The PREP Act and the Revocation of an Emergency Use Authorization

In recent weeks, the FDA has revoked Emergency Use Authorizations (EUAs) for several products meant to combat COVID-19.  These include the June 15, 2020 revocation [fda.gov] of the oral formulations of chloroquine phosphate and hydroxychloroquine sulfate and the June 16, 2020 revocation [fda.gov] of the Chembio Diagnostic Systems Inc.’s DPP COVID-19 IgM/IgG System.

The fact that FDA is revoking its authorization for drugs and medical devices may have implications for the immunity granted under the Public Readiness and Emergency Preparedness Act (“PREP Act”) (42 U.S.C. § 247d-6d and 6e) for products that have had their authorizations revoked.  This blog explores this issue.

Background on PREP Act and the EUA Statute.

Some background on both the PREP Act and EUA statute is important in order to understand the issue.  The PREP Act provides nearly blanket immunity under certain circumstances for manufacturers, distributors, and administrators of certain drugs, medical devices, and biologics meant to counteract an epidemic or pandemic.  This immunity is provided not only to approved drugs and cleared medical devices, but also investigational drugs and medical devices, as well as drugs and medical devices that have been authorized by the FDA under its EUA authority.

So, what is the FDA’s EUA authority and how does it work?  In short, if the Secretary of Health and Human Services declares a public health emergency, the FDA can authorize the use of a non-approved/non-cleared product, or authorize an off-label use of an otherwise approved/cleared product, for the limited purpose of combatting the public health emergency.  21 U.S.C. § 360bbb-3.  Once authorized for emergency use, the products can be sold and used under the conditions of the EUA authorization until one of three events occur: either (i) the product becomes approved or cleared via a traditional pathway, (ii) the public health emergency ends, or (iii) the FDA revokes its emergency use authorization.  Id.  The FDA can revoke an authorization if there is no longer a need for the product, the evidence supporting the authorization is no longer met, or other circumstances make revocation appropriate to protect public health and safety.  Id. at (g)(2).  Even if the health emergency ends or the FDA revokes its authorization, continued use of the product with respect to a specific patient can continue if found necessary by the patient’s attending physician.  Id. at (f)(2).

The EUA statute partially addresses the issue of a manufacturers’ obligations if the product is revoked or the public health emergency ends.  If the public health emergency ends, the EUA statute provides that the “Secretary shall consult with the manufacturer of such product with respect to the appropriate disposition of the product.”  Id. at (b)(2)(B).  The statute does not address this issue if the FDA revokes its authorization, though the FDA’s interpretation of the statute is that it will similarly consult with the manufacturer if it revokes the authorization on the appropriate disposition of the product.  Emergency Use Authorization of Medical Products and Related Authorities, Food Drug Cosm. L. Rep. 300052.

FDA’s COVID-19 Response.

With this background on the statutes out of the way, let’s turn to the FDA’s response to COVID-19 under these statutes.  On February 4, 2020, Secretary Azar declared a public health emergency for COVID-19, which enabled the FDA to begin issuing EUAs for products intended to combat COVID-19.  85 FR 7316.  Since the beginning of the COVID-19 pandemic, the FDA has authorized [fda.gov] over 150 products under its EUA authority.  These products fall into six categories: (i) In Vitro Diagnostic Products, (ii) High Complexity Molecular-Based Laboratory Developed Tests, (iii) SARS-CoV-2 Antibody Tests, (iv) Personal Protective Equipment and Related Devices, (v) Ventilators and Other Medical Devices, and (vi) Drug Products.

These 150+ products, as such, fall within the definition of a “covered countermeasure” under the PREP Act, and thus largely fall within the protections of the PREP Act.  42 U.S.C. § 247d-6d; see also 85 FR 15198.  However, the question arises whether the products for which EUA authority was revoked enjoy the same immunity as non-revoked EUA products under the PREP Act.

What Happens Under the PREP Act if the FDA Revokes its EUA Authorization?

Neither the PREP Act itself nor the EUA statute directly address the issue of what happens under the PREP Act if the FDA revokes its EUA authorization.  However, buried deep in the PREP Act are two references to EUA revocation.  These references strongly suggest that EUA revocation does not, in and of itself, remove PREP Act immunity.

The references to EUA revocation in the PREP Act appear in the section that addresses the willful misconduct exception to immunity.  As background, the PREP Act contains an immunity exception that provides that there is no immunity when a manufacturer or distributor engaged in “willful misconduct” with respect to the covered product.  In turn, the statute provides a lengthy definition of what constitutes willful misconduct.  42 U.S.C. § 247d-6d(c-d).  Among the circumstances described, is the initiation of an “enforcement action” by the federal government that resulted in a “covered remedy.”  Id. at (c)(5).  An “enforcement action” is defined as a laundry list of items, such as an injunction or mandatory recall of a product.  Among the listed items that constitute an enforcement action is “a revocation, based on willful misconduct, of an authorization under section 564 of such Act [21 USCS § 360bbb-3].”  Id. at (c)(5)(B)(i) (block parentheticals in original).  In other words, only a revocation of an EUA that was “based on willful misconduct” can constitute an “enforcement action.”  Id.  Conversely, in the laundry list of items included in the definition of “covered remedy,” the following appears, among others: “a revocation of an authorization under section 564 of such Act [21 USCS § 360bbb-3].”  Id. at (c)(5)(B)(i)(I) (block parentheticals in original).

As such, the PREP Act contemplates that a product whose authorization has been revoked for a reason other than willful misconduct – perhaps because FDA finds that there are significant clinical performance problems with it – is still entitled to immunity.  Otherwise, there would be no reason to define the method by which the authorization must be revoked in order to lose immunity.  A plaintiff attempting to demonstrate that PREP Act immunity does not apply needs to show more than just the EUA revocation in order to prove willful misconduct.  Rather, the plaintiff must show that the revocation was “based on willful misconduct” as defined in the Act.  Id. at (c)(5)(B)(i).  The recent revocation letters from the FDA contain no such language.

This conclusion that immunity remains following the revocation of an EUA is bolstered by the purpose of the PREP Act.  The policy behind the PREP Act is to provide immunity so as to encourage companies to make products that help reduce the severity of pandemics.  And, if all that must occur for a product to no longer receive the PREP Act protection is that it loses its EUA authorization status, that would run contrary to the purpose of encouraging companies to make products and seek EUA authorization.  Similarly, a product can lose its authorization once the pandemic is over in the same manner as if it was revoked during the pandemic.  And certainly, products that are no longer needed after the declared public health emergency has ended continue to have protection under the PREP Act for their use during the pandemic.  Otherwise, the PREP Act would provide no protection at all.

This conclusion is further bolstered by the fact that the PREP Act states that its “sole exception to the immunity from suit” is for “willful misconduct,” Id. at (d), which is a much higher standard than the standard for revoking an EUA.  Compare 42 U.S.C. § 247d-6d(c) (setting forth the willful misconduct standard) with 21 USCS § 360bbb-3(g)(2) (setting forth the revocation standard). While the “sole exception” language should not lull manufacturers into believing the PREP Act always provides protections, this “sole exception” language does show that willful conduct is far more serious than a simple revocation of an EUA.

In spite of the foregoing, none of the above points are a guarantee that a court may not reach a contrary result.  After all, the PREP Act does not specifically say that it extends to products whose EUAs have been revoked.  Rather, this is only a result by necessary implication from the definition of willful misconduct, as well as the policy behind the PREP Act and the EUA statute.

Next Steps After Revocation.

If an EUA is revoked, the manufacturer should work with FDA on the appropriate disposition of the product.  See 21 U.S.C. § 360bbb-3(b)(2)(B); Emergency Use Authorization of Medical Products and Related Authorities, Food Drug Cosm. L. Rep.  300052.  While the product can continue to be used for a specific patient if found necessary by the patient’s attending physician, what must be done with the product that remains in the marketplace after the EUA has been revoked needs to be addressed with FDA.

It is important for the manufacturer to be aware that in the laundry list of actions that constitutes “an enforcement action” under the PREP Act’s willful exception is “a mandatory recall of a product because [a] voluntary recall was refused.”  Put another way, if forced to do a mandatory recall as opposed to a voluntary recall, a manufacturer increases the likelihood that it will not enjoy the full protections of the PREP Act.

Written by Jordan Lipp, Partner at Childs McCune

United States Supreme Court Decides that FDA Impossibility Pre-emption is a Matter for Judges, not Jurors

Jordan Lipp, Esq. | Managing Member, Childs McCune

It is a basic tenant of Constitutional law that if it is impossible to comply with both state and federal law, the state law is preempted and only the federal law controls. This is referred to as “impossibility pre-emption,” and is a frequently litigated issue regarding products regulated by the FDA, especially drugs. In approving warnings, the FDA is concerned not just with warning, but also preventing “overwarning” and making sure that warning language does not exaggerate the risk. In state law personal injury actions, however, plaintiffs frequently argue that the drug company should have provided more warnings or stronger warnings. This creates the significant possibility that a company regulated by the FDA may be put in a situation where the FDA does not permit it to over-warn under federal law, but at the same time it is faced with state law litigation arguing that it was required to over-warn by state tort law. When caught between this impossible position of not being able to comply with both federal and state law, the state law is preempted. When the state law is preempted, the personal injury lawsuit must be dismissed.

