Friday, 6 February 2009

Innovator liability

Imagine you have created a pharmaceutical drug which, after lengthy testing you spend money on marketing and explaining to doctors what the benefits and side effects are and they come to rely on your information. You pass all the FDA tests and start making sales and then when your patents expire you are faced with competition from manufacturers who supply generic drugs. Tough, but that is the way of the world, no one gets an intellectual monopoly forever.

Now imagine that one of the customers for the generic drug sues the manufacturer and your company because of the side effects. Does the Court find against the manfucturer and decide that your company is not culpable?

In a recent case a court in California has decided that you, as the Innovator, are culpable, and the generic manufacturer is not.

The court stated:
"The common law duty to use due care owed by a name-brand prescription drug manufacturer when providing product warnings extends not only to consumers of its own product, but also to those whose doctors foreseeably rely on the name-brand manufacturer's product information when prescribing a medication, even if the prescription is filled with the generic version of the prescribed drug. "

As lawyers Mayer Brown LLP explain one of the consequences of the court's decision is that it " threatens to create an insurance system under which name brand manufacturers absorb the liability of their competitors: competitors that, in many instances, not only enjoy greater market share, but are also relieved of research, development and advertising costs. This system, in turn, threatens to drive up the costs associated with the development and marketing of new drugs, which could chill innovation of new products and undermine the policy goal of preventing future injury to patients. "

This would make generic drug manufacturer even more attractive as insurance costs would be reduced. Perhaps generic drug manafacturers should be made pay for the insurance of the innovator as they are clearly getting a benefit. Don't hold you breath though.

No comments: