Rafferty v. Merck & Co., Inc.

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SJC-12347
BRIAN RAFFERTY vs. MERCK & CO., INC., & another.1
Middlesex. November 6, 2017. - March 16, 2018.
Present: Gants, C.J., Gaziano, Budd, & Cypher, JJ.
Negligence, Pharmaceutical manufacturer, Adequacy of warning,
Duty to warn, Standard of care. Actionable tort. Public
Policy. Consumer Protection Act, Unfair or deceptive act,
Trade or commerce. Practice, Civil, Motion to dismiss.
Civil action commenced in the Superior Court Department on
October 10, 2013.
A motion to dismiss was heard by Kenneth J. Fishman, J.,
and entry of separate and final judgment was ordered by him.
The Supreme Judicial Court on its own initiative
transferred the case from the Appeals Court.
Emily E. Smith-Lee for the plaintiff.
Richard L. Neumeier (Aaron Rice, of Mississippi, & David L.
Johnson, of Tennessee, also present) for Merck & Co., Inc.
The following submitted briefs for amici curiae:
Michael X. Imbroscio & Gregory L. Halperin, of the District
of Columbia, & Paul W. Schmidt for Pharmaceutical Research and
Manufacturers of America & others.
1 Sidney Rubenstein.
2
Mark C. Fleming & Tyler L. Sparrow for International
Association of Defense Counsel.
Hugh F. Young, Jr., of Virginia, & David R. Greiger &
Richard G. Baldwin for Product Liability Advisory Council, Inc.
Kannon K. Shanmugam, Allison Jones Rushing, & Connor S.
Sullivan, of the District of Columbia, & Jennifer G. Wicht for
Chamber of Commerce of the United States of America.
Lawrence G. Cetrulo, Kyle E. Bjornlund, Elizabeth S.
Dillon, & Brian D. Fishman for Massachusetts Defense Lawyers
Association.
GANTS, C.J. Under Federal law, a manufacturer of a generic
drug must provide its users with a warning label that is
identical to the label of the brand-name counterpart. See
PLIVA, Inc. v. Mensing, 564 U.S. 604, 613 (2011) (PLIVA). The
issue on appeal is whether a plaintiff who alleges that he was
injured from his use of a generic drug, because of a failure to
warn of the drug's side effects, may bring a common-law general
negligence claim and a statutory claim under G. L. c. 93A
against the brand-name drug manufacturer that created the
warning label. Applying our general principles of tort law and
as a matter of public policy, we conclude that the plaintiff may
not bring a negligence claim against the brand-name manufacturer
for a failure to warn. We further conclude that the plaintiff,
if he were to amend his complaint, and if the amended
allegations would so warrant, may bring a common-law
recklessness claim against the brand-name manufacturer if it
intentionally failed to update the label on its drug, knowing or
having reason to know of an unreasonable risk of death or grave
3
bodily injury associated with its use. We also conclude that a
plaintiff who is injured by a generic drug due to a failure to
warn cannot bring a claim under G. L. c. 93A, § 9, against a
brand-name manufacturer that did not advertise, offer to sell,
or sell that drug because such failure did not occur in the
conduct of "trade or commerce" as defined in § 1 (b).2
Background. 1. Regulatory background. Under the Federal
Food, Drug, and Cosmetic Act (act), 21 U.S.C. §§ 301 et seq.
(2012), drug manufacturers may not market drugs in interstate
commerce without the approval of the United States Food and Drug
Administration (FDA). 21 U.S.C. § 355(a). As such, a
manufacturer that seeks to market a new brand-name drug must
submit a new drug application, showing that the drug is safe and
effective. See 21 U.S.C. § 355(b)(1); 21 C.F.R.
§ 314.50(d)(5)(iv)-(vi) (2017). As part of the new drug
application, the manufacturer must also show that the proposed
warning label for the drug is accurate and adequate. See 21
U.S.C. § 355(b)(1), (d); 21 C.F.R. § 314.50(c)(2)(i), (d)(5)(v),
(d)(5)(viii) (2017). The process of obtaining FDA approval is
2 We acknowledge the amicus briefs submitted in support of
Merck & Co., Inc., by the Pharmaceutical Research and
Manufacturers of America, the American Tort Reform Association,
and the National Association of Manufacturers; the International
Association of Defense Counsel; the Product Liability Advisory
Council, Inc.; the Chamber of Commerce of the United States of
America; and the Massachusetts Defense Lawyers Association.
