The following is a guest post by Laura Mastrangelo at Reed Smith, who gets all the credit, and takes all the blame, for its contents. Take it away Laura….
There was a fair amount of preemption action on punitive damage statutes last week, at least with respect to those states that limit punitive damages for FDA approved drugs and devices. John Sullivan provided excellent coverage of Zimmerman v. Novartis Pharmaceutical Corp., ___ F. Supp. 2d ___, 2012 WL 3848545 (D. Md. Sept. 5, 2012), yesterday here, so I won’t belabor that discussion further. Flying more under the radar, though, the Sixth Circuit issued an opinion in Marsh v. Genentech, Inc., ___ F.3d ___, 2012 WL 3854780 (6th Cir. Sept. 6, 2012), which dovetails nicely with the District of Maryland’s analysis in Zimmerman. In Marsh, the Sixth Circuit affirmed its previous holding in Garcia v. Wyeth-Ayerst Laboratories, 385 F.3d 961 (6th Cir. 2004), that the fraud exception to Michigan’s bar on products liability suits against drug manufacturers is preempted, even where Plaintiffs haven’t alleged fraud-on-the-FDA in the classical sense.
Plaintiffs brought consolidated products-liability actions against drug manufacturers Genentech, Inc. and Xoma (U.S.) LLC (collectively, “Genentech”) to recover for injuries allegedly sustained from use of the psoriasis medication Raptiva, alleging strict products liability under design-defect and failure-to-warn theories, negligence, breach of warranty, and fraud. Id. at *1. The action consolidated four different plaintiffs, but apart from their dates of use and alleged injuries, the allegations for the four were identical. Id., n.2.
Plaintiffs claimed that, both prior to and after FDA approval, Genentech knew of dangerous side effects that it concealed from the public and did not include in the drug’s label. Id. at *1. Specific to the arguments at issue here, Plaintiffs further alleged that Genentech “intentionally and negligently failed to update statement of contraindications, warnings, precautions, and adverse reactions that Defendant affirmatively knew about” and “intentionally and negligently failed to comply with various [FDA disclosure regulations].” Id.
Genentech moved to dismiss, and won. The district court held that Genentech was entitled to immunity under the Michigan Products Liability Act (the Act) and that Plaintiffs’ claim that immunity did not apply was preempted by federal law. Id. at *2. Citing Garcia, the district court explained that federal law preempts tort claims premised on the Act’s exceptions absent a finding by the FDA itself that the manufacturer had committed fraud or bribery. Id. The district court concluded that, because Plaintiffs had not alleged that the FDA had found that Genentech committed fraud, their claims were preempted. Id.
It’s not news that Michigan law is very favorable to drug manufacturers, providing that a drug manufacturer or seller is not liable for injuries caused by the use of its products “if the drug was approved for safety and efficacy by the [FDA], and the drug and its labeling were in compliance with the [FDA’s] approval at the time the drug left the control of the manufacturer or seller.” Mich. Comp. Laws §600.2946(5).
Statutory immunity does not apply, however, if the manufacturer or seller: (a) Intentionally withholds from or misrepresents to the FDA information concerning the drug that is required to be submitted under the FDCA, and the drug would not have been approved, or the FDA United States food and drug administration would have withdrawn approval for the drug if the information were accurately submitted, or (b) Makes an illegal payment to an official or employee of the United States food and drug administration for the purpose of securing or maintaining approval of the drug. 2012 WL 3854780, at *2-3. The Michigan Supreme Court has described the Act’s immunity provision as “an absolute defense to a products liability claim” premised on the determination that “compliance with federal governmental standards (established by the FDA) is conclusive on the issue of due care for drugs.” Taylor v. Smith-Kline Beecham Corp., 658 N.W.2d 127, 130-31 (Mich. 2003).
