution of Pending MDL Dockets by District (2017) httpwwwjpmluscourtsgovsitesjpmlfiles Pending_MDL_Dockets_By _District-November-15-2017 pdf 7 9

VII

Victor E Schwartz et al Warning Shifting Liability to Manufacturers ofBrandshyName Medicines When the Harm Was Allegedly Caused by Generic Drugs Has Severe Side Effects 81 Fordham L Rev 1835 (2013) 13 18

W Kip Viscusi et aI A Statistical Profile ofPharmaceutical Industry Liability 1976-198924 Seton Hall L Rev 1418 (1994) 10

W Va R App Proc 30(a) 1

Xarelto Prescribing Information (2017) httpwwwjanssenlabelscomlpackageshyinsertiproduct-monographprescribing-informationIXARELTO-pipd 8 9

viii

STATEMENT OF AMICUS CURIAE

The Pharmaceutical Research and Manufacturers of America (PhRMA) is a voluntary

nonprofit association comprised of the leading biopharmaceutical research and technology

companies1 PhRMA members are devoted to inventing medicines that allow patients to live

longer healthier and more productive lives PhRMA members alone have invested more than

half a trillion dollars in RampD since 2000 and in 2016 PhRMA members invested $655 billion

in discovering and developing new medicines PhRMA Biopharmaceuticals in Perspective

Spring 2017 at 30 (2017) httpphrma-docsphrmaorgifilesdmfilelBiopharmaceuticals-inshy

Perspective-2017pdf PhRMA frequently files amicus briefs on issues that affect its members

and the issue presented in this case is especially crucial to them

Nearly every brand-name medicine eventually faces generic competition Indeed ninety

percent of 2016 prescriptions were filled with generics Id at 49 By expanding the already

substantial litigation risks that innovator companies face to encompass the risks created by their

generic competitors products Plaintiffs outlier innovator liability theory would unfairly subject

innovator companies to unpredictable and potentially immense liability stifling innovation and

undermining public health

1 No partys counsel authored this brief in whole or in part No party or partys counsel made a monetary contribution intended to fund the preparation or submission of this brief and no person other than amicus curiae its members or its counsel made such a monetary contribution Although Johnson amp Johnson is a member of PhRMA it has not contributed fmancially to the preparation of this brief All parties have consented to the filing of this brief

2 Pursuant to W Va R App Proc 3 O(a) this amicus brief is permitted because all parties have consented to its filing

1

SUMMARY OF ARGUMENT

Unable to recover from the manufacturer of the product that they claim injured Ms

McNair Plaintiffs instead seek to hold another company liable for her injury on the belief that

for every wrong there is supposed to be a remedy somewhere Opening Br of Plaintiffsshy

Appellants at 28 Specifically Plaintiffs ask the Court to hold that Janssen Pharmaceuticals

Johnson amp Johnson and Ortho-McNeil Pharmaceutical Inc (Janssen) can be liable for their

generic competitors version of their innovative medicine Levaquinreg Although Plaintiffs

proclaim that the duty at issue in this case is neither novel nor exotic id at 39 in truth the

duty that Plaintiffs ask this Court to devise is contrary to elemental tort law principles and has

been rejected by nearly every court to consider it

Moreover Plaintiffs novel innovator liability theory is inconsistent with West Virginia

social policy in three respects

First by subjecting the companies engaged in the research and development of new

medicines to liability for products they did not manufacture or profit from Plaintiffs theory

would meaningfully disrupt the incentive structure that encourages brand-name companies to

innovate resulting in fewer new medicines especially for the most underserved patient

populations

Second adopting innovator liability would create a remarkable risk profile for innovator

companies that would encourage them to either prophylactically warn of every conceivable risk

or withdraw their branded products from the market upon generic entry The former could erode

the meaningfulness of scientifically-justified warnings and deter beneficial uses of medications

And because innovator companies have more significant regulatory responsibilities greater

2

access to clinical and post-marketing data and more experience in monitoringthe safety of their

medicines the latter would substantially impair public health

Third turning innovator companies into de facto insurers for injuries caused by their

generic competitors products is at odds with basic fairness This unfairness is especially

pronounced in light of the Hatch-Waxman regime which incentivizes innovators to shoulder the

enormous costs and risks of developing pioneering new treatments but then allows generic

competitors to capture almost all oftheir market share when the exclusivity period ends

Respectfully this Court should reject the notion of innovator liability and answer the

Fourth Circuits certified question in the negative

ARGUMENT

It is well established that public policy and social considerations are important

factors in detennining whether to fashion a new tort duty Crum v Equity Inns Inc 224 W

Va 246258685 SE2d 219231 (2009) Among other things West Virginia courts evaluate

the likelihood of injury the magnitude of the burden of guarding against it and the

consequences of placing that burden on the defendant Stevens v MTR Gaming Group Inc

237 W Va 531 535 788 SE2d 59 63 (2016) (quoting Robertson v LeMaster 171 W Va

607 612 301 SE2d 563 568 (1983)) Because shifting liability to innovator companies for

injuries allegedly sustained by individuals who ingest generic manufacturers products will chill

innovation impair the usefulness of pharmaceutical warnings and unfairly expose innovators to

limitless liability Plaintiffs liability theory should be rejected

3

I Holding Innovators Liable for Generic Competitors Products Will Harm Innovation

A Innovator Companies Invest Immense Resources in Researching and Developing New Medicines

Bringing a new medicine to market is an onerous and lengthy process Mutual Pharm

Co Inc v Bartlett 133 S Ct 2466 2471 (2013) Before studying a new medicine in humans

a pharmaceutical company must conduct a series of laboratory and animal studies to test how the

medicine works and assess its safety 21 CFR sect 31223(a)(8) If the results are promising the

company submits an Investigational New Drug application (IND) to the Food and Drug

Administration (FDA) outlining the preclinical study results and offering a plan for clinical

trials in humans 21 USC sect 355(i)(2) 21 CFR sect 31220(a)-b) Upon FDA approval of the

IND the company conducts three phases of clinical trials each of which must be completed

successfully before the potential new medicine may undergo FDA review and approval

21 CFR sect 31221 On average the clinical trial phase takes six to seven years to complete

PhRMA Modernizing Drug Discovery Development and Approval 1 (2016) httpphrmashy

docsphrmaorglsitesdefaultlfilespdflproactive-policy-drug-discoverypdf

If clinical trial results show that the medicines benefits outweigh its risks the sponsoring

company can seek the FDAs approval to market the medicine by submitting a New Drug

Application (NDA) 21 USC sect 355(b) The NDA must contain among other things the

results of the clinical and pre-clinical testing proposals for manufacturing and proposed labeling

for the new medicine id sect 355(b)(1) and it often exceeds 100000 pages in length PhRMA

Biopharmaceutical Research amp Development The Process Behind New Medicines 14 (2015)

httpwwwphrmaorgisitesdefaultifilespdflrd_brochure_0223 07 pdf

Innovator companies undertake this process at tremendous expense On average

developing and obtaining FDA approval of a new medicine takes ten to fifteen years and costs

4

$26 billion PhRMA Biopharmaceuticals in Perspective Spring 2017 at 29 (2017)

httpphrma-docsphrmaorgfilesdmfileBiopharmaceuticals-in-Perspective-2017pdf

(hereinafter Biopharmaceuticals in Perspective)3 Pharmaceutical companies spend even more

money developing compounds that are never approved just one out of every 5000 to 10000

compounds under development and just one out of every eight medicines entering clinical trials

obtains FDA approval PhRMA 2016 Profile Biopharmaceutical Research Industry at ii

(2016) httpphrmaorgsitesdefaultlfilespdfbiopharmaceutical-industry-profllepdf4

PIlRMAs member companies invest approximately one quarter of their total annual domestic

sales on research and development - an estimated $656 billion in 2016 PhRMA

Biopharmceuticals in Perspective supra at 35

These costs and risks do not end when the medicine makes it through the rigorous

approval process Once a new medicine is brought to market the innovator company is required

to monitor review and report to the FDA all adverse events received from any source

including information derived from commercial marketing experience postmarketing clinical

investigations postmarketing epidemiologicalsurveillance studies reports inmiddot the middotscientific

literature and unpublished scientific papers 21 CFR sect 31480(b)5 Innovator companies

must also submit to the FDA annual reports summarizing all information received about their

3 See also Joseph A DiMasi et aI Innovation in the Pharmaceutical Industry New Estimates of RampD Costs 47 J Health Econ 20 (2016)

4 See also PhRMA Biopharmaceutical Research amp Development supra at 10 PhRMA amp Battelle Biopharmaceutical Industry-Sponsored Clinical Trials Impact on State Economies 12 (2015) httpphnna-docsphrmaorglsitesdefault1filespdflbiopharmaceutical-industry-sponsored-clinical-trialsshyimpact-on-state-economiespdf (reporting that in 2013 pharmaceutical companies sponsored 6199 clinical trials involving 11 million participants)

5 See also us Food amp Drug Admin Reports Received and Reports Entered into FAERS by Year (last updated Nov 2015) httpwwwfdagovlDrugsGuidanceComplianceRegulatoryInfonnationi SurveillanceAdverseDrugEffectsucm070434htm (stating that FDA received over 12 million adverse event reports from pharmaceutical companies in 2014)

5

medicines including adverse drug events and clinical trial results 21 CFR sect 31481 (b)(2)

Apart from adverse event reporting the FDA frequently requires innovator companies to

undertake additional clinical studies after approval See 21 USC sect 355(0)(3) According to

one estimate more than three quarters of all new medicine approvals are accompanied by a

commitment by the sponsor to conduct one or more post-marketing or Phase IV studies

Charles Steenburg The Food and Drug Administrations Use ofPostmarketing (Phase IV) Study

Requirements Exception to the Rule 61 Food amp Drug LJ 295 300 (2006) PhRMAs

member companies spend more than $88 billion annually conducting these Phase IV studies

PhRMA Annual Membership Survey 6 tb14 (2016) httpphrma shy

docs phrmaorgsites defaultlfilespdfannual-membership-survey-results pdf

B Plaintiffs Proposed Duty Would Expose Innovator Companies to Limitless Liability

Plaintiffs argument that liability should exist against an innovator company simply

because the [generic] manufacturer is out of reach Opening Br of Plaintiffs-Appellants at 19 is

one without a limiting principle This novel innovator liability theory would expose innovator

companies to virtually unlimited liability for injuries allegedly caused by a generic competitors

version of their medicine The scope of litigation against pharmaceutical companies is already

immense and rapidly expanding From June 2016 through June 2017 18610 product liability

lawsuits were filed against pharmaceutical companies in federal courts alone representing

approximately half of all federal products liability filings See Admin Office of US Courts

Table C-2A us District Courts--Civil Cases Commenced by Nature ofSuit During 12-Month

Periods Ending June 30 2016 and 2017 httpwwwuscourtsgovsitesdefaultlfilesdata_tables

stfLc2_123 120 16pdf In fact the number of federal civil products liability actions involving

pharmaceutical companies has tripled in the past five years See Admin Office of US Courts

6

Table C-2A Us District Courts--Civil Cases Commenced by Nature ofSuit During 12-Month

Periods Ending September 30 2011 and 2012 (6791 lawsuits in 2012) Moreover twentyshy

eight out of seventy-one pending product liability multidistrict litigation proceedings involve

pharmaceuticals US Judicial Panel on Multidistrict Litig MDL Statistics Report-

Distribution of Pending MDL Dockets by District (2017)

httpwwwjpmluscourtsgovsitesjpmlfiles

PendinKMDL_Dockets_By_District-November-15-2017pdf By comparison between 1960

and 1999 there were only five MDL product liability actions involving FDA-approved

medicines See Deborah R Hensler Has the Fat Lady Sung The Future ofMass Toxic Torts

26 Rev Litig 883 897-902 tbll (2007)6

Lawsuits seeking to impose innovator liability on innovator pharmaceutical companies

already number in the thousands See Neely v Wolters Kluwer Health Inc 311 FRD 427 429

(ED Ky 2015) (noting that thousands of cases have been filed against various genenc and

brand-name companies responsible for manufacturing Reglanregmetoclopramide) Courts have

ruled on this issue in lawsuits involving treatments for allergic reactions asthma bacterial

infections cardiac arrhythmias depression heartburn insomnia menopausal symptoms

migraine headaches obesity panic disorder and schizophrenia to nam~ just a few 7 Cases

6 Similar increases have occurred in state courts For example of the nineteen consolidated multi-county litigation proceedings pending in New Jersey nine involve challenges to FDA-approved labeling for prescription medications NJ Courts Multicounty Litigation httpsllwwwjudiciarystatenjus attomeysmclindexhtml (last visited Dec 112017)

7 See eg Foster v Am Home Prods Corp 29 F3d 165 168-71 (4th Cir 1994) (phenergan (promethazine hydrochlorideraquo Coleson v Janssen Pharm Inc No 115-CV-04792-RWS 2017 WL 1745508 at 3-4 (SDNY May 32017) (Risperdal (risperdoneraquo Tsavaris v Pjizer Inc 154 F Supp 3d 1327 1339-41 (~D Fla 2016) (Activella (estradiolnorethindrone acetateraquo Neeley v Wolters Kluwer Health Inc 311 FRD 427 432-34 (ED Ky 2015) (Reglan (metoc1opramideraquo Anselmo v Sanoji-Aventis Inc USA No 10-CV-77 2014 WL 8849464 at 1-4 (Kan Dist Ct Oct 13 2014)