4
"both onerous and lengthy," requiring manufacturers to expend
significant time and resources. Mutual Pharm. Co., v. Bartlett,
570 U.S. 472, 476 (2013).
Originally, the same process was required for generic
drugs. See PLIVA, 564 U.S. at 612. This changed in 1984, when
Congress enacted the Drug Price Competition and Patent Term
Restoration Act, commonly known as the Hatch-Waxman amendments
to the act. See id. The purpose of the amendments was twofold:
to improve the affordability of prescription drugs while also
encouraging innovation and investment in new drugs. See Abbott
Labs. v. Young, 920 F.2d 984, 985 (D.C. Cir. 1990), cert.
denied, 502 U.S. 819 (1991), citing H.R. Rep. No. 98-857, 98th
Cong., 2nd Sess., pt. 1, at 14-15 (1984), reprinted in 1984
U.S.C.C.A.N. 2647, 2648 (House Report). In striking a balance
between these competing goals, Congress made two significant
changes to the existing regulatory scheme.
First, the amendments established a simpler and speedier
approval process for generic drugs. See 21 U.S.C. § 355(j). A
manufacturer now seeking to market a generic version of an
approved brand-name drug need only submit an abbreviated new-
drug application, indicating that the generic drug is equivalent
to its brand-name counterpart in certain key respects. 21
U.S.C. § 355(j)(2)(A). Specifically, the manufacturer must show
that the proposed generic drug has the same active ingredients,
5
route of administration, dosage form, and strength as the
approved brand-name drug. 21 U.S.C. § 355(j)(2)(A)(ii)-(iii).
It also must show that the generic drug is "bioequivalent" to
the brand-name drug, 21 U.S.C. § 355(j)(2)(A)(iv), meaning that
it has the same rate and extent of absorption. 21 U.S.C.
§ 355(j)(8)(B). Finally, it must show that the proposed warning
label for the generic drug is the same as the labeling approved
for the brand-name drug. 21 U.S.C. § 355(j)(2)(A)(v). As a
result, generic manufacturers can bring their drugs to market
much less expensively and can therefore make these lower-cost
alternatives more widely available to consumers. See PLIVA, 564
U.S. at 612.
Second, in order to safeguard the interests of brand-name
manufacturers and incentivize continued innovation, the
amendments also authorized the FDA to extend the length of its
patent terms to offset delays caused by the FDA's regulatory
review. See 35 U.S.C. § 156 (2012). See also House Report,
supra at 15. For patents issued after the amendments were
enacted, patent terms can now be extended for up to five years,
depending on the length of the review period, thereby allowing
brand-name manufacturers to enjoy a monopoly over their newly
developed drugs for a longer period of time. 35 U.S.C.
§ 156(a), (c), (g)(6)(A).
6
A key feature of the current regulatory scheme is that it
imposes different labeling responsibilities on brand-name
manufacturers and generic manufacturers. See PLIVA, 564 U.S. at
613. A manufacturer of a brand-name drug must ensure that its
label is accurate and adequate. See 21 U.S.C. § 355(b)(1), (d).
In contrast, a manufacturer of a generic drug must ensure only
that its label is identical to the label of the brand-name
counterpart. See 21 U.S.C. § 355(j)(2)(A)(v), (j)(4)(G). See
also PLIVA, supra. Furthermore, although all drug manufacturers
are required to continue to monitor the safety of their products
after approval, 21 C.F.R. §§ 314.80, 314.81, 314.98 (2017), only
brand-name manufacturers have the power to change the contents
of their labels without FDA approval. Under FDA regulations, a
manufacturer may, through a process known as "changes being
effected," "add or strengthen" a warning on its label by filing
a simultaneous application with the FDA, without waiting for the
agency's approval. 21 C.F.R. § 314.70(c)(3), (c)(6)(iii)(A)
(2017).3 This process is not available to generic manufacturers
that, pursuant to their "ongoing [F]ederal duty of 'sameness,'"
The United States Food and Drug Administration (FDA)
3
retains the authority to disapprove any labeling changes made
through the "changes being effected" process, in which case it
may order the manufacturer to cease distribution of the drug
with the disapproved label change. See 21 C.F.R.
