FDA's generic-drug label rule draws controversy

When new evidence emerges that a brand-name prescription drug has harmed patients, manufacturers are required to immediately warn doctors and consumers by updating product labels or sending letters.

Drugmakers face major product liability exposure under the “failure to warn” legal theory if they fail to act quickly. That gives them a strong incentive to take prompt steps to protect patient safety.

The federal mandate to update warning labels, however, doesn't apply to the 3.4 billion prescriptions for generic drugs ordered annually in the U.S. In fact, it's just the opposite.

Federal law does not allow the makers of generics to change the safety warnings on their labels in response to new information until the maker of the branded equivalent has done so and the change has received approval from the Food and Drug Administration. The U.S. Supreme Court ruled last year that patients who claim they were injured by generic drugs can't bring failure-to-warn lawsuits against generic-drug manufacturers that use the FDA-mandated labels, immunizing those companies from legal risk.

Now the FDA has proposed a rule allowing the makers of generics to update their warning labels in response to new information about drug risks, creating what it calls parity on labeling between brand-name drugmakers and generic makers. If the proposed rule is adopted without changes, experts say generic-drug makers will have to update their labels or face heightened risk of failure-to-warn lawsuits. The FDA and supporters of the rule say that would put pressure on generic-drug makers to do a better job of finding out when drugs are harming patients. An FDA representative did not say when the final rule would be issued.

The generic-drug industry, which supplies more than 80% of the prescriptions ordered in the U.S., strongly objects to the proposal. It argues that the current system of having the FDA approve label changes for generics after brand-name drugmakers identify needed updates has worked well for 30 years, since Congress approved a law encouraging generic-drug use. They predict the proposed rule would hike generic-drug costs by $4 billion a year and lead to a confusing array of different warning labels for the same drugs.

“Our bedrock principle is that the FDA should make the decision on changing the label,” said Ralph Neas, president and CEO of the Washington-based Generic Pharmaceutical Association. “The FDA is the only entity that has all the necessary information to make the decision.”

Meanwhile, House Republicans have warned that the rule would lead to increased litigation against drugmakers, and they have suggested that FDA officials took their marching orders from plaintiff attorneys after meeting with them early last year. “The proposed rule could increase manufacturer exposure to state tort lawsuits,” according to a letter signed by Rep. Fred Upton (R-Mich.), House Energy and Commerce Committee chairman, and other Republican lawmakers. “These costs could be in the billions and surely will be passed on to the consumer in the form of higher prices.”

During the public comment period that ended March 31, the FDA received 119 comments on the proposal, many of which were critical. The California Public Employees' Retirement System said the rule would undermine the market for generic drugs. The National Patient Safety Foundation said confusion could result from having identical products with differing labels if generics makers can amend their warnings without prior FDA approval.

But AARP said the changes would give consumers the same legal rights whether they were injured by brand-name or generic drugs. The Pharmaceutical Research and Manufacturers of America, which represents companies that develop new drugs, agreed with the FDA's goal of bringing parity to labeling requirements but objected to the specifics of the rule. PhRMA urged the FDA to maintain control over generic labels but use an “expeditious” process to consider updates.

Dr. Michael Carome, director of the Health Research Group at consumer-advocacy organization Public Citizen, said generic-drug makers are seeking to preserve a unique immunity from product-liability cases created by recent Supreme Court rulings.

But the drug companies argue that the rule would create new liability exposure that would reduce the nation's estimated $200 billion in annual savings generated by the generic-drug system.

The existing system for generic-drug labeling was established by the 1984 Hatch-Waxman Amendments. The law allows makers of a generic drug to bypass the FDA's stringent new-drug application process and related clinical trials if the generic has the same formula, dose, rate of absorption and product-safety warnings as the approved branded version. Under the law, the drugs' original developers retain the primary role of post-market surveillance because they hold the original clinical trial data and all the information while the drug was under patent protection.

But increased competition from generics has forced many off-patent branded drugs off the market. More than 1,000 FDA-approved drugs are available only as generics, according to one 2011 analysis. For generic drugs without brand-name equivalents, there are no clear and rapid methods to disseminate information to prescribers and the public about newfound risks, because the generic makers currently are not allowed to amend product labels on their own, Public Citizen argues.