7

seeking to hold innovator companies liable under a theory of innovator liability persist even

though the concept has been rejected by an overwhelming majority of courts that have

considered it See In re ZoJran (Ondansetron) Products Liability Litigation MDL No1 15-mdshy

2657-FDS 2017 WL 3448548 at 15 (D Mass Aug 4 2017) Should Plaintiffs theory of

innovator liability gain acceptance the number oflawsuits would multiply even further

Plaintiffs argument that innovator companies can avoid liability simply by updat[ing]

their labels to warn of new hazards that emerge after their drugs go generic Opening Br of

Plaintiffs-Appellants at 30 ignores the reality of modem pharmaceutical products liability

litigation Interested plaintiffs lawyers have every incentive to craft arguments to undermine a

medicines labeling regardless of the steps an innovator has taken and the notion that a plaintiff

will be satisfied with the labeling efforts of an innovator - whether before or after generic entry

- is fanciful See Br for the United States as Amicus Curiae Supporting Petr at 25 Wyeth v

Levine 555 US 555 (2009) (No 06-1249) ([The FDA] could not reasonably be expected to

expressly reject every possible variant of approved labeling as part of its decisional process

Indeed it would underestimate the post hoc imagination of lawyers to think such an exhaustion

of potential variants by the manufacturer or the agency is even possible)

Indeed over the last decade lawyers have repeatedly mounted widespread attacks against

even the strongest of medicine warnings For example nearly 20000 plaintiffs have filed claims

in federal court alleging that the label for the anticoagulant medicine Xarelto fails to adequately

(Ambien (zolpidem)) Barnhill v Teva Pharm USA Inc No CIV A 06-0282-CB-M 2007 WL 5787186 at 2 (SD Ala Apr 24 2007) (Keflex (cephalexin)) Goldych v Eli Lilly amp Co No 504-CVshy1477(GLSGJD) 2006 WL 2038436 at 3-8 (NDNY July 192006) (Prozac (fluoxetine)) Colacicco v Apotex Inc 432 F Supp 2d 514 539-43 (ED Pa 2006) (Paxil (paroxetine)) DaCosta v Novartis AG No CV 01-800-BR 2002 WL 31957424 at 8-9 (D Or Mar 12002) (Migranal (ergot alkaloid)) Stanley v Wyeth Inc 991 So2d 3133-35 (La Ct App 2008) (Cordarone (amiodarone)) Flynn v Am Home Prods Corp 627 NW2d 342 350-52 (Minn Ct App 2001) (Pondimin (fenfluramine))

8

warn of the risk of severe bleeding notwithstanding the labels direct and repeated warnings that

Xarelto can cause serious and fatal bleeding8 The manufacturer of Depakote a medicine used

to treat epilepsy and bipolar disorder currently faces hundreds of claims for failing to warn about

the risk of birth defects despite a black box warning - the strongest warning available - that

the medicine can cause major congenital malformations9 And in the Avandia MDL Plaintiffs

argue that the diabetes medicine failed to adequately warn of the risk of congestive heart failure

despite a warning that Avandia can cause or exacerbate congestive heart failure in some

patients See In re Avandia Mktg Sales Practices amp Prod Dab Litig 817 F Supp 2d 535

(BD Pa 2011)

C Litigation Risk Disincentivizes Innovator Companies from Investing in Research and Development of New Medicines

When a company is exposed to liability that bears no relationship to its products sales r

revenue it is both prevented from recapturing its research and development investment in that

medicine and discouraged from making future investments Such a result directly undermines

the purposes of the Hatch-Waxman Amendments which careful[ly] balance the interest in

lower-cost medicines against the need to encourag[e] research and innovation 57 Fed Reg

1795017951 (Apr 281992) see also HR Rep No 98-857 pt 1 at 15 reprinted in 1984

USCCAN 2647 (The purpose of Title II of the bill is to create a new incentive for increased

8 See US Judicial Panel on Multidistrict Litig MDL Statistics Report-Distribution ofPending MDL Dockets by District (2017) httpwwwjpmluscourtsgovsitesjpmlfilesPending_ MDLJ)ockets_By_District-November-15-2017pdf Xarelto Prescribing Infonnation (2017) http wwwjanssenlabelscomlpackage-insertlproduct-monographprescribing-infonnationIXARELTO-pipdf

9 See Hannah Meisel Abbott Cant Escape Failure-To-Warn Claims in Depakote Suit Law360 (Oct 20 2017) httpswwwlaw360comlarticles976888abbott-can-t-escape-failure-to-warn daims-inshydepakote-suit Depakote Prescribing Infonnation (last visited Dec 13 2017) httpwwwrxabbviecoml pdfldepakotepdf

9

expenditures for research and development of certain products which are subject to premarket

government approval)

Given the enormous costs associated with researching and developing a hew medicine

the added potential cost of litigation bears heavily on a companys decision to invest in

innovation W Kip Viscusi et al A Statistical Profile of Pharmaceutical Industry Liability

1976-198924 Seton Hall L Rev 1418 1419 (1994) ([T]he net effect of the surge in liability

costs ha[s] been to discourage innovation in the pharmaceutical industry) Richard A Epstein

Legal Liability for Medical Innovation 8 Cardozo L Rev 1139 1153 (1987) (If in the

aggregate the net gains are wiped out by the liability costs then the product will no longer be

made)

The anti-nausea drug Bendectin the only FDA-approved prescription medicine for the

treatment of severe morning sickness in pregnant women illustrates why After Bendectin was

alleged to cause of birth defects in thousands of lawsuits its manufacturer withdrew the

medicine from the market in 1983 only later to be vindicated by scientific studies showing that

Bendectin posed no risks to either mothers or fetuses See Joseph Sanders From Science to

Evidence The Testimony on Causation in the Bendectin Cases 46 Stan L Rev 1 7 (1993)10

In 2013 after nearly thirty years off the market Bendectin returned under a new name See

News Release Food amp Drug Admin FDA Approves Diclegis for Pregnant Women

Experiencing Nausea and Vomiting (Apr 82013) In the interim however hospital admissions

for excessive vomiting during pregnancy had doubled costing the US economy $17 billion

10 See also Robert Brent Medical Social and Legal Implications 0 Treating Nausea and Vomiting oPregnancy 186 Am J Obstetrics amp Gynecology S262 S262-63 (2002) David E Bernstein The Breast Implant Fiasco 87 Cal L Rev 457460 (1999) Lars Noah Triage in the Nations Medicine Cabinet The Puzzling Scarcity oVaccines and Other Drugs 54 SC L Rev 371 392 (2002)