§ 314.70(c)(3), (7) (2017). See also Wyeth v. Levine, 555 U.S.
555, 571 (2009).
7
may change a label only when necessary to match an updated
brand-name label or to follow FDA instructions. PLIVA, supra at
613, 614-615. See 21 C.F.R. § 314.150(b)(10) (2017) (FDA
approval for generic drug may be withdrawn if label is "no
longer consistent" with brand-name label).
This allocation of labeling responsibilities under Federal
law has proved difficult to reconcile with the duties required
of generic drug manufacturers under State tort law. Many
States, including this one, impose on manufacturers a duty to
warn consumers of dangers arising from the use of their products
where the manufacturers know or should have known of the
dangers. See PLIVA, 564 U.S. at 611; Mitchell v. Sky Climber,
Inc., 396 Mass. 629, 631 (1986). Under Federal regulations,
however, manufacturers of generic drugs -- because they lack the
power to change the warning labels on their products
unilaterally -- cannot independently fulfil these State law
duties. For this reason, in PLIVA, 564 U.S. at 608-609, the
United States Supreme Court held that State tort law claims
against generic manufacturers arising out of a failure to warn
are preempted by Federal drug regulations. See Mutual Pharm.
Co., 570 U.S. at 476 ("[S]tate-law design-defect claims that
turn on the adequacy of a drug's warnings are pre-empted by
[F]ederal law under PLIVA"). The practical consequence is that
a consumer who suffers injury arising from an inaccurate or
8
inadequate drug warning label can sue the manufacturer for
damages caused by his or her injury only if the consumer
ingested a brand-name version of the drug -- but not if the
consumer ingested the generic version. See PLIVA, supra at 625.
2. Plaintiff's claims. We summarize the facts as stated
in the plaintiff's complaint. Merck & Co., Inc. (Merck), is the
manufacturer of Proscar, an FDA-approved, brand-name version of
the drug finasteride. Finasteride is used to treat benign
prostatic hyperplasia in persons with an enlarged prostate.
In August, 2010, Brian Rafferty was prescribed finasteride
by his physician to treat an enlarged prostate. Shortly after
he started taking finasteride, Rafferty began to experience side
effects causing sexual dysfunction, including erectile
dysfunction and decrease in libido. In October, 2010, Rafferty
weaned himself off of the drug but the side effects continued
and even worsened. He was eventually diagnosed with
hypogodanism and androgen deficiency allegedly induced by the
finasteride, and is now undergoing treatment that, according to
his physicians, may continue indefinitely.
It is undisputed that Rafferty ingested the generic version
of finasteride, not Merck's brand-name version Proscar. At the
time that Rafferty was prescribed the finasteride, the product
label warned of the potential for side effects related to sexual
dysfunction, but represented that these side effects would
9
resolve after discontinued use of the drug. As required under
Federal law, this generic label conformed to Merck's label for
Proscar.
Rafferty alleged that by the time he was prescribed
finasteride, several reports and studies had already emerged
suggesting that those side effects could in fact persist even
after discontinued use. He also alleged that, starting in 2008,
Merck changed the label for Proscar in certain foreign markets,
including Sweden, the United Kingdom, and Italy, to include a
warning about persistent erectile dysfunction. Nevertheless, as
of 2010, when Rafferty ingested finasteride, Merck had not
changed its label for Proscar in the United States to include
this warning.
In 2013, Rafferty commenced an action against Merck in the
Massachusetts Superior Court, asserting claims of negligence for
failure to warn, and a violation of G. L. c. 93A, § 9.4 Crucial
to Rafferty's negligence claim was his contention that, although
he had never ingested Merck's brand-name version of finasteride,
Merck nevertheless owed him a duty to warn of its dangers
because, under Federal law, Merck controlled the label on the
generic version that Rafferty did ingest. The case was removed
4 Rafferty also sued his prescribing physician for negligent
failure to obtain informed consent. He later voluntarily
dismissed the claim against the physician.
10
to Federal court but subsequently remanded to the Superior
Court.
