Generic Drugs and the Law

A recent Supreme Court decision made it much more difficult for people injured by generic drugs to receive justice. The highest court ruled that if the FDA had approved the formulation of the brand-name drug with the same formula as the generic, there could be no claim against the generic manufacturer for defective design.

The case in question involved a New Hampshire woman, who took Sulindac, the generic form of the brand-name drug Clinoril. The drug caused her skin to peel off, leaving an open wound over much of her body. The woman is now legally blind as a result. She had received a $21 million settlement in the New Hampshire state courts, which was upheld by a federal appeals court. However, the U.S. Supreme Court ruled that because drugs are approved at the federal level, state lawsuits cannot supersede federal agency determinations. This ruling effectively eliminated the option to file lawsuits for thousands of potential plaintiffs.

FDA May Issue Rule to Counter Court Decision

However, the U.S. Food and Drug Administration (FDA) apparently plans to issue a rule that would permit generic drug manufacturers to change their labelling. This would open them up to the lawsuits recently limited by the Supreme Court ruling.

The proposed rule is a direct response to the recent high court ruling. According to an FDA spokesperson, the new rule, if enacted, would restore parity between generic drug manufacturers and their brand-name counterparts. It would also improve the safety of generic drugs by making the manufacturers liable for injuries resulting from labelling problems if they changed their labelling as allowed by the proposed FDA rule.

In 2009, the Supreme Court allowed a suit in state court involving issues related to the drug's warning label. However, a 2011 ruling by the court protected generic drug manufacturers from that type of lawsuit. The recent ruling was a reaffirmation of the 2011 decision.

The recent court ruling, especially if not trumped by FDA rules, could give a green light to generic drug manufacturers to cut corners and conduct outright fraud in their pursuit of profit. Would there be any way to stop them? The story of one Indian generic drug company suggests that it can and will be very difficult.

The Example Of Ranbaxy, A Foreign Generic Drug Manufacturer

The company, Ranbaxy, makes a generic version of the cholesterol-lowering drug Lipitor, one of the most widely used drugs in the United States. It also manufactures many other widely used medications such as antibiotics and painkillers. After a lengthy investigation by the FDA and the U.S. Department of Justice, Ranbaxy pleaded guilty to seven federal criminal charges. The charges included selling adulterated drugs with intent to defraud, failing to report that its drugs were not compliant with brand-name specifications, and making false statements. It agreed to pay $500 million in fines, the largest penalty ever imposed on a generic drug company.

Monitoring Compliance Of Foreign Manufacturers Is Difficult

Can the recent Supreme Court ruling reduce the ability of the Food and Drug Administration to monitor the U.S drug supply, which is more than 80 percent generic? Moreover, more than 80 percent of ingredients for U.S. drugs come from overseas. Similarly, more than 40 percent of manufactured pills and capsules are produced outside the United States. Overseas operations are especially difficult to police.

The generic drug industry is big business, with a global market worth $242 billion. Although Americans have embraced generic drugs as a way to cut healthcare costs, troubling concerns remain. Only 11 percent of foreign generic drug manufacturers are inspected by regulators. Although the FDA has increased the number of foreign-based inspectors, staying on top of this huge market may be impossible.

Moreover, foreign inspections are quite different from inspections of U.S. drug manufacturers. In the United States, inspections are unannounced and can last up to six weeks. Overseas, inspections are announced well in advance and generally last a week or less.

Can The FDA Ever Catch Up With Fraudulent Generic Drug Manufacturers?

The drug manufacturing system is self-policing. The FDA uses data provided by the drug companies to evaluate safety and efficacy. In short, the entire system is based on the assumption that drug manufacturers, whether brand-name or generic, are ethical and behave honorably. Whether this is true is an open question. Moreover, those generic manufacturers who do engage in fraud are far less likely to be caught if the recent Supreme Court ruling is not tempered by FDA rule changes.

If you believe you may have been injured by a defective drug, whether it s generic or not, contact the lawyers at Elk & Elk Co., Ltd.