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Goldberg, Klasmeier Brief State Judges on Legal Shortcomings of Innovator Liability

By / 5.22.2018

The George Mason University’s Law & Economic Center hosted its Twelfth Annual Judicial Symposium on Civil Justice Issues on Monday, May 11, 2018. The program included many pressing topics of liability, including innovator liability against branded pharmaceutical companies, climate change tort cases against energy producers, litigation financing, and the implications of the U.S. Supreme Court’s recent personal jurisdiction decisions. The panels were filled with skilled lawyers on all sides of the issues.

PPI Center for Civil Justice Director, Phil Goldberg, and Coleen Klasmeier of Sidley Austin debated Leslie Brueckner of Public Justice and Adina Rosenbaum of Public Citizen on the issue of innovator liability. Innovator liability is a novel theory for liability developed over the past 25 years by which users of generic drugs seek to subject branded drug companies to liability for the harms they allege were caused by the generic drug. The PPI Center for Civil Justice’s previous writing on this issue can be found here.

As Goldberg explained to the audience of state judges, innovator liability has been rejected by well-over a hundred federal and state courts, including several U.S. Courts of Appeal. These courts have all concluded that under traditional product liability law, a manufacturer of a product is subject to liability only for its own products, not the products of its competitors. Also, there are no other common law tort theories for establishing this liability because there is no legal relationship between the manufacturer of the branded drug and the user of the generic, and saddling branded drug manufacturers with the liability for all users of generic drugs could have devastating implications for America’s health care.

Therefore, as Goldberg said, “This issue involves determining both what’s best for America’s health care and the most appropriate liability policies. Innovator liability does not advance either and undermines both. Innovator liability is solely about finding a pocket to pay a claim . . . that is the very definition of deep pocket jurisprudence and should continue to be rejected by courts around the country.”

The reason this issue is particularly timely is that in the past six months, three state high courts have ruled on innovator liability claims. The Supreme Court of California allowed these theories for traditional negligence claims, whereas the high courts in Massachusetts and West Virginia continued the widespread rejection of such liability. The Supreme Court of Massachusetts would only allow innovator liability for acts of recklessness or gross negligence. Goldberg broke down all three rulings for the judges in showing how California isolated its law from the rest of the country in allowing for innovator liability.

In addition, Goldberg and Klasmeier fleshed out the West Virginia court’s concern that innovator liability would wreak havoc on the Hatch-Waxman Act, which is the federal law that created a delicate balance between generic and branded drugs and should not be undone through distortions in state tort law. In particular, Klasmeier suggested to the judges that the Food & Drug Administration be afforded primary jurisdiction on these issues because of the imbalance that innovator liability would cause.

In February, the George Mason Law & Economic Center held a similar briefing for members of the Congressional Civil Justice Caucus. A video to that presentation, which featured a debate between Goldberg and Brueckner can be found here. A lengthier law review article that Goldberg published on innovator liability can be found here.