Following Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), the Sixth Circuit previously held in Garcia that suits against drug manufacturers under Michigan law in which the Plaintiffs seeks to defeat immunity by invoking the Act’s fraud exceptions are equivalent to fraud-on-the-FDA claims and are thus preempted. 2012 WL 3854780, at *4. Even though, under Michigan law, fraud on the FDA is an exception to a grant of immunity to the manufacturer rather than a stand-alone cause of action, it nonetheless ultimately “requir[es] proof of fraud committed against the FDA” to succeed, and is therefore preempted. Id. “Garcia thus essentially requires treating a plaintiff’s fraud arguments against manufacturer immunity as a threshold “claim” that can be preempted.” Id.
Here, Plaintiffs attempted to argue that Garcia did not apply because their claims − in what was basically a pleading trick − did not invoke the Act’s fraud exception. Id. Though Plaintiffs’ theory was somewhat unclear, the Court interpreted the argument to be that immunity should not apply because of Genentech’s alleged non-compliance with the terms of the FDA’s approval of Raptiva, in that Genentech failed to comply with the FDA’s post-marketing reporting requirements. Id. However, the purported “non-compliance” was precisely the same fraud on the FDA allegations that the same court had ruled preempted in Garcia.
The court noted that Plaintiff’s allegations of non-compliance “do not fit comfortably within the statutory language requiring compliance for immunity to apply,” because the complaint alleged that Genentech did not comply with the terms of the FDA approval by failing to update its application or submit safety reports, not that “the drug and its labeling” did not comply.” Id. at *5. Further, the complaint also did not allege that the dose of Raptiva she received was adulterated or that its label varied from the label that the FDA approved. Id.
Thus, the Court considered the allegation of failure to submit reports to the FDA that the FDA requires “to be a species of fraud on the agency under the state Act.” Id. “Indeed, the Michigan Act’s fraud exception specifically encompasses at least some of the misconduct Marsh alleges − a manufacturer “[i]ntentionally withhold[ing] from … the [FDA] information concerning the drug that is required to be submitted under the [FDCA] ‘when the FDA “would have withdrawn approval for the drug if the information were accurately submitted.’” Id.
Further, even if Plaintiffs’ allegations did constitute “non-compliance” (as opposed to fraud on the FDA) within the meaning of the Act, the claim “that immunity does not apply triggers the same concerns that animated Buckman and Garcia[,]” and is therefore preempted. Id. In short, Plaintiffs could not plead around preemption.
Plaintiffs claimed that “Genentech failed to submit updated safety information to the FDA as required of all applicants by FDA Form 356h and generally applicable FDA regulations,” and thus they rely on “federal enactments [a]s a critical element in [their] case.” Quoting Buckman, 531 U.S. at 353. Moreover, this alleged wrong was perpetrated upon the agency, and thus implicates the “inherently federal” relationship described in Buckman. Id. at 347. Finally, Plaintiffs’ suit would require a court to rule on the adequacy of Genentech’s post-marketing disclosures to the FDA, which is the kind of “inter-branch[ ]meddling” that concerned the Court in Buckman. See Garcia, 385 F.3d at 966. Having a court determine whether any non-disclosed information “ ‘may reasonably affect the statement of contraindications, warnings, precautions or adverse reactions in the draft labeling,’ “would both usurp the agency’s role and go beyond the court’s institutional expertise.” Marsh, 2012 WL 3854780, at *5.
The Court did not take a position, however, as to whether an allegation of “substantive non-compliance that is unique to the terms of approval of a particular drug or that more directly involves a consumer, such as a chemical variance or an inaccurate label, would be preempted under Garcia,” as the allegations there did not implicate such a holding. Id., n. 9.
As a final note, the Court dismissed Plaintiffs’ other arguments, concluding first that the fact that Plaintiffs’ substantive claims sound in negligence and strict products liability would not enable her to avoid preemption, because so did the claims in Garcia. Id. at *6. Moreover, Wyeth v. Levine did not change the analysis either, because “[a]lthough preemption principles do not foreclose state-law failure-to-warn claims once the FDA has approved a drug, Michigan law does so.” Id. Finally, the Court rejected Plaintiffs’ argument that as an affirmative defense, Defendants bore the burden of establishing compliance with its FDA approval, because the complaint “makes clear that Marsh could not defeat Genentech’s arguments for immunity.” Id. at *6-7.