As the United States Supreme Court has stated (in a wonderfully confusing string of negatives): “‘absent clear evidence that the FDA would not have approved a change’ to the label, the Court ‘will not conclude that it was impossible . . . to comply with both federal and state requirements.’” Merck Sharp & Dohme Corp. v. Albrecht, No. 17-290, 2019 U.S. LEXIS 3542, at *3 (May 20, 2019) (quoting Wyeth v. Levine, 555 U. S. 555, 571 (2009), ellipses in original). An open question, until now, has been who makes this decision. Does the judge or the jury decide whether the FDA would not have approved a label change?

That question was answered yesterday by the United States Supreme Court. In Merck Sharp & Dohme Corp. v. Albrecht, the Third Circuit decided that it was a question for the jury whether the FDA would have rejected the atypical femoral fractures warning pushed by the plaintiffs in the Fosamax litigation. Merck appealed this decision. Yesterday, the United States Supreme Court disagreed with the Third Circuit. It found that “judges, rather than lay juries, are better equipped to evaluate the nature and scope of an agency’s determination.” Id. at *27. As such, “a judge, not the jury, must decide the pre-emption question.” Id. at *18. And, interestingly enough, all nine justices agreed with the judgment, although for different reasons. While this outstanding question on impossibility preemption has now been answered, the precise scope of impossibility preemption will continue to be litigated for many years.

Supreme Court Cases to Watch This Term

Courtney Young, Esq. | Senior Attorney, Medmarc Risk Management

This term (which began last month), the Supreme Court will hear a number of cases that may affect the life sciences industry. Here are a few we will be watching.

Air and Liquid Systems Corp. v. DeVries

The issue in this case is whether defendants in a products liability case can be held liable under maritime law for injuries caused by products they did not make, sell, or distribute. The Court heard argument in this case on October 10. The case involves equipment sold by various manufacturers and installed several years ago on Navy ships. To function properly, the equipment required asbestos insulation, which was installed shortly after equipment. The plaintiffs are a group of individuals who worked on the ships at the time and were allegedly injured by the asbestos.

Merck Sharp & Dohme Corp. v. Albrecht

This is another preemption case, and an important one for makers of drugs and, potentially, PMA devices. The issue here is whether a plaintiff’s state-law-based failure-to-warn claim is preempted if the FDA rejected the drug manufacturer’s proposal to warn about the specific risk the state-law claim alleges should have been warned about. Argument has not been scheduled in this case yet.

Plaintiff Runs out of Time in Prosthetic Hip Lawsuit

Device makers know all too well they can be hit with a Warning Letter for failure to file a medical device report (MDR) when they reasonably should have known the device was associated with an adverse event, but a plaintiff in a lawsuit over a hip implant recently received the same message. The plaintiff had attempted to argue that the clock for the statute of limitations for a liability claim had not commenced until the implant was removed, but the judge who heard the case said no reasonable juror would have entertained any misgivings about the origins of the symptoms for that long a time.

The implant of the Zimmer hip took place in early 2011, and the plaintiff is said to have “suffered pain and complications as early as September 2012, when she returned to her surgeon due to recurrent pain in the hip. The surgeon initially treated the plaintiff for bursitis, but began to check for evidence of problems directly associated with the device in January 2013. Although imaging scans ruled out any loosening or fracture of the device and joint, there was evidence that metal ion levels were outside the normal range. The plaintiff experienced a dislocation of the hip in November 2014, however, and the physician advised the patient in January 2015 that a revision procedure might be necessary to address the problem.

The plaintiff agreed to undergo revision surgery in January 2015, and the procedure took place the following month. The plaintiff filed suit in February 2017 for strict liability, negligence and  three counts for breach of warranty, and toward the end of May 2018, Zimmer petitioned for summary judgment based on the two-year statute of limitations for such claims under Pennsylvania state law. The plaintiff argued that she could not have been clear on the precise origin of the problems until the device had been removed, but the judge in this case said the plaintiff’s acknowledgment in January 2015 that the device “had to come out” was a clear indication that the patient either already understood – or at least should have recognized – that the device was at the root of the problem.