Merck filed a motion to dismiss the complaint, and the
judge allowed the motion. With respect to Rafferty's negligence
claim, the judge ruled that Merck owed no duty of care to
Rafferty. The judge relied on "two well-established . . .
principles" of Massachusetts products liability law: first,
that "[a] plaintiff who sues a particular manufacturer for
product liability generally must be able to prove that the
[product] which it is claimed caused the injury can be traced to
that specific manufacturer," Mathers v. Midland-Ross Corp., 403
Mass. 688, 691 (1989); and second, that a manufacturer cannot be
held liable "for failure to warn of risks created solely in the
use or misuse of the product of another manufacturer" (emphasis
added). Mitchell, 396 Mass. at 631. Because Merck did not
manufacture the finasteride that allegedly caused Rafferty's
injury, the judge concluded that Merck could not be held liable
for his injuries. The judge, quoting the Iowa Supreme Court
opinion in Huck v. Wyeth, Inc., 850 N.W.2d 353, 376-377 (Iowa
2014), cert. denied, 135 S. Ct. 1699 (2015), declared that
imposing liability on Merck for an injury caused by a
competitor's product would not only disturb the balance struck
between brand-name and generic manufacturers in the Hatch-Waxman
amendments -- which courts are not "institutionally qualified"
11
to second-guess -- but also run contrary to the fundamental
principle of tort law that "[l]iability generally follows
control." Id. at 378. Similarly, with respect to Rafferty's
c. 93A claim, the judge concluded that there could be no
violation of the consumer protection statute where there was no
duty of care owed to the consumer.
After the judge dismissed both claims, a final judgment
entered in favor of Merck. Rafferty now appeals from that final
judgment and from the judge's decision allowing Merck's motion
to dismiss. We transferred this case from the Appeals Court on
our own motion.
Discussion. We review a judge's decision to dismiss a
claim de novo, accepting as true the allegations in the
complaint and drawing every reasonable inference in favor of the
plaintiff. See Curtis v. Herb Chambers I-95, Inc., 458 Mass.
674, 676 (2011). Our task is to "consider whether the factual
allegations in the complaint are sufficient, as a matter of law,
to state a recognized cause of action or claim, and whether such
allegations plausibly suggest an entitlement to relief."
Dartmouth v. Greater New Bedford Regional Vocational Tech. High
Sch. Dist., 461 Mass. 366, 374 (2012). Here, Rafferty has
asserted two claims, the first for negligence based on failure
to warn, and the second for a violation of c. 93A. We address
each of these claims in turn.
12
1. Negligence claim. "To recover for negligence, a
plaintiff must show 'the existence of an act or omission in
violation of a . . . duty owed to the plaintiff[] by the
defendant.'" Cottam v. CVS Pharmacy, 436 Mass. 316, 320 (2002),
quoting Dinsky v. Framingham, 386 Mass. 801, 804 (1982). The
existence of a duty is a question of law for the courts.
Cottam, supra at 321. Here, the question is whether Merck, as
the brand-name manufacturer of finasteride, owed a duty to warn
to those, like Rafferty, who ingested the generic version of the
drug.
Typically, where a consumer is injured by a product, our
law holds the manufacturer or seller responsible under a theory
of products liability. See, e.g., H.P. Hood & Sons, Inc. v.
Ford Motor Co., 370 Mass. 69, 75 (1976). But Rafferty concedes,
as he must under our prevailing law, that Merck owes him no duty
to warn under the law of products liability. As noted by the
judge, a manufacturer may be found liable for a failure to warn
only where the product that caused the injury was made by that
manufacturer; its duty of care extends only to users of its own
product. See Mathers, 403 Mass. at 691; Mitchell, 396 Mass. at
631. This principle was applied in Carrier v. Riddell, Inc.,
721 F.2d 867, 868 (1st Cir. 1983), where the plaintiff, a high
school football player, suffered a severe spinal injury playing
football and sued the defendant, a helmet manufacturer, claiming
13
that it negligently failed to warn his team that helmets offer
little protection to a player's neck and spine. When the
plaintiff learned in discovery that the helmet he wore was made
by another manufacturer, not the defendant, the plaintiff
continued to press his claim, arguing that his teammates wore
helmets made by the defendant manufacturer and that, if it had
provided a general warning about a helmet's limitations, he
would have heard that warning and taken additional precautions
that would have prevented his injury. Id. In an opinion
written by now United States Supreme Court Justice Stephen
Breyer, the United States Court of Appeals for the First
Circuit, applying Massachusetts law, held that the defendant
manufacturer could not be liable for failing to warn the
plaintiff. Id. at 870. The court reasoned, "In the absence of
some special circumstance one would expect a purchaser or a user
of a product to rely for warnings upon the maker of the product
they buy or use, not upon the maker of another, similar
product." Id. at 869. As a general principle of products
liability law, the court concluded that a manufacturer's "duty
of care runs to those who buy or use the product itself, not a
different [manufacturer's] product." Id.