10

annually in time lost from work caregIver time and hospital expenses See Nina

Nuangchamnong amp Jennifer Niebyl Doxylamine Succinate-Pyridoxine Hydrochloride

(Diclegis) for the Management ofNausea and Vomiting in Pregnancy An Overview 6 Intl J

Womens Health 401 401-02 (2014) available at httpsllwwwncbLnlmnihgovpmc

articlesIPMC3990370pdflijwh-6-401pdf

Similarly by 1990 eight of the nine major US pharmaceutical companies that had been

involved in researching and developing new contraceptives had abandoned their efforts Natl

Research Council Comm on Contraceptive Dev amp Inst of Med Div of fun Health

Developing New Contraceptives Obstacles and Opportunities 59 (Luidi Mastroianni et al eds

1990) httpsllwwwnapedulreadl1450 According to the National Research Council and the

Institute of Medicine recent products liability litigation and the impact of that litigation on the

cost and availability of liability insurance have contributed significantly to the climate of

disincentives for the development of contraceptive products Id at 141 In 1989 the inventor

of the birth control pill Carl Djerassi recommended changes to the product liability regime

commenting that the United States is the only country other than Iran in which the birth control

clock has been set backward during the past decade Carl Djerassi The Future ofBirth Control

Wash Post (Sept 10 1989) httpsllwwwwashingtonpostcomarchiveopinionsI1989109110theshy

future-of-birth-controll7 e25 f2cc-ae3 5-4a 79-8daf-031 db02f81 belutm _ term=dd4d8bbcf626 The

executive director of the Society for the Advancement of Womens Health Research similarly

testified before Congress that the current liability climate is preventing women from receivrng

the full benefits that science and medicine can provide S Rep No 104-69 at 7 (1995)

The countrys experience with vaccines is also illustrative Lawsuits in the late 1970s

alleging that the whooping-cough component of the DPT vaccine caused permanent brain

11

damage led nearly all manufacturers to cease production resulting in nationwide shortages See

Linda A Willett Litigation as an Alternative to Regulation Problems Created by Follow-on

Lawsuits with Multiple Outcomes 18 Geo J Legal Ethics 1477 1488 n60 (2005) Although the

allegation that the DPT vaccine causes neurological harm was subsequently discredited

Stephen D Sugarman Cases in Vaccine Court - Legal Battles Over Vaccines and Autism 357

N Eng 1 Med 1275 1276 (2007) by 1986 there was only one American manufacturer of the

polio vaccine one manufacturer of the measles mumps and rubella vaccine and two

manufacturers of the DPT vaccine HR Rep No 99-908 at 7 (1986) reprinted in 1986

USCCAN 6344 Congress realizing the inadequacy - from both the perspective of

vaccine-injured persons as well as vaccine manufacturers - of the current approach to

compensating those who have been damaged by a vaccine HR Rep No 99-908 at 7 passed

the National Childhood Vaccine Injury Act of 1986 Pub L No 99-660 100 Stat 3743 which

removed many personal-injury cases involving vaccines from the state-law tort system

Congress hoped that once manufacturers ha[ d] a better sense of their potential litigation

obligations a more stable childhood vaccine market w[ould] evolve HR Rep No 99-908 at

7 And in fact the Act appears to have succeeded in stabilizing prices and stemming further

exit from the market for listed vaccines Noah supra at 393

In short the past 40 years have repeatedly demonstrated that dramatic Illcreases III

potential liability - particularly unpredictable long-enduring liability - can drive

biopharmaceutical companies to abandon the research and production of medicines especially

those used to treat populations like children and pregnant women where the liability risks are

especially significant Yet the unpredictable liability that would follow from Plaintiffs

innovator liability theory is worse by an order of magnitude each of the examples discussed

12

above took place in a legal landscape where companies were potentially liable for injuries to

plaintiffs who used medicines that they themselves manufactured Under Plaintiffs theory an

innovator company could be subjected to decades of liability for a product manufactured by its

competitor years after the innovative companys revenue trails off

The impact of this unpredictable and potentially limitless liability on innovation and

correspondingly on public health would be profound I I The biopharmaceutical industry

provides a majority of funding to discover develop and manufacture transformative medicines

PhRMA Biopharmaceuticals in Perspective supra at 30 Its investments have produced dozens

of major scientific breakthroughs For example over the past two decades innovative diagnostic

techniques and treatments have reduced the death rate from cancer by twenty-five percent Id at

11 Innovations have reduced the death rate from heart disease by thirty-five percent since 2000

Id at 14 And innovative treatments for HIVAIDS have contributed to a nearly eighty-seven

11 Accord Huck v Wyeth Inc 850 NW2d 353 377 (Iowa 2014) (plurality opinion) ([E]xtending liability to brand manufacturers for harm caused by generic competitors would discourage investments necessary to develop new beneficial drugs by increasing the downside risks) Rossi v Hoffmann-LaRoche No ATL-L690-05 2007 WL 7632318 (NJ Sup Ct Jan 3 2007) (holding that innovator liability could only act to stigmatize the ability of companies to develop new and innovative drugs) Sloan v Wyeth No MRS-L-1183-04 2004 WL 5767103 (NJ Sup Ct Oct 132004) (Brand name manufacturers would be less likely to develop new products if liability were imposed upon these companies for injuries wrought by products of generic manufacturers) In re Darvocet Darvon amp Propoxyphene Prod Liab Litig 756 F3d 917 947 (6th Cir 2014) ([T]here are grave health policy consequences associated with recognizing brand manufacturer liability in these situations including higher priced brand name drugs and fewer innovative drugs) Anna B Laakmann The Hatch-Waxman Acts Side Effects Precautions for Biosimilars 47 Loyola LA L Rev 917 926 (2014) (innovator liability could further dampen the incentives to create new drugs and thus reduce overall patient welfare) Lars Noah Adding Insult to Injury Paying for Harms Caused by a Competitors Copycat Product 45 Tort Trial amp Ins Prac LJ 673 688 n69 (2010) (innovator liability threatens to chill therapeutic product innovation) Victor E Schwartz et aI Warning Shifting Liability to Manufacturers of Brand-Name Medicines When the Harm Was Allegedly Caused by Generic Drugs Has Severe Side Effects 81 Fordham L Rev 1835 1871 (2013) (innovator liability makes it riskier for brand-name manufacturers to dedicate resources to researching and developing potentially life-saving or lifeshyimproving medicines) Samantha Koopman Hidden Risks of Taking Generic Drugs over Brand Name The Impact ofDrug Labeling Regulations on Injured Consumers and the Pharmaceutical Industry 34 J Natl Assn Admin L judiciary 112 140 (2014) (Overall innovator liability likely results in less new drug development)

13

percent decline in death rates since the mid-1990s preventing over 862000 premature deaths

Id at 9 Without ongoing investments from pharmaceutical companies in research and

development none of these advances would have been possible Advances in medicine not only

save lives but also benefit the economy According to one estimate the development of a new

medicine that could delay the onset ofAlzheimers disease by just five years would save the US

economy over $376 billion PhRMA Prescription Medicines International Costs in Context 18

(2017) http

phrmadocsphrmaorgidownloadcfmobjectid=1EB3F3BO-02B7-11E784190050569A4B6C

Plaintiffs insist that any argument about the effect of tort liability on innovation defies

common sense because of the financial windfall that comes with a monopoly prior to the

market entrance of generic competitors Opening Br of Plaintiffs-Appellants at 30 Plaintiffs

assertion is divorced from todays reality in which multiple innovator companies are often

simultaneously competing to research develop and secure FDA approval of first-in-class

treatments On average a fust-in-class medicine now faces competition within just 23 years of

product launch down from 102 years several decades ago PhRMA Biopharmaceuticals in

Perspective supra at 67 Correspondingly the average lifetime revenue for a new medicine has

declined by over forty percent since 2000 even as the costs of researching and developing new

medicines have more than doubled over a similar timeframe See id at 36 66 Thus while

Congress granted innovator companies an extended period of market exclusivity to enable them

to begin earning back their up-front research and development costs four out of every five

medicines today never produce any profit Id at 50 Innovator liability would shrink the number

ofprofitable medicines even further

14

II Holding Innovator Companies Liable for Injuries Allegedly Sustained from Their Generic Competitors Products Could Impair the Usefulness of Pharmaceutical Labeling and Impair Public Health

A Innovator Liability Could Encourage Companies to Warn of Speculative and Unsubstantiated Risks

The risk of being held liable for generic competitors medicines will affect how

companies seek to protect themselves Because liability in pharmaceutical cases usUally hinges

on whether a company adequately warned of potential risks companies looking ahead to the

generic phase of a medicines lifespan may pile on warnings for every conceivable adverse

reaction no matter how remote the odds to protect themselves from the 2020 hindsight of

juries Comment Resolving Drug Manufacturer Liability for Generic Drug Warning Label

Defects 47 St Marys LJ 219 238 (2015) But the inclusion of warnings that are not

supported by the science can lead to unintended and adverse consequences for the patient In re

ZoloJt Litig No 14-C-7000 2017 WL 665299 (W Va Cir Ct 2017)

First consumers and physicians may disregard lengthy labeling that is filled with

speculative warnings thereby overlooking important scientifically founded safety information

HR Rep No 86-1861 2d Sess p 2837 (1960) reprinted in 1960 USCCAN 2833

(speculative warnings invit[e] indifference to cautionary statements on packages of substances

presenting a real hazard of substantial injury or illness) 73 Fed Reg 49603 49605--06 (Aug

22 2008) (unfounded statements in FDA labeling may cause more important warnings to be

overshadow[ed])12 Warnings on pharmaceutical labeling are already extensive The average

12 See also Robinson v McNeil Consumer Healthcare 615 F3d 861 869 (7th Cir 2010) (The resulting information overload [from describing every remote risk] would make label warnings worthless to consumers) Thomas v Hoffman-LaRoche Inc 949 F2d 806 816 n40 (5th Cir 1992) (explaining that if warnings were cluttered with every possible risk then physicians [would] begin to ignore or discount the warnings)

15

package insert today lists 49 potential adverse events and one out of every ten labels contains

over 500 warnings Jon Duke et aI A Quantitative Analysis of Adverse Events and

Overwarning in Drug Labeling 171 Archives of Internal Med 944 945 (2011)

httpjamanetworkcomjoumals

jamainternalmedicinefullarticle487051

Second warnings that are not grounded in science discourage the beneficial use of

medicines See 73 Fed Reg at 49605-06Y All medicines have risks and all prescribing

decisions are based on a balancing of those risks against the medicines potential benefits

Overstating risk thus keeps physicians from making optimal prescribing decisions

The FDA has long been aware of the dangers that overwarning presents Since 1979 the

agency has stated that it would be inappropriate to require statements in drug labeling that do

not contribute to the safe and effective use of the drug but instead are intended solely to

influence civil litigation 44 Fed Reg 37434 37435 (June 26 1979)14 Because innovator

liability could produce the very result that the FDA considers in its expert scientific judgment to

be inappropriate the concept should be rejected

B Innovator Liability Could Negatively Affect Safety Monitoring

Plaintiffs innovator-liability theory places innovator companies in an untenable position

although they capture a just tiny fraction of sales upon generic entry they would become the sole

guarantors for the entire market See Henry G Grabowski et al Updated Trends in US Brandshy

13 See also Mason v SmithKline Beecham Corp 596 F3d 387 391-92 (7th Cir 2010) ([O]verwarning can deter potentially beneficial uses of the drug by making it- seem riskier than warranted )

14 See also 150 Congo Rec S8657-01 (dailyed July 22 2004) (statement of former FDA Chief Counsels) (If every state judge and jury could fashion their own labeling requirements for drugs and medical devices FDAs ability to advance the public health by allocating scarce space in product labeling to the most important information would be seriously eroded)

16

Name and Generic Drug Competition 19 J Med Econ 836 (2016) (reporting that for brand

medicines facing generic entry in 2013-2014 generics captured an average of 93 percent of the

market [by volume] within the fIrst year) Faced with this massive disproportionate liability an

innovator company may reasonably opt to cease selling the branded drug withdraw from the

market and relinquish its NDA See 21 CFR sect 314150 (requiring the FDA to withdraw

approval of an NDA if the applicant requests its withdrawal because the drug subject to the

application is no longer being marketed) By relinquishing their NDA and leaving the

market companies could stem the risk of unending liability because they would no longer have

an ability to effect a labeling change IS

The monitoring and evaluation of a medicines risks in the post-market environment is

crucial to public health16 Despite the intensive scientifIc testing and analysis required before the

FDA authorizes a medicine for sale these pre-market studies are by their nature limited to a

fInite pool of patients As a result some risks are not discovered until after the medicine is on

the market and used in sufficiently large numbers But if innovators were driven from the