The FDA's proposed rule would give generic-drug companies the same ability as brand-name makers to add warnings to drug labels and send letters to doctors about newly discovered risks. Updates would be sent simultaneously to the FDA and the branded drug companies for further review. But generic-drug makers could immediately make changes while waiting for the FDA and the brand-name owner to decide if the change was necessary. The FDA also would quickly post notices online disclosing when the agency is in the process of reviewing a label change from a generic-drug maker.

While the FDA acknowledges the proposed system could lead to temporary differences between labels for the same drug, that situation already arises when the makers of brand-name drugs update labels and there is a time lag before generic makers follow suit. FDA drug research director Dr. Janet Woodcock told Upton's committee in April that “concerns related to temporary differences in labeling between generic drugs and their corresponding brand drugs are outweighed by the benefit to the public health” from giving all drugmakers the ability to update warning labels.

Public Citizen had petitioned the FDA for the rule change in 2011. But Woodcock told the House committee that Supreme Court decisions in 2011 and 2013 prompted the rule. Last June, the U.S. Supreme Court threw out a $21 million jury award in U.S. District Court in New Hampshire in a product liability lawsuit filed by Karen Bartlett against Mutual Pharmaceuticals, a subsidiary of an India-based company with U.S. headquarters in Detroit.

Bartlett went nearly blind, spent months in a coma, and had more than half her skin sloughed off after she contracted a rare disease caused by the generic anti-inflammatory drug sulindac, manufactured by Mutual. The jury found that under New Hampshire's design-defect law, Mutual should have issued a warning about the risk sooner and more clearly than it did. The 1st U.S. Circuit Court of Appeals ruled that Mutual was liable for the damages because it chose not to withdraw the drug from the New Hampshire market.

But the Supreme Court in a 5-4 decision in Mutual v. Bartlett found that New Hampshire's design-defect law was pre-empted by federal law and regulations forbidding generic-drug makers to change labels or send letters to doctors warning about newly discovered risks without prior FDA approval.

“Mutual Pharmaceutical wasn't held accountable for anything,” Bartlett said in an interview. “I strongly believe generic companies should be held accountable just like brand-name companies are.”

Mutual did not respond to requests for comment.

The Supreme Court issued a similar decision in favor of generic-drug makers in its 2011 ruling in Pliva v. Mensing. That case arose out of lawsuits in Louisiana and Minnesota, which have laws like New Hampshire's requiring companies including generic-drug makers to warn the public about the known risks of their products.

Last December, the FDA published its preliminary rule. In her congressional testimony in April, Woodcock described the change as “enabling” the makers of generic drugs to quickly amend the labels.

Product liability experts, however, say the change allowing generic-drug makers to update labels with safety warnings would be tantamount to mandating such updates.

“Once they've been given the right to change their label, they get the right to be sued for failing to change their label,” said Bruce Roberts, a plaintiff attorney with Tyler, Texas-based personal injury firm Roberts & Roberts. The rule would make generic makers responsible for knowing the full effects of their products, which he acknowledged would “probably” cause some drug prices to increase.

The generic-drug industry criticizes the FDA for giving short shrift to the cost issue in issuing the rule. A study published by economic consulting firm Matrix Global Advisors and promoted by the Generic Pharmaceutical Association in February estimated the rule would lead to a 5% annual increase in spending on generic drugs.

The study also warned of cost growth from a loss of competition resulting from generic-drug makers withdrawing products from the market and from higher liability costs.

“This is a draconian departure from what the law has been for the past 30 years,” said the Generic Pharmaceutical Association's Neas. “There have been some settlements over the years, but there has been no final court decision that said generic manufacturers were liable for failure to warn. What Bartlett and Mensing did was reaffirm what was the law for the past 30 years.”

That's strongly disputed by Public Citizen's Carome, who said that until the Supreme Court's 2011 ruling in Mensing, generic-drug companies faced legal liability from failure-to-warn lawsuits and many cases were settled by the drugmakers after courts rejected their immunity claims. “The proposed rule would not create a new cost, but one borne and managed well by the industry consistently until June 2011,” Carome said.

Neas said generic-drug makers are urging the FDA to modify the proposed rule. Instead of allowing manufacturers to amend their labels, his group would prefer to leave the decisionmaking authority on generic labels with the FDA, but have the agency set up a process for expedited reviews of adverse-event reports.

“We don't want to kill the rule, we want to improve the rule,” he said.

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