Here, however, Rafferty did not bring a products liability
claim and does not contend that Merck owed him a duty to warn as
a manufacturer. Instead, he has brought a general negligence
14
claim, relying on "a general principle of tort law" that we
articulated in Jupin v. Kask, 447 Mass. 141, 147 (2006), quoting
Remy v. MacDonald, 440 Mass. 675, 677 (2004). In Jupin, supra,
we declared:
"'[E]very actor has a duty to exercise reasonable care to
avoid physical harm to others.' . . . A precondition to
this duty is, of course, that the risk of harm to another
be recognizable or foreseeable to the actor. . . .
Consequently, with some important exceptions, 'a defendant
owes a duty of care to all persons who are foreseeably
endangered by his conduct, with respect to all risks which
make the conduct unreasonably dangerous.'" (Citations
omitted.)
Applying this "general principle," id., we held in Jupin
that a homeowner who stores firearms on his or her property has
a duty of reasonable care to ensure that those firearms are
properly secured, and that that duty was owed to, among others,
a law enforcement officer shot by a person granted unsupervised
access, because he was a "foreseeable victim" of the improper
storage. Id. at 143. Under that same principle, we also have
held, for example, that a limousine driver who discharges an
intoxicated passenger, knowing that that passenger is likely to
drive while intoxicated, owes a duty of reasonable care to those
who are foreseeably endangered by the passenger's drunk driving.
Commerce Ins. Co. v. Ultimate Livery Serv., Inc., 452 Mass. 639,
649-651 (2008). Similarly, we have held that an attorney owes a
duty of reasonable care to nonclients, absent a conflict with a
15
client's interest, if he or she knows or should know that the
nonclient will rely on the attorney's advice, see Lamare v.
Basbanes, 418 Mass. 274, 276 (1994), and that an accountant owes
a duty of reasonable care to third parties if the accountant
knows that they will rely on the audit he or she prepares.
Nycal Corp. v. KPMG Peat Marwick, LLP, 426 Mass. 491, 495-498
(1998).
At the same time, we recognized in Jupin that, even where
the requirements of negligence are satisfied, there may
nevertheless be a public policy justification for declining to
impose a duty of care where "the imposition of a precautionary
duty is deemed to be either inadvisable or unworkable." Jupin,
447 Mass. at 150-151, quoting Remy, 440 Mass. at 677. "The
concept of 'duty' . . . 'is not sacrosanct in itself, but is
only an expression of the sum total of . . . considerations of
policy which lead the law to say that the plaintiff is entitled
to protection.'" Luoni v. Berube, 431 Mass. 729, 735 (2000),
quoting W.L. Prosser & W.P. Keeton, Torts § 53, at 358 (5th ed.
1984). Thus, the existence of duty is ultimately determined
with "reference to existing social values and customs and
appropriate social policy." Cremins v. Clancy, 415 Mass. 289,
292 (1993). This approach comports with the one taken by the
Restatement (Third) of Torts, which provides:
16
"(a) An actor ordinarily has a duty to exercise reasonable
care when the actor's conduct creates a risk of physical
harm.
"(b) In exceptional cases, when an articulated
countervailing principle or policy warrants denying or
limiting liability in a particular class of cases, a court
may decide that the defendant has no duty or that the
ordinary duty of reasonable care requires modification."
Restatement (Third) of Torts: Liability for Physical and
Emotional Harm § 7 (2010).
Merck contends that, where a plaintiff alleges injury
caused by a product arising from a failure to warn, we should
limit the duty to warn to the manufacturer of that particular
product, regardless of whether the claim is framed as a products
liability claim or, as here, as a general negligence claim. It
is true that, in the vast majority of such cases, the duty to
warn would be limited to the manufacturer of the product -- even
if the plaintiff were to bring a general negligence claim --
because the risk of harm arising from an inadequate warning
would be foreseeable to a manufacturer only with respect to
users of its own product, not the users of another product.