At the very latest, the plaintiff’s signature on a consent form dated Feb. 9, 2015, which authorized the revision procedure, suggested that the plaintiff ought to have recognized “through the exercise of reasonable diligence,” that the hip implant was the root cause of the difficulties, wrote Judge Edward Smith of the U.S. District Court for the Eastern District of Pennsylvania. The suit was filed two years and one day after that consent form was signed, and Smith said no reasonable juror would have concluded that the plaintiff “was unaware, or should not have been aware” of a connection between the hip dislocation and device until after the revision surgery. While the surgeon confirmed after the revision that the device was, indeed, the cause of her injuries, Smith said that knowledge of precise medical cause is not required to start the clock on the two-year limitations period.

Apple Scores Quick De Novo

The pilot program for the FDA precert framework for software medical devices is still in development, but Apple Inc. scored a win with two apps for its Apple Watch 4 in a remarkably short amount of time. Other companies in the device business, even tech companies toiling in the digital space, might find the quick turn-around time for the de novo applications conspicuous, but the timing of the grant of the de novos was unusual as well.

The FDA posted the granted de novo petitions (here and here) to the agency’s website Sept. 12, the day after the date the petitions were granted. The interesting part of this discussion is that neither premarket filing took more than 33 days, a far shorter amount of time than the average turn-around of 150 days called for under the fourth device user fee agreement.

More conspicuous to some observers, however, was that the agency had posted those de novos on the same day that Apple unveiled the Apple Watch 4, the platform for the two software devices. Regardless of whether one sees the rapid review as more conspicuous than the synchronized announcements, the combination of the two makes it difficult to ignore the possibility that the entire affair was worked out well in advance.

There are clear indications that the de novos had been in the works for some time prior to the nominal filing dates – indeed, FDA Commissioner Scott Gottlieb tweeted that the agency had “worked closely” with Apple during the two software devices’ developmental phases – but Apple had the smarts to hire a consultant with the regulatory chops to help the company avoid choppy regulatory waters. Donna-Bea Tillman, who at one time was the director of the Office of Device Evaluation at the FDA, served as the lead consultant for these projects on behalf of Biologics Consulting Group in Alexandria, Va.

Conspiracy theorists may ultimately have nothing to dissuade them from their suspicions about the timing of all this, but device makers who hope that this signals a new era of cooperation may be likewise disappointed if they are hoping that this is the new normal at the FDA. There are far too many product releases to allow the agency to regularly coordinate with device makers in this manner, but one of the Apple apps is designed to detect atrial fibrillation, which is strongly associated with sudden cardiac death. The agency’s Sept. 12 announcement not only emphasized the need to encourage development in the digital space, but also to “help millions of users identify health concerns more quickly,” thus suggesting the FDA saw a considerable public health benefit in connection with the grant of these de novos.

Hits and Misses for May 2018

Given the volume of news affecting the life sciences, there are always some favorable outcomes and some that trend in the opposite direction. Following are a few recent developments of note, including one that provided good news for the companies in question, and another that is still unfolding.

Fifth Circuit Blasts Pinnacle Hip Decision

In the area of liability law, the big miss over the past couple of weeks for litigants was the decision by the Fifth Circuit Court of Appeals regarding the Pinnacle hip multi-district litigation. The outcome is of course a significant win for DePuy Orthopedics and its parent, Johnson & Johnson, but the case was remanded to a lower court for reconsideration, and so the device makers are not off the hook just yet.

The court expressed quite a bit of ire over the handling of the case at the trial court, particularly regarding allegations the companies bribed the regime of Saddam Hussein in Iraq, but there were a few issues with paid witnesses that plaintiff’s attorneys had indicated were testifying without compensation. The outcome relieves the companies of a $151 million liability, which was itself a fraction of the $502 million originally arrived at in this case. The principle message to be learned from this outcome is that attorneys for plaintiffs can’t indulge in every whimsical allegation that comes to mind if they want these lawsuits to stay on an even keel.

FDA floats digital precert model

The precertification pilot program for software as a medical device drew raves from stakeholders when the FDA announced the program in September 2017, and the agency has now delivered on a draft working model of a full program. Whether developers see this as a hit or a miss might be conditional on several things, including whether the vendor has prior experience with device applications. The draft states that developers with previous experience in the device business will be subject to less scrutiny, something that information technology companies may see as discriminatory.

The precert concept relies on an organization’s demonstrated commitment to a culture of quality, but the agency said in a statement accompanying the draft working model that such a designation would mean that the organization in question “could potentially submit less information” on the product prior to going to market. The FDA addressed the question of third-party precertification with another response that amounts to “definitely maybe.” This uncertainty also underscored the agency’s remarks regarding whether certified sponsors will be subject to inspections, another conspicuous deviation from the precert pilot.