15 See PLIVA Inc v Mensing 564 US 604 (2011) (holding that failure-to-wam claims are preempted when manufacturers cannot independently do under federal law what state law requires of [them]) see also Lyman v Pfizer Inc No 209-CV-262 2012 WL 2970627 at 16 (D Vt July 20 2012) (recognizing that upon the sale of the medicine at issue its former manufacturer lost any ability to change the label) In re Darvocet Darvon and Propoxyphene Products Liability Litigation Master File No 211-md-2226 2012 WL 767595 7 (ED Ky Mar 7 2012) ([A]ny state failure-to-warn claims would be preempted by federal law because as the plaintiffs concede Lilly had no power to change the labels for generic drugs or for brand-name drugs that were made and sold by others ) The only way for a company to change a medicines labeling is by submitting a prior approval supplement or a changes being effected supplement to its NDA 21 CFR sect 31470(b)(2)(v) (c)(6) Since only the NDA holder may submit a supplement to an application a former manufacturer has no control over a products labeling after it has left the market Id sect 31471(a)

16 See US Food amp Drug Admin Guidancejor Industry Good Pharmacovigilance Practices and Pharmacoepidemiologic Assessment 3 (2005) httpsllwwwfdagovdownloadsdrugs guidancecomplianceregulatoryinformationiguidancesucm071696pdf ([p]ostmarketing safety data collection and risk assessment based on observational data are critical for evaluating and characterizing a products risk profile and for making informed decisions on risk minimization)

17

market to avoid the kind of perpetual liability that innovator liability would entail safety

surveillance and consequently the public health would suffer

First innovators have unparalleled experience and expertise regarding their medicine due

to their extensive efforts studying and bringing the medicine to market This expertise includes a

deep understanding of the data from the many clinical trials that allow the company to better

understand post-marketing reports and to identify trends or new subtle safety signals that might

not otherwise be apparent Indeed innovators have on average some 125 additional years

experience monitoring a medicines safety in the marketplace See PhRMA Prescription

Medicines International Costs in Context 39 (2017) httpwwwphrmaorgreportprescriptionshy

medicines-international-costs-in-context

Second while innovator companies have elaborate systems to fulfill their post-marketing

surveillance obligations - including hundreds of employees worldwide whose sole purpose is to

monitor safety - generic manufacturers have far more limited post-marketing obligations and

thus devote comparatively few resources to monitoring trends and conducting other postshy

marketing safety surveillance activities

If it becomes the norm that innovators routinely exit the market after generic entry a

regulatory vacuum will exist that will meaningfully diminish the level of safety monitoring of

generic medicines and this void would meaningfully impact public health Accord Schwartz

2013 supra at 1870 (Should the brand-name manufacturer prematurely withdraw from the

market over liability consumers will have lost the company most familiar with a medicine and

18

the one that likely has the greatest infrastructure and resources to facilitate postmarket research

and analysis into any late developing safety issues with a drug)17

C Innovators Already Have Ample Incentives to Adequately Warn of Known Risks Even After Generic Entry

Plaintiffs and their amici assert that innovator companies have little incentive to ensure

that their drug labels remain accurate upon generic entry Eg Opening Br of Plaintiffs-

Appellants at 28 That suggestion is preposterous At all times pharmaceutical labeling must

warn of all clinically significant hazard [ s] for which there is reasonable evidence of a causal

association 21 CFR sect 20157(c)(6)(i) If a company learns of new evidence that meets this

standard at any time after approval of its NDA it must submit a supplement to modify the

labeling Id sect 31470(b)(2)(v) (c)(6) A medicine that bears labeling that fails to warn of risks

for which there is reasonable evidence of a causal association is misbranded

Pharmaceutical companies have ample incentives to comply with these obligations

because the consequences for misbranding a medicine are severe If at any time after approval

the FDA believes that a medicine is misbranded it can withdraw marketing approval 21 USC

sect 355(e)(3) and bring an enforcement action against the manufacturer id sect 352(a) Upon

fmding that the medicine is misbranded a court may enjoin the medicines distribution id

sect 332 seize the medication id sect 334 or impose criminal penalties id sect 333 which can result in

complete exclusion from healthcare programs such as Medicare or Medicaid and thereby

eliminate a companys major distribution channel Such a regulatory enforcement action can

17 The FDA has recognized the crucial role that innovators play in the post-marketing surveillance context See 78 Fed Reg 67985 67991 (Nov 132013) (proposed rule) (reflecting FDAs belief that its analysis of whether the labeling change proposed by an ANDA holder should be approved would benefit from the views of the NDA holder who has full access to the data upon which the [innovator product] was approved and in most cases has substantial knowledge about the postmarketing experience for the drug product)

19

lead to serious reputational harm that can negatively affect a companys entire portfolio of

medicines

More fundamentally innovators who market their branded products face the same risk of

civil product liability suits by patients who continue to use their branded medicine In that

manner if an innovator is deemed to have failed to provide an adequate warning it will face

liability to those patients irrespective of generic usage If it has a branded product on the

market the innovator company will have every incentive to ensure the adequacy of its labeling

Innovator liability is not necessary to encourage innovators to update their labels

III Innovator Liability is Fundamentally Unfair

A Generic Manufacturers Bear Almost None of the Costs of Researching and Developing Innovative Medicines

Prior to the passage of the Hatch-Waxman Amendments virtually all companies weremiddot

required to conduct pre-clinical and clinical trials as a prerequisite to obtaining the FDAs

approval to market a medicine Recognizing that this procedure was a hindrance to the

availability of generic medicines Congress amended the FDA approval process to make

available more low cost generic drugs HR Rep No 98-857 pt 1 at 14

The Hatch-Waxman Amendments left in place the lengthy and onerous approval process

for innovative new medicines but it streamlined that process for generic versions of those

medicines Under Hatch-Waxman a company may seek approval to market a generic medicine

by filing an abbreviated new drug application (ANDA) demonstrating that the generic version

is biologically equivalent to an already-approved medicine 21 USC sect 355G)(2)(A)(iv) 21

CFR sect 31492(a)(1) An ANDA applicant need not independently perform extensive studies to

prove that the generic is safe and effective instead it can rely on a prior agency finding of

20

safety and effectiveness based on the evidence presented in [the] previously approved new drug

application 57 Fed Reg at 17953

Due to these streamlined procedures researching and developing a generic version of an

FDA-approved medicine costs under $2 million today -less than one-tenth of one percent of

the cost of developing the innovative medicine itself US Dept of Health and Human Servs

Expanding the Use of Generic Drugs 4-5 (2010) httpsaspehhsgovsystemJfilespdf761511

ibpdf PhRMA Biopharmaceuticals in Perspective supra at 29 Generic manufacturers pass

these cost savings onto consumers See PhRMA Biopharmaceuticals in Perspective supra at

51 Consequently immediately after generic entry the market share of generic copies of banded

medicines dwarfs the innovators market share See eg Grabowski supra

B Plaintiffs Innovator Liability Theory Would Unfairly Make Innovators Guarantors of Their Competitors Products

