Pennsylvania Supreme Court Increases the Liability Exposure for Pharmaceutical Manufacturers

Manufacturers must balance the inherent risks associated with developing innovative new products, especially pharmaceuticals.  Fortunately for consumers, there is a well-established regime to impose liability where it is appropriate.  However, a new claim recognized by the Pennsylvania Supreme Court threatens this delicate balance.  The court’s holding may prove particularly relevant to drugs that treat less common or acute disorders, where the return on investment could be more quickly overcome by these new liability risks.

In Pennsylvania, pharmaceutical manufacturers were already subject to liability for manufacturing defects and inadequate warnings related to their prescription drug products.  However, the Pennsylvania Supreme Court held that plaintiffs may also assert “negligent design” claims for prescription drugs.  This claim would require a lesser evidentiary showing than the existing manufacturing defect and inadequate warning claims.  In particular, under the negligent design theory, a plaintiff must show that a manufacturer failed to exercise reasonable care by proving that a particular drug was marketed and sold with actual or constructive knowledge that the drug is too dangerous to be used by anyone, notwithstanding regulatory action to the contrary.

With this ruling, the Pennsylvania high court failed to take proper account of the realities in the pharmaceuticals industry, where regulators intervene in the markets to protect consumers and give some predictability to manufacturers, who might not otherwise subject themselves to the risks associated with launching new products.  Our system designates the Food and Drug Administration to conduct thorough cost-benefit analysis before approving the marketing of new drugs.  By allowing the new “negligent design” liability, the role of the FDA is diminished and manufacturers are left facing uncertainty even when the FDA determines that a drug is safe enough for consumers to purchase with a doctor’s prescription.  In addressing this issue for the first time, the majority considered that the negligent design cause of action had always existed, while the minority viewed the decision as creating a new cause of action.  Regardless, this decision recognizes a dangerous new opportunity for lay juries to displace the expertise of the FDA and threatens to stifle the investment-intensive process of innovating new pharmaceutical treatments.

Thomas C. Kirby is a Legal Fellow for the Manufacturers’ Center for Legal Action, the leading voice of manufacturers in the courts. To read more about the Manufacturers’ Center for Legal Action, please click here.

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