Opinions vary regarding whether this new paradigm for regulated software is as painless as some believe, given all the optimism surrounding the pilot. One regulatory attorney told a media outlet recently that the FDA document seems an implicit trade of faster times to market in exchange for more regulation. Regulatory attorney Bradley Merrill Thompson of Epstein Becker Green also said, “industry has to review this proposal with eyes wide open.”

In a somewhat related development, the FDA published a draft guidance for multiple function device products, and the Federal Register notice states that the FDA’s Bakul Patel is the contact point for the draft, making clear that this is principally about software devices and software functions that are secondary to the device primary function. Patel is the associate director for digital health at the agency’s device center, hence the authorship makes clear the focus of the draft despite that a device with no software at all could be a multi-function device.

The draft defines the term “function” as “a distinct purpose of the product,” but that distinct purpose could be a mere subset of the intended use or could make up the entire intended use. The most interesting part of the draft, which was made necessary by Section 3060 of the 21st Century Cures Act, is that it states that the “device function-under-review” will be the principle point of interest, although the agency will assess the impact of these other functions on the function under review, even when those other functions would otherwise enjoy enforcement discretion or would not be subject to regulation.

Sponsors will have to conduct a risk analysis of the potential impact of these non-reviewed functions on the function under review, but these non-reviewed functional aspects of the device won’t be subject to post-market surveillance activities. Still, device makers will have to document design considerations for non-reviewed functions, such as software architecture, as well as any relationships between the reviewed and non-reviewed functions, such as shared computational resources.

While the draft may be an improvement on regulatory silence on the matter, it would seem to raise the question of why the entirety of the Quality Systems Regulation is not applicable to a device function that is nonetheless subject to risk analyses and some of the more labor-intensive documentation requirements that fall under the QSR.

Massachusetts Says Brand Name Drug Manufacturers Are Not Liable for Generic Drugs, Except . . .  

Jordan Lipp | Attorney, Managing Member | Childs McCune

On March 16, 2018, the Massachusetts Supreme Court weighed in on the issue of whether a brand name drug manufacturer is liable for a plaintiff’s use of the generic form of the drug, and it reached a surprising result.  As discussed in the previous blog post on December 22, 2017, Conte on Steroids, most states conclude that a brand name drug manufacturer cannot be liable for damages caused by the generic version of the drug.  In a detailed analysis, the Massachusetts Supreme Court followed the vast majority of its sister courts, concluding that a brand name drug manufacturer cannot be held liable in product liability or negligence for a plaintiff who ingested the generic version.

But then, borrowing from case law involving such disparate subjects as landowner duties to trespassers and liability releases for sporting activities, the Massachusetts Supreme Court explained that “public policy is not served if generic drug consumers have no remedy for the failure of a brand-name manufacturer to warn in cases where such failure exceeds ordinary negligence, and rises to the level of recklessness.”  Rafferty v. Merck & Co., No. SJC-12347, 2018 Mass. LEXIS 161, at *29 (Mar. 16, 2018).  As such, the Court found that a brand name drug manufacturer can be liable for the generic version of the drug “where, for instance, a brand-name manufacturer learns that its drug is repeatedly causing death or serious injury, or causes birth defects when used by pregnant mothers, and still fails to warn consumers of this danger.”  Id. at *29-30 (Mar. 16, 2018).

The ramifications of this novel approach are significant.  Setting aside the fact that this decision comes from a court in one of the hubs of innovation in the life sciences, it is important to note that the decision is the very first of its kind.  No other court has determined to bar negligence claims yet permit reckless claims with regards to brand name drug liability resulting from generic use.  The Massachusetts Supreme Court even admits that it is “the only court” to make this distinction.  Id. at *32.

While this is a new issue in the context of drug and device litigation, other types of litigation shed light on what the repercussions of this decision may be.  As referenced above, this distinction of not permitting negligence claims but permitting reckless claims exists in the context of both sporting participants who have signed a release and trespassers who claim injury.  On one hand, the higher standards in these types of cases has discouraged lawsuits and made summary judgment easier for defendants to obtain.  On the other hand, requiring a plaintiff to meet a reckless standard certainly does not eliminate litigation.  And, depending upon the situation and insurance policy, the reckless standard can have serious insurance ramifications as some insurance policies do not cover reckless conduct.  The other question, of course, is whether courts in other jurisdictions may start to follow Massachusetts’ novel approach on brand name drug liability.

Regardless, for brand name drug manufacturers, it is a brave new world in Massachusetts.