Where the product causing the injury carries its own warning,
one would expect the plaintiff to rely on that warning, not on
the warning given for another product. Moreover, apart from any
duty arising from the risk of foreseeable injury, only in rare
17
cases could a plaintiff contend that his or her injury was
caused by the inadequate warning given for another product.
But this case presents an exception to the usual pattern.
Because the Hatch-Waxman amendments to the act require that the
warning label of a generic drug be identical to the warning
label of its brand-name counterpart, and because the United
States Supreme Court in PLIVA, 564 U.S. at 614-615, interpreted
the resulting regulatory scheme to forbid a generic drug
manufacturer from independently revising its warning labels,
duty to warn claims involving generic drugs are potentially
viable as general negligence claims, although not as products
liability claims. With generic drugs, it is not merely
foreseeable but certain that the warning label provided by the
brand-name manufacturer will be identical to the warning label
provided by the generic manufacturer, and moreover that it will
be relied on, not only by users of its own product, but also by
users of the generic product. Unlike in Carrier, 721 F.2d at
869, where the defendant manufacturer exercised no control
whatsoever over the warnings attached to another manufacturer's
product, Federal labeling requirements for generic drugs present
precisely the kind of "special circumstance" where a consumer
would rely on the warnings created by someone other than the
manufacturer of the product causing the injury, because those
will be identical to (and inseparable from) the warnings
18
provided by the generic manufacturer. Where a brand-name drug
manufacturer provides an inadequate warning for its own product,
it knows or should know that it puts at risk not only the users
of its own product, but also the users of the generic product.
Consequently, this is the rare (perhaps the only) type of case
involving a manufactured product where the requirements of
general negligence may be satisfied even where the requirements
of products liability are not.
However, as noted earlier, even where the requirements of
general negligence are satisfied, we must still consider as a
matter of public policy whether the imposition of a duty is
"inadvisable or unworkable," see Jupin, 447 Mass. at 151,
quoting Remy, 440 Mass. at 677, or, in the words of the
Restatement (Third) of Torts, supra at § 7, whether this is an
"exceptional case[]" where a "countervailing principle or policy
warrants denying or limiting liability" in this class of cases.
"Public policy favors the development and marketing of new
and more efficacious drugs." Payton v. Abbott Labs, 386 Mass.
540, 573 (1982). Therefore, we must carefully consider whether
the imposition of general negligence liability on brand-name
manufacturers for injuries suffered by generic drug consumers
arising from a failure to warn would materially diminish the
development and marketing of new drugs.
19
Inevitably, imposing on brand-name manufacturers a duty to
warn generic drug consumers would add to the manufacturer's
costs. Where there is a duty to warn, negligence may be found
where there is a failure "to exercise reasonable care in warning
potential users of hazards associated with use of the product."
Laaperi v. Sears, Roebuck & Co., 787 F.2d 726, 729 (1st Cir.
1986) (applying Massachusetts law). "The common law duty to
warn . . . necessitates a warning 'comprehensible to the average
user and . . . convey[ing] a fair indication of the nature and
extent of the danger to the mind of a reasonably prudent
person.'" MacDonald v. Ortho Pharm. Corp., 394 Mass. 131, 140,
cert. denied., 474 U.S. 920 (1985), quoting Ortho Pharm. Corp.
v. Chapman, 180 Ind. App. 33, 49 (1979). "Whether a particular
warning measures up to this standard is almost always an issue
to be resolved by a jury; few questions are 'more appropriately
left to a common sense lay judgment than that of whether a
written warning gets its message across to an average person.'"
MacDonald, supra, quoting Ferebee v. Chevron Chem. Co., 552 F.
Supp. 1293, 1304 (D.D.C. 1982). The breadth and uncertain scope
of this standard for a negligent failure to warn means that,
where a consumer suffers injury from a generic drug, there would
be broad latitude to bring a failure to warn claim and great
difficulty in defeating it before trial. As a result, brand-
name manufacturers faced with failure to warn claims would bear
20
the significant cost not only of compensating injured consumers,
but also of litigating their claims, meritorious or not.