Having paid nearly all the costs associated with researching and developing a new

medicine only to lose a substantial proportion of their market share to generic manufacturers

upon generic entry innovator companies would nevertheless under Plaintiffs innovator liability

theory be forced to pay for the harm allegedly caused by their generic competitors products If

accepted Plaintiffs theory would create an insurance scheme for generic companies unfairly

underwritten by pioneer pharmaceutical companies Plaintiffs assertion that a rejection of

innovator liability would upset what Congress created Opening Br of Plaintiffs-Appellants at

26 is patently false They cite no evidence that Congress intended to set up a massive insurance

system whereby innovator companies would underwrite the costs of litigation against generic

manufacturers See Huck 850 NW2d at 371 (We see no indication Congress intended to alter

common law principles of causation to create liability for injuries caused by use of a

competitors product) To the contrary foisting virtually unlimited liability on innovator

21

companies would fundamentally disrupt the careful balance struck by the Hatch-Waxmanmiddot

Amendments

This case starkly illustrates the unfairness of holding innovators liable for products that

their competitomiddotrs control produce and profit from The FDA first approved a generic version of

Levaquin in June 2011 Christian Nordqvist Generic Versions of Antibiotic Levaquin

(Levojloxacin) Approved by FDA Medical News Today (Jtme 21 2011)

httpsllwwwmedicalnewstodaycomlarticles229081php By the following year Levaquin sales

had dropped by 88 and continued to decline Johnson amp Johnson 2012 Annual Report

httpfilesshareholdercomidownloadsJNJ2233480279xOx64476085FDOCFF-2305-4A02shy

8294-2E47DOF31850JNJ2012annualreportpdf Plaintiff was not prescribed generic

levofloxacin until March 2012 and did not sue until June 2014 by which time Janssens profits

from name-brand Levaquin were negligible Janssen is thus being subjected to potential liability

for a competitors product even when that product was manufactured well after Janssens market

share (and corresponding revenue) dropped precipitously

Indeed despite Plaintiffs assertion that foreseeability should not even be a question

Opening Br of Plaintiffs-Appellants Janssen could not have foreseen that it could be held liable

for injuries sustained at the hands of its generic competitors products - and thus factored that

risk into its investment decision - at the time that it chose to research and develop Levaquin in

the 1980s and 1990s The FDA approved Levaquin in 1998 see Levaquin FDA Drug Approval

Package httpsllwwwaccessdatafdagovdrugsatfda_docsnda98020634s04cfrn decades ~

before the notion that generic manufacturers might be immune from liability was resolved

Compare Mensing 564 US at 614 (2011) (holding that generic manufacturers were prohibited

from submitting Changes Being Effected (CBE) supplements and thus immUne from liability)

22

with Foster 29 F3d at 170 (1994) (holding that generic manufacturers could make labeling

changes through the CBE process) Gaeta v Perrigo Pharm Co 630 F3d 1225 1232-34 (9th

Cir 2011) (same) Demahy v Actavis Inc 593 F3d 428439-44 (5th Cir 2010) (same)

Plaintiffs argue that this unfairness is dwarfed by the unfairness of denying

compensation to consumers of generic medicines Opening Br of Plaintiffs-Appellants at 25

It is true that dismissal would appear to leave some consumers injured by generic drugs without

any form of remedy ZoJran 2017 WL 3448548 at 14 But just as it may be unfair to leave

some injured consumers without a remedy so too it may be unfair or unwise to require brandshy

name manufacturers to bear 100 of the liability when they may have only 10 or less of the

relevant market Id This unfairness to innovator companies is especially true given that [t]he

brand-name manufacturer plays no role in the generic manufacturers decision to enter the

market [and] is not responsible for crafting the regulatory and legal framework within which

the generic manufacturer chooses to do so Wyeth Inc v Weeks 159 So3d 649 694 n27 (Ala

2014) (Murdock J dissenting)18 The fact that generic manufacturers are immune from liability

does not make it any less unfair to shift liability onto innovator companies for injuries sustained

from products they never sold

CONCLUSION

For the foregoing reasons the Court should hold that West Virginia law does not

recognize innovator liability and answer the certified question in the negative

18 See also Wyeth 159 So3d at 685 (Murdock J dissenting) (noting that any perceived unfairness was created by Congress and the Food and Drug Administration in return for the perceived societal benefit of less expensive generic drugs or perhaps instead by the manner in which the United States Supreme Court subsequently has applied the preemption doctrine to the legislative and regulatory scheme structured by those entities)

23

Dated December 14 2017

Respectfully submitted

~~BarN-3013)STEPTOE amp JOHNSON PLLC PO Box 2195 Huntington WV 25722 Telephone (304) 526-8133 Facsimile (304) 933-8738 ancilrameysteptoe-johnsoncom

Russell D Jessee (WV Bar No 10020) STEPTOE amp JOHNSON PLLC 707 Virginia S1 E Charleston WV 25301 Telephone (304) 353-8000 Facsimile (304) 353-8180 russelljesseesteptoe-johnsoncom

Michael X Imbroscio (Pro Hac Vice pending) Paul W Schmidt (Pro Hac Vice pending) Gregory L Halperin (Pro Hac Vice pending) COVINGTON amp BURLING LLP 850 10th Street NW Washington DC 20001 Telephone (202) 662-6000 Facsimile (202) 662-6291 mimbrosciocovcom pschmidtcovcom ghalperincovcom

Counselfor Amicus Curiae Pharmaceutical Research and Manufacturers ofAmerica

24


KIMMY MCNAIR AND LARRY MCNAIR ) )

Plaintiffs-Appellants ) ) Case No 15-1806

~ ) )

JOHNSON amp JOHNSON ) A FOREIGN CORPORATION ) JANSSEN PHARMACEUTICALS INC ) A FOREIGN CORPORATION ) AND ORTHO-MCNEIL PHARMACEUTICAL INC ) A FOREIGN CORPORATION )

) l)ejfendants )

)

CERTIFICATE OF SERVICE

I hereby certify that on 14th day of December 2018 I served a true and accurate

copy of the foregoing Brief of Amicus Curiae Pharmaceutical Research and

Manufacturers of America upon the following by US mail first class postage pre-paid

Leslie A Brueckner Esq Daniel R Higginbotham Esquire PUBLIC JUSTICE PC Thomas Combs amp Spann PLLC 555 12th Street Suite 1230 Post Office Box 3824Oakland California 94607 Charleston WV 25338

Richard D Lindsay Esq WV State Bar 10832 Tabor Lindsay amp Associates PO Box 1269 Charleston WV 25325

25

TABLE OF CONTENTS

STATEMENT OF AMICUS CURIAE 1

SUMMARY OF ARGUMENT 2

I Holding Innovators Liable for Generic Competitors Products Will Harm Innovation 4