Two Tales of Preemption

FDA preemption for medical devices is never out of the spotlight for long, even if the story usually seems unchanged by the latest retelling. One recent case confirms that success is sometimes measured in large part by the adversary’s miscues, but the other seems to break new ground in this area by posing the question of how preemption works when a PMA and a 510(k) device are joined. Perhaps as important, however, is that this second case portends a growing split in the courts on a central point in the preemption debate.

Alphatec Prevails in Sixth Circuit

Some preemption cases are a trial in more ways than one, but Alphatec Spine, Inc. prevailed fairly handily in a hearing of Agee v. Alphatec Spine in the U.S. Court of Appeals for the Sixth Circuit. The district court had dismissed the charges with prejudice despite allowing the plaintiff to amend the complaint, describing the plaintiff’s arguments as “a rambling, disorganized mess,” which consisted primarily of conclusory arguments that came up short of pleading standards under the Federal Rules of Civil Procedure 8 and 9.

The plaintiff seems to have compounded the problem by failing to directly respond to Alphatec’s argument regarding implied preemption during district court proceedings, taking up the subject only from the standpoint of doctrine. The plaintiff attacked express preemption at the district court stage, but Alphatec never raised express preemption. Also apparently unchallenged by the plaintiff was Alphatec’s argument that state law in Ohio bars common-law negligence claims.

The Sixth Circuit allowed the plaintiff to return to the district court to revisit the issue of whether the complaint met federal pleading standards, a move attributed to what is said to have been an abuse of discretion on the part of the district court judge. Nonetheless, the Sixth Circuit made clear it was unimpressed with more or less the entirety of the plaintiff’s handling of the matter, stating that the plaintiff’s failure to challenge the district court’s conclusions regarding preemption “fully determines this appeal inasmuch as the forfeited arguments encompass all of the plaintiffs’ causes of action.”

Preemption, PMAs and Predicate Devices

Express preemption might seem a largely settled matter thanks to Reigel v. Medtronic, but the recently decided case of Shuker v. Smith & Nephew took up the relatively novel predicament of a combination of both PMA and 510(k) devices. The outcome in this case in the U.S. Court of Appeals for the Third Circuit affirmed preemption for PMA devices, but seems to have created a schism with respect to the presumption against express preemption.

Shuker addresses a combination of devices that were not approved by the FDA in the configuration used by the implanting physician, and the plaintiff alleged the company’s literature had violated the law when it discussed the use of Smith & Nephew’s R3 acetabular cup in this configuration. The court received an amicus brief from the Department of Justice, which affirmed preemption for PMA devices even when attached to one or more 510(k) devices, but the Third Circuit seems to have sustained the possibility that Smith & Nephew’s printed material regarding the R3 could support a claim of misrepresentation. The Third Circuit sent that discussion back to the district court, which had dismissed that claim with prejudice.

While Shuker is a win for preemption, this appears to be the first instance in which an appeals court has undertaken the question of a device system bearing both 510(k) and PMA components. There is a novel source of tension in the decision, however, in that the court declared that the presumption against express preemption is still alive. The U.S. Court of Appeals for the Eight Circuit arrived at a different conclusion last year in Accord Watson v. Air Methods Corp., but the outcome in Shuker is based in part on the notion that what some believe is pertinent a Supreme Court precedent – that of Puerto Rico v. Franklin California Tax-Free Trust – is not applicable to the areas of the economy regulated by the FDA because Puerto Rico v. Franklin was directed toward bankruptcy law.

Consequently, the Third Circuit argued that the presumption against federal preemption is still a functioning legal theory, but attorneys for Medtronic might differ. The company won a case in the Arizona Supreme Court in October 2017, Conklin v. Medtronic, in which Judge Lori Bustamante declared that even though federal laws are not typically presumed to preempt state laws, the courts “do not invoke that presumption when the federal statute contains an express preemption clause.” Bustamante cited Puerto Rico v. Franklin in support of that conclusion.

It is predictably difficult to forecast how the presumption dilemma will unfold if only because a device maker will have to suffer an adverse outcome in a circuit court before the question is brought to the Supreme Court. On the other hand, there is clearly a growing trend toward differential outcomes on this point, which at the very least suggests the Supreme Court may find this a compelling problem should a device maker apply for cert.

