Last Month, the California Supreme Court issued a controversial ruling that will allow drug manufacturers to be held liable for generic versions of the same drug manufactured by another company, even if they have sold the rights to the drug since. This runs contrary to a 2011 US Supreme Court decision, which states that generic drug companies cannot be sued for not properly labeling their products because they must use the same label as the brand-name drug. This ruling essentially stated that anyone negatively affected by a generic drug’s improper labeling could not pursue a legal remedy. Since generic drugs are much cheaper than their brand-name counterparts, the decision seemed to disenfranchise low-income users, especially minorities.

In 2007, a pregnant woman with twins, who is unnamed in the lawsuit, was prescribed the generic version of the drug Terbutaline in order to prevent premature labor. Although Terbutaline is an asthma medication, it has been used “off-label” in order to prevent premature births. She claims that it caused the two children to suffer brain injuries that led to developmental problems, including autism.

Terbutaline was sold by the pharmaceutical company, Novartis, under the name Brethine until it sold the rights to the drug in 2001. Studies from as far back as the 1970s have shown that Terbutaline should not be used by pregnant women, but the Plaintiff’s alleged that Novartis shucked all responsibility for the children’s injuries during the trial by stating that it could do nothing about the warnings on the generic-product’s label.

In a 4-3 decision by the court, Associate Justice Mariano-Florentino Cuellar stated that the federal regulations in play made it “foreseeable” that the former manufacturer, which in this case is Novartis, would not update their former drug’s warning label because it would not be strictly in their financial interests.

Currently, generic-drug’s labels must only match the brand-name’s. The court’s decision further states that the brand-name manufacturer is still liable for discrepancies between its label and the generic’s, even if the brand-name drug has stopped being manufactured. Generic medication manufacturers cannot change the warning labels on the drugs they produce without approval from either the FDA or current generic manufacturer. The generic-drug manufacturer, however, is still liable for injuries if they purposefully change the label from that of the brand-name counterpart, if there is an issue in the manufacturing process, and if the generic manufacturer suggests a use different from that of its FDA approved functions.

This ruling will likely have large implications for the pharmaceutical industry since the ruling was so close, and it deviated from decades of precedent. It is possible that if other state courts rule with the same mindset as the California Supreme Courts, they will pressure the US Supreme Court into reviewing the existing federal regulations.

No matter what the future holds, this is a big win for California consumers! Read the entire opinion of the court courtesy of Stanford Law School [HERE].