Since the inception of the blog we’ve taken interest in “flip side” lawsuits in which a plaintiff sues one of our manufacturer clients making allegations diametrically opposed to what we usually see in product liability litigation – that, far from being injurious or “defective” − our client’s product is so valuable that the plaintiff can’t do without it, and is suing because of some threat to his/her supply of that product.
The first time we commented on such suits, the plaintiffs were suing the government, claiming a constitutional right to try investigational drugs. We opposed that, knowing that, were such a right recognized, our clients would be the next targets of such constitutionally empowered plaintiffs, because our clients, not the government, had the drugs in question. The courts ultimately said “no,” see Abigail Alliance v. von Eschenbach, 495 F.3d 695 (D.C. Cir. 2007), but the lawsuits followed anyway. Most of these cases involved desperately ill people grasping at investigational straws because there was no cure (or even reliable treatment) for their conditions (muscular dystrophy, multiple sclerosis, and similarly devastating and fatal conditions). We summed this kind of litigation up recently in reviewing the first comprehensive law review article on the subject.
Now there’s another one.
The plaintiffs’ duty-to-supply allegations in Hochendoner v. Genzyme Corp., ___ F. Supp.3d ___, 2015 WL 1333271 (D. Mass. March 25, 2015), were a little different, since the drug in question was not investigational. The defendant was described as “the manufacturer of . . . the only treatment for Fabry disease” that had FDA approval. Id. at *1. Fabry disease is a rare (≈ 1 in 100,000), progressive, and life-shortening condition.
Because the condition is rare, the market is small. Defendant was the “sole supplier” of the only approved medication. Id. Therefore, when manufacturing problems removed several batches from production, the resultant “shortage in the U.S. market” forced the defendant to ration supply. Id. at *1-2. This rationing prevented the plaintiffs – disease sufferers (and spouses) from 22 states – from obtaining more than 30-50% of the recommended dose. Id. at *2. The reduced dose was allegedly less effective at treating the disease, which allegedly injured the plaintiffs. Their core allegation was:
Because [defendant] has denied Fabry patients access to the drug in FDA-recommended doses, Fabry patients have suffered a return of the symptoms of their life-threatening disease.
Plaintiffs alleged a potpourri of theories predicated on the supposed duty: negligence, negligence per se, strict liability, breach of warranty, third-party beneficiary contract, and various state consumer protection statutes. Hochendoner, 2015 WL 1333271, at *4. They alleged three kinds of “injury”: (1) return of symptoms due to lower doses being less effective; (2) “accelerated” progression of the disease due to lower dose; and (3) exposure to “adulterated” product that should not have been sold. Id. at *5. The first was held to be adequately pleaded, because it was common to all plaintiffs, whereas categories 2 and 3 were not common, and thus inadequately pleaded. Id. at *5-7
With the complaint thus reduced to only injuries allegedly attributable to rationing/reduced dose, the question of whether a drug manufacturer has a “duty” to maintain a full supply of its drug to all prescribed users, and can be liable for damages for a breach, was thus squarely presented in Hochendoner.
First to go was negligence per se, which was based on alleged violations of something called the “Bayh-Dole” (sounds like a pineapple commercial) Act, 35 U.S.C. §§200 et seq. We divine from Hochendoner that the drug must originally have been developed with some sort of public funding, and the plaintiffs’ theory was that, because the defendant’s manufacturing problems led to a shortage, the defendant had somehow used its rights to this “publicly funded invention” unreasonably. Sounds like BS, but the merits were never reached. This statute did not provide an express cause of action and the court wasn’t about to imply one:
[The statute] focuses neither on the individuals protected nor even on the funding recipients being regulated, but on the agencies that will do the regulating. Its purpose is not to protect the public or to prevent nonuse or unreasonable use of inventions, but instead to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public.
2015 WL 1333271, at *8 (citations and quotation marks omitted). The only remedy under Bayh-Dole was that the government could “march in” and license somebody else to produce the invention at issue. Id. Plaintiffs had no rights at all:
The express provision of one method of enforcing a substantive rule suggests that Congress intended to preclude others. As with other federal statutes [that do] . . . not  confer a private right of action, this identified remedy provides a mechanism for federal review of a potential violation of the statute, rather than leaving individuals aggrieved by such a violation without any form of redress.
Id. “[W]ithout statutory intent, a cause of action does not exist and courts may not create one, no matter how desirable that might be as a policy matter, or how compatible with the statute.” Id. at *9 (citation and quotation marks omitted). Sounds a lot like Buckman to us – one of the reasons such unusual claims interest us.
The third-party beneficiary contract theory fell next. First, what was the purported contract? The license agreement between the drug’s inventors and the defendant manufacturer. Hochendoner, 2015 WL 1333271, at *9. The contract – like the statute just discussed – was devoid of any intent to confer actionable rights on anybody else. “[N]one of the operative clauses mentions Fabry patients, and, even more pertinently, that none of the operative clauses creates any obligation for [defendant] to produce sufficient medicine to meet demand. Plaintiffs simply cannot point to any operative clause that [defendant] breached.” Id.
The tort claims (negligence and strict liability) followed. There is simply no duty recognized in any state that requires a manufacturer to keep on hand enough of a product to meet foreseeable demand. “Plaintiffs fail to cite a single case establishing that [defendant] has a duty to manufacture sufficient medication to meet market demand. I can find no such case under the law of any state implicated in these actions.” Id. at *11. All prior precedent was to the contrary, and the opinion cited the Schubert and Lacognata cases we have blogged about previously, as well as the aforementioned law review article.
What remains are Plaintiffs’ claims that [defendant] violated the state product liability laws by failing to manufacture sufficient [product] to meet the U.S. market demand and refusing to fill physicians’ prescriptions for the FDA-recommended dosage. These allegations fail to state a claim upon which relief may be granted, because the relevant state statutes do not render such conduct actionable.
Id. at *13.
Failure to provide enough of a product is not a “defect.” Id. (“non-provision of a product does not fit” into the definition). The harm was caused by the underlying disease, not by the product. Id. at *14. “Simply put, the claims asserted here are not for the manufacture and distribution of a defective product, as state product liability laws have developed, but are for a failure to manufacture sufficient quantity of a non-defective product.” Id.
Adding icing on the cake, Hochendoner invokes our favorite Erie principle:
A federal court sitting in diversity cannot be expected to create new doctrines expanding state law. It is not appropriate for this court to create the proposed duty as a new component of the common law, especially given that it is such a radical departure from the law as it exists.
2015 WL 1333271, at *11 (citation and quotation marks omitted). Accord Id. at *14.
“For much the same reason,” Hochendoner declined to create a duty to supply under the consumer protection statutes of any of the plaintiffs’ 22 home states. Id. Again, there was no precedent for any such holding in any of the affected states. “It is inappropriate for a federal court sitting in diversity to create a new doctrine under state law in this manner.” Id.
Nor were there any express warranties concerning supply. Certainly, nothing warranted “that a lower dosage would be as efficacious for use in the treatment of Fabry disease as the dose recommended on the packaging and by the FDA.” Id. at *12. That would amount to promoting an off-label use. Nor was there any reliance on the non-statement: “They do not allege that any Plaintiff believed that the lower dose would work as well.” Id. The warranty claim simply didn’t make any sense.
Plaintiffs offer no case law in support of the proposition that if a merchant has available only a limited amount of a product, the merchant is impliedly warranting that the limited amount will be as powerful or effective as a greater amount. A shop owner does not warrant that one cup of sugar (the only cup in stock) will make as sweet a cake as the two cups of sugar for which the recipe calls.
Id. at *13. The case involved a prescription drug, not some homeopathic remedy.
Finally, in a footnote, Hochendoner disposed of plaintiffs’ contention that they could plead a constitutional tort (“Bivens action”). Assuming everything else plaintiffs alleged, only a state actor could violate the Fifth Amendment, as Bivens requires. No support existed for a theory that mere exercise of rights flowing from a federal patent converted a private manufacturer into a state actor. 2015 WL 1333271, at *9 n.7.
In the prior duty-to-supply litigation, the claims tended to concern termination of access to investigational products that allegedly helped the plaintiffs. Hochendoner, involved a fully approved drug, with shortages caused by temporary manufacturing problems. Id. at *2. They eventually ended, and regular shipments resumed. Thus these plaintiffs did not even have the arguable injuries of the prior cases, so it’s not surprising that they lost, too. Plaintiffs are fond of saying (in the preemption contexts) that manufacturers don’t have to produce anything. Yes, manufacturers don’t have to manufacture, nor do tort plaintiffs have any basis to stop them. Nor can plaintiffs force them to do so. Hochendoner reached the right result.