Conte on Steroids — The California Supreme Court Finds that Novartis Can Be Liable for a Drug It Hasn’t Made in Years

Jordan Lipp | Partner, Davis Graham & Stubbs LLP

 

A basic premise of product liability law is that it is the manufacturer of a product, not its competitors, is the sole entity liable for the harm caused by its own defective product.  This issue is of particular importance in the context of brand name versus generic drug manufacturers.  Courts throughout the nation have faced the question of whether the manufacturer of a name brand version of a drug is liable to a plaintiff who only took the generic version of the same drug.  The overwhelming precedent, with a handful of exceptions, has been that a name brand manufacturer cannot be liable if the plaintiff consumed a generic version of the drug.  One of those handful of exceptions was Conte v. Wyeth, a 2008 decision from the California Court of Appeals, which held that a brand name drug manufacturer has a duty to warn the prescribers of the generic versions of their drug.

On December 21, 2017, the California Supreme Court rejected the overwhelming precedent from other states, and following the Conte decision.  It held that brand name drug manufacturers have a duty to warn about their drugs, regardless of whether the plaintiff used the brand-name or generic version of the drug, so long as the plaintiff relied upon the brand name drug manufacturer’s warning.

Perhaps even more surprising was the California Supreme Court’s holding that the brand-name manufacturer’s sale of the rights to the drug did not terminate its liability.  The case, T.H. v. Novartis Pharmaceuticals Corp., — P.3d —,  2017 WL 6521684 (Cal. 2017), arose from a claim by two children (through their guardian ad litem) that their developmental delays and autism were caused by their mother’s use of terbutaline in 2007 during her pregnancy with them.  The brand name version of terbutaline is Brethine, which was manufactured by Novartis until 2001.  In 2001, six years before the generic version of the drug was actually used, Novartis sold its rights to the brand name drug to another drug company.

In spite of the facts that (1) the plaintiffs’ mother took the generic drug, not the brand name drug, and (2) when the mother took the generic drug, Novartis no longer held the rights to the brand-name equivalent, the California Supreme Court still found that Novartis could be liable.  On the first issue, the California Supreme Court held that “Because the same warning label must appear on the brand-name drug as well as its generic bioequivalent, a brand-name drug manufacturer owes a duty of reasonable care in ensuring that the label includes appropriate warnings, regardless of whether the end user has been dispensed the brand-name drug or its generic bioequivalent.”  On the second issue, the Court found that “If the person exposed to the generic drug can reasonably allege that the brand-name drug manufacturer’s failure to update its warning label foreseeably and proximately caused physical injury, then the brand-name manufacturer’s liability for its own negligence does not automatically terminate merely because the brand-name manufacturer transferred its rights in the brand-name drug to a successor manufacturer.”

Well aware that this decision runs contrary to the great weight of authority in other states, the California Supreme Court ended its opinion stating: “We do not doubt the wisdom of crowds in some settings. But the value of an idea conveyed by or through a crowd depends not on how loudly it is proclaimed or how often it is repeated, but on its underlying merit relative to the specific issue at hand.”  With this decision, California will continue to be a hotbed for pharmaceutical litigation for years to come.

Status of Medical Device Reprocessor/Refurbisher Liability

Courtney S. Young, Esq. |Senior Attorney, Medmarc Risk Management

Status of Reprocessor Liability

The recent pressures to drive down the cost of medical care have given way to a practice of using medical devices (even so-called “single-use devices”) a greater number of times, on a greater number of patients, before disposing of them. To accomplish this, hospitals are increasingly using reprocessors to sterilize and re-validate their devices between uses. Although device reprocessing is nothing new, the increase in demand has largely altered the general practice from one in which hospitals sent its devices to a reprocessor and got those exact units back after reprocessing, to one in which the reprocessor provides the hospital with the same model of devices that the hospital submitted but not necessarily the same specific units submitted. This allows for a faster turn-around time.  In this process, the reprocessor may often re-serialize the devices and alter the labels, warnings, or instructions for use, hopefully to account for any additional precautions medical personnel must need to take in light of the manner of reprocessing.

FDA Regulation

Medical device refurbishing is an interesting area right now as it has recently become a focus for FDA and a potential subject of new regulation. Last Spring, the FDA sought industry feedback on proposed definitions including repair, refurbish, remanufacture, recondition, and remarket. At the same time, the Agency also solicited answers to questions about the risks and failure modes introduced as a result of performing these activities on medical devices, and whether the risks were different depending on who performs the activities (hospitals, OEMs, third parties). Thus far, though over 200 comments were submitted in response to these questions, there has not been any further movement from the FDA in this area. Many have speculated that when the Agency does take action, it will likely be to bring refurbishers under the same oversight scheme as reprocessors of single-use devices.

Kapps v. Biosense Webster, Inc.