A Innovator Companies Invest Immense Resources in Researching and Developing New Medicines 4

B Plaintiffs Proposed Duty Would Expose Innovator Companies to Limitless Liability 6

C Litigation Risk Disincentivizes Innovator Companies from Investing in Research and Development ofNew Medicines 9

II Holding Innovator Companies Liable for Injuries Allegedly Sustained from Their Generic Competitors Products Could Impair the Usefulness ofPharmaceutical Labeling and Impair Public Health 15

A Innovator Liability Could Encourage Companies to Warn of Speculative and Unsubstantiated Risks 15

B Innovator Liability Could Negatively Affect Safety Monitoring 16

C Innovators Already Have Ample Incentives to Adequately Warn of Known Risks Even After Generic Entry 19

III Innovator Liability is Fundamentally Unfair 20

A Generic Manufacturers Bear Almost None of the Costs of Researching and Developing Innovative Medicines 20

B Plaintiffs Innovator Liability Theory Would Unfairly Make Innovators Guarantors of Their Competitors Products 21

CONCLUSION 23


Page(s)

Cases















ii

















III


Statutes


21 USC sect 355(e)(3)19

21 USC sect 355(i)(2) 4

21 USC sect 355G)(2)(A)(iv) 20

21 USC sect 355(0)(3) 6


Other Authorities

21 CFR sect 20157(c)(6)(i) 19

21 CFR sect 31220 4

21 CFR sect 31221 4

21 CFR sect 31223(a)(8) 4

21 CFR sect 31470 17 19

21 CFR sect 31480(b) 5

21 CFR sect 31481 (b)(2) 6

21 CFR sect 31492(a)(I) 20

21 CFR sect 314150 17


44 Fed Reg 37434 (June 26 1979) 16

57 Fed Reg 17950 (Apr 28 1992) 9 20

73 Fed Reg 49603 (Aug 22 2008) 15 16

78 Fed Reg 67985 (Nov 13 2013) 18

IV
















v














VI







S Rep No1 04-69 (1995) 11







VII





viii



















1

SUMMARY OF ARGUMENT
















populations






2










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4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









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12














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15






















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20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25


Page(s)

Cases















ii

















III


Statutes


21 USC sect 355(e)(3)19

21 USC sect 355(i)(2) 4

21 USC sect 355G)(2)(A)(iv) 20

21 USC sect 355(0)(3) 6


Other Authorities

21 CFR sect 20157(c)(6)(i) 19

21 CFR sect 31220 4

21 CFR sect 31221 4

21 CFR sect 31223(a)(8) 4

21 CFR sect 31470 17 19

21 CFR sect 31480(b) 5

21 CFR sect 31481 (b)(2) 6

21 CFR sect 31492(a)(I) 20

21 CFR sect 314150 17


44 Fed Reg 37434 (June 26 1979) 16

57 Fed Reg 17950 (Apr 28 1992) 9 20

73 Fed Reg 49603 (Aug 22 2008) 15 16

78 Fed Reg 67985 (Nov 13 2013) 18

IV
















v














VI







S Rep No1 04-69 (1995) 11







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viii



















1

SUMMARY OF ARGUMENT
















populations






2










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3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















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(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25

















III


Statutes


21 USC sect 355(e)(3)19

21 USC sect 355(i)(2) 4

21 USC sect 355G)(2)(A)(iv) 20

21 USC sect 355(0)(3) 6


Other Authorities

21 CFR sect 20157(c)(6)(i) 19

21 CFR sect 31220 4

21 CFR sect 31221 4

21 CFR sect 31223(a)(8) 4

21 CFR sect 31470 17 19

21 CFR sect 31480(b) 5

21 CFR sect 31481 (b)(2) 6

21 CFR sect 31492(a)(I) 20

21 CFR sect 314150 17


44 Fed Reg 37434 (June 26 1979) 16

57 Fed Reg 17950 (Apr 28 1992) 9 20

73 Fed Reg 49603 (Aug 22 2008) 15 16

78 Fed Reg 67985 (Nov 13 2013) 18

IV
















v














VI







S Rep No1 04-69 (1995) 11







VII





viii



















1

SUMMARY OF ARGUMENT
















populations






2










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25


Statutes


21 USC sect 355(e)(3)19

21 USC sect 355(i)(2) 4

21 USC sect 355G)(2)(A)(iv) 20

21 USC sect 355(0)(3) 6


Other Authorities

21 CFR sect 20157(c)(6)(i) 19

21 CFR sect 31220 4

21 CFR sect 31221 4

21 CFR sect 31223(a)(8) 4

21 CFR sect 31470 17 19

21 CFR sect 31480(b) 5

21 CFR sect 31481 (b)(2) 6

21 CFR sect 31492(a)(I) 20

21 CFR sect 314150 17


44 Fed Reg 37434 (June 26 1979) 16

57 Fed Reg 17950 (Apr 28 1992) 9 20

73 Fed Reg 49603 (Aug 22 2008) 15 16

78 Fed Reg 67985 (Nov 13 2013) 18

IV
















v














VI







S Rep No1 04-69 (1995) 11







VII





viii



















1

SUMMARY OF ARGUMENT
















populations






2










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25
















v














VI







S Rep No1 04-69 (1995) 11







VII





viii



















1

SUMMARY OF ARGUMENT
















populations






2










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25














VI







S Rep No1 04-69 (1995) 11







VII





viii



















1

SUMMARY OF ARGUMENT
















populations






2










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25







S Rep No1 04-69 (1995) 11







VII





viii



















1

SUMMARY OF ARGUMENT
















populations






2










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25





viii



















1

SUMMARY OF ARGUMENT
















populations






2










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25



















1

SUMMARY OF ARGUMENT
















populations






2










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25

SUMMARY OF ARGUMENT
















populations






2










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25










ARGUMENT











3
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25
























4





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25





















5
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25
























6










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25










26 Rev Litig 883 897-902 tbll (2007)6










7





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25





















8









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25









(BD Pa 2011)











9










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25










made)












10
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25
























11
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25
























12














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25














13







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25







(2017) http
















14




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25




















15






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25






















16

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25

















17





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25





















18





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25





















19


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25


medicines





















20
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25
























21


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25


Amendments






















22

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25

















CONCLUSION




23







24




~ ) )


) l)ejfendants )

)







25







24




~ ) )


) l)ejfendants )

)







25




~ ) )


) l)ejfendants )

)







25

amicus brief, Kimmy and Larry McNair v. Johnson & Johnson ... · Estimates ofR&D Costs, 47 J....

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Transcript of amicus brief, Kimmy and Larry McNair v. Johnson & Johnson ... · Estimates ofR&D Costs, 47 J....