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    PRODUCTS LIABILITY UPDATE: Sixth Circuit Finds Drug Manufacturer Entitled to Immunity Despite Claims of Fraud on the FDA

    Posted by Gale Burns on Fri, Sep 21, 2012 @ 16:09 PM

    September 25, 2012

    Jeremy Taylor, Senior Attorney, National Legal Research Group

    The U.S. Court of Appeals for the Sixth Circuit recently decided that an immunity defense given to a drug manufacturer by a state statute was preempted by the Federal Food, Drug, and Cosmetic Act ("FDCA").  See Marsh v. Genentech, Inc., Nos. 11-2373, 11-2385, 11-2419, 11-2417, 2012 WL 3854780 (6th Cir. Sept. 6, 2012).  Therefore, the manufacturer's entitlement to immunity had to be analyzed under federal law, despite the existence of an applicable state immunity provision.

    The plaintiffs were consumers who alleged that they suffered life-threatening side effects from their use of the defendant's psoriasis drug "Raptiva."  Raptiva worked by suppressing T cells to prevent them from migrating to the skin and causing psoriasis.  However, because T cells fight infection, their suppression has been linked to life-threatening side effects.  Following reports of such effects, including a rare brain infection in patients taking Raptiva, the defendant removed the drug from the market in 2009. 

    One of the plaintiffs in the consolidated cases had begun using Raptiva in 2004 and later suffered viral meningitis and a collapsed lung.  She sued Genentech under the theory of strict liability, alleging defective design and failure to warn, and also under the theories of negligence, breach of warranty, and fraud.  She argued that both before and after approval of Raptiva by the Food and Drug Administration ("FDA"), the defendant had known of the dangerous side effects, concealed them from the public, and not included them in the drug's labeling.  The plaintiff further alleged that Genentech had failed to update statements of contraindications, warnings, precautions, and adverse reactions based upon what the defendant knew and that Genentech had negligently failed to comply with various FDA regulations. 

    The manufacturer moved to dismiss on the ground that it was immune from liability under the Michigan Products Liability Act.  The state Act immunizes drug manufacturers from liability in products liability actions if the allegedly dangerous drug and its label were approved by the FDA and were in compliance with such approval at the time the drug left the manufacturer's control.  The statute contains exceptions to immunity that apply if a manufacturer (1) has intentionally withheld from or misrepresented to the FDA information concerning the drug that is required by the FDCA, and the drug would not have been approved if the information had been accurately submitted, or (2) makes an illegal payment to an official or employee of the FDA for the purpose of securing or maintaining approval of the drug.  The district court granted Genentech's motion to dismiss on the basis that neither statutory exception applied.  Citing Sixth Circuit precedent, the district court noted that federal law preempts state tort claims premised on the Michigan Act's exceptions unless there is a finding by the FDA itself that a manufacturer had committed fraud or bribery.  The district court determined that because the plaintiff did not allege that the FDA had found that the defendant had committed fraud, her claims were preempted. 

    The Sixth Circuit affirmed.  Observing that federal law impliedly preempts a state law if the state law creates an unacceptable obstacle to the accomplishment and execution of the full purposes and objectives of Congress, the court noted that the FDCA authorizes the FDA to investigate and to penalize fraud in a drug manufacturer's disclosures or elsewhere in the drug approval process.  The court of appeals stated that unlike a common-law tort claim, a fraud-on-the-FDA cause of action exists solely by virtue of the FDCA's disclosure requirements for manufacturers seeking drug approval.  According to the court, the alleged wrong is inadequate disclosure to a federal agency, rather than breach of the common-law duty to exercise reasonable care.  The court noted that under the Michigan Act, fraud on the FDA is not an independent cause of action, but an exception to the immunity afforded to drug manufacturers if the statutory prerequisites to the exception are satisfied.  However, according to the court, the exception requires proof of fraud committed against the FDA.  Therefore, a plaintiff's fraud argument must be treated as a threshold claim subject to preemption by the FDCA.  Claims based upon federal findings of bribery or fraud on the FDA can defeat a manufacturer's immunity granted by the Michigan Act.  Because the plaintiff alleged no such findings, her fraud-on-the-FDA claim failed.

    As to the plaintiff's separate claim that the defendant was not entitled to immunity under the state Act because the defendant did not comply with the FDA approval process, the court of appeals similarly concluded that the plaintiff's claim was preempted by federal law.  According to the court, the plaintiff's allegations that Genentech had failed to comply with the FDCA's postmarketing reporting requirements by concealing the dangerous side effects of Raptiva were premised on a violation of federal law and implicated the relationship between a federal agency and a regulated entity.  The court observed that the plaintiff's claim improperly asked the court to assume a role usually occupied by the FDA.

    Finally, the court rejected the plaintiff's argument that under the state Act, manufacturer immunity based upon compliance with FDA approval is merely an affirmative defense, such that the plaintiff was not required to plead noncompliance sufficient to defeat immunity.  The court ruled that even if immunity were an affirmative defense, the manufacturer would be entitled to dismissal of the plaintiff's claims based on immunity.  In so holding, the court stated that although a manufacturer would normally bear the burden of establishing an affirmative defense, the plaintiff's response to the manufacturer's motion to dismiss anticipated the defense of immunity in a way that demonstrated that the plaintiff's response lacked merit.  According to the court, the plaintiff made an argument, which was preempted by the FDCA, that the manufacturer was not in compliance with the FDCA approval process. 

    Marsh is an important reminder for both plaintiffs and defendants in defective drug cases that satisfying, or failing to satisfy, the elements of a state products liability immunity statute is governed by federal law, which likely preempts the state immunity provision.

    Topics: legal research, products liability, Jeremy Taylor, fraud on FDA not independent action, Marsh v. Genentech, 6th Circuit, immunity defense of manufacturer analyzed under fe, Food, Drug & Cosmetic Act, state statute exceptions to immunity

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