Although the presence of reprocessors in the chain of distribution presumably has products liability implications for the original-equipment manufacturers (OEMs), few cases have addressed the issue of strict products liability for manufacturers when a device malfunctions after it has been reprocessed or refurbished. The most recent case that really explored this issue was Kapps v. Biosence Webster, 813 F.Supp.2d 1128 (D.Minn. 2011), a case that came out of the Federal District Court of Minnesota in 2011. Though several years old now, the Court’s analysis provides some valuable insights into distinctions that may be important in deciphering products liability apportionment between OEMs and reprocessors. It’s easy to extrapolate that similar reasoning would apply to refurbishers.

In Kapps, the plaintiff was an atrial fibrillation patient that underwent a procedure in which doctors used a “lasso catheter” that had been reprocessed.  During the surgery, the lasso portion of the catheter separated and remained entangled in the plaintiff’s mitral valve. It was eventually able to be removed by the doctors, but the damage that was sustained to the plaintiff’s mitral valve in the process necessitated additional open-heart surgery and replacement of his damaged valve with a prosthesis.

The plaintiff brought the usual products liability claims—manufacturing defect, warning defect, design defect, breach of warranty, and negligence—against both the OEM and the reprocessor.

The Court held:

  1. Plaintiff cannot rely on res ipsa loquitor to establish the OEM’s liability for manufacturing defects.

Res ipsa loquitur is a doctrine used in negligence and products liability actions when the plaintiff has incurred some harm, but obvious difficulties may make too difficult for the plaintiff to prove the exact origin of the cause of harm. In order to utilize res ipsa, plaintiffs (generally) must first establish both that (1) the accident—here, the defect in the product—is the kind that would usually be caused by negligence; and (2) that the defendant had exclusive control over the instrumentality that caused the accident—here, the manufacture and composition of the device.  In disallowing the plaintiff to rely on res ipsa against the OEM, the Court relied on the fact that at the time of injury, the reprocessed device could not be said to have been in the same condition it was when it left the OEM’s control. In effect, the second prong was not satisfied as the OEM did not have exclusive control over the condition of the catheter once the reprocessor was used.

  1. Claims against the reprocessor are viable under theory of res ipsa loquitor.

In contrast, because the reprocessor did have exclusive control over the condition of the catheter as it was at the time of the injury, the Court held that res ipsa loquitur could be applied to the negligence claim against the reprocessor.

  1. An OEM that markets its device as single use will be immunized against the claim that it nonetheless should have foreseen and warned that a reprocessor might ignore the single-use instructions.

In Kapps, the OEM of the catheter has specifically labeled the device, and included in its instructions for use, that it was intended for single use only. Nonetheless, the plaintiff claimed that the OEM should have foreseen that the catheter would likely still be reprocessed despite such instructions, and warned accordingly of the dangers of reprocessing. The Court rejected this claim.

  1. Reprocessor carried a manufacturer’s duties to warn and to provide a defect-free product, because it acted (a) replaced the OEM’s instructions for use and product serial numbers with its own; (b) warranted the functionality of the reprocessed device; and (3) marketed the product as its own equivalent to the OEM’s.

The reprocessor responded to the warning-defect allegations of the plaintiff’s by asserting that the duty to warn should lie only with the OEM. The Court did not find this argument compelling, and instead held that the reprocessor in these circumstances indeed had the same duty to warn as an OEM has.

Kapps can provide helpful guidance for OEMs and reprocessors alike.  For OEMs, it may be reassuring that they may not be strictly liable for manufacturing defects after the their device has been reprocessed, but they must be careful to include warnings and instructions for reprocessing and its dangers if in fact their device is not designated for single use only. Reprocessors should be mindful of enlarging their own products liability when they mix, re-serialize, and alter the warnings and labels of an OEM’s devices.

State Statutes

In the years since Kapps, courts haven’t been asked to reconsider the issue of reprocessor/refurbishers liability hasn’t come before the courts again, so it’s the best indication we’ve got as to how courts are likely to treat reprocessor liability going forward. That said, several states aren’t waiting for the courts to decide, and some have enacted statutes specifically deeming reprocessors and refurbishers to have the same liability with respect to a defective device as original manufacturers. See, e.g., Utah’s statute, U.C.A. 1953 § 78B-4-505. Liability of reprocessor of single-use medical devices.

Conclusion

The safest course for reprocessors and refurbishers of medical devices is probably to assume that they may stand in the shoes of the OEM if something goes wrong with the device they process. In doing so, they should implement a quality management system and undertake the same robust risk management practices of which successful OEMs make use.