Where failure to warn claims are brought by consumers of a
manufacturer's own product, "the risk of injury can be insured
by the manufacturer and distributed among the public as a cost
of doing business." Escola v. Coca Cola Bottling Co. of Fresno,
24 Cal. 2d 453, 462 (1944) (Traynor, J., concurring). The cost
of litigation and of damage awards or settlements is in this
sense treated as "a cost of production." Restatement (Second)
of Torts § 402A comment c (1965). But if consumers of generic
drugs were allowed to recover damages for a brand-name
manufacturer's negligent failure to warn, it would be far more
difficult for the manufacturer to shoulder these costs, for
three reasons.
First, these costs would not be incurred until after the
brand-name manufacturer's patent monopoly expires and generic
competitors enter the market, at which point the brand-name
manufacturer will have suffered a precipitous decline in sales
of its product. When there is such competition, generic
manufacturers command approximately ninety per cent of the
market, see Association for Accessible Medicines, Generic Drug
Access & Savings in the U.S. 16 (2017), in part because many
States, including Massachusetts, have enacted laws that
authorize or even require pharmacists to substitute generic
21
drugs when filling prescriptions for brand-name drugs. See,
e.g., G. L. c. 112, § 12D (requiring generic substitution unless
prescribing physician indicates "no substitution"). See also
PLIVA, 564 U.S. at 628 (Sotomayor, J., dissenting); Grabowski,
Long, Mortimer, & Boyo, Updated Trends in US Brand-Name and
Generic Drug Competition, 19 J. Med. Econ. 836, 840 (2016)
(brand-name drugs facing generic competition between 2013 and
2014 saw market share by volume fall to average of twelve per
cent within first year).
Second, because prices drop with generic drug competition,
the sales of generic drugs may exceed the sales generated during
the patent monopoly period, and may even continue indefinitely,
long after the brand-name manufacturer has moved on to focus on
other patented products. See United States Department of Health
and Human Services, Office of the Assistant Secretary for
Planning and Evaluation, Issue Brief: Understanding Recent
Trends in Generic Drug Prices 1-2 (Jan. 27, 2016).
Third, because the United States Supreme Court in PLIVA,
564 U.S. at 624, ruled that Federal preemption bars any generic
drug consumer from bringing a failure to warn claim against any
generic manufacturer, all such claims would be brought only
against the brand-name manufacturer that drafted the warning
label, leaving the brand-name manufacturer without any ability
22
to share the costs of litigation, or of a damage award or
settlement, with the generic manufacturer.
Therefore, although brand-name manufacturers are in the
best position, because of their Federal labeling
responsibilities, to prevent an injury arising from the
inaccurate or inadequate warning on a generic drug, they are not
in the best position to bear its costs. To recognize negligence
liability here would impose on brand-name manufacturers an
additional "cost of production" for products that, in reality,
they no longer produce. Restatement (Second) of Torts, supra at
§ 402A comment c.
These additional costs, and the uncertainty regarding their
scope and duration, would inevitably affect to some degree the
financial incentives to invest in the research and development
of new drugs. Having said that, it is difficult to accurately
assess whether, and to what extent, this would have a chilling
effect on drug innovation. See S. Garber, RAND Institute for
Civil Justice, Economic Effects of Product Liability and Other
Litigation Involving the Safety and Effectiveness of
Pharmaceuticals 55-56, 58, 62 (2013) (some evidence that
expanded products liability has discouraged drug innovation, but
"there is no reliable empirical basis for estimating in dollar
terms the social costs or benefits of liability-induced . . .
price increases, or effects on product safety, effectiveness, or
23
innovation"). We realize that bringing a new drug to market is
already a long, expensive, and risky process; studies have shown
that, on average, the process of developing and obtaining FDA
approval for a new drug takes ten to fifteen years and costs
$2.6 billion, and only a small fraction of compounds under
development are ever approved. See Pharmaceutical Research and
Manufacturers of America, Biopharmaceuticals in Perspective 29
(2017). See also United States Department of Health and Human
Services, Report to Congress, Prescription Drugs: Innovation,
Spending, and Patient Access 25-36 (Dec. 7, 2016). Given that
the costs of research and development are already so high and
the odds of FDA approval so low, it is far from clear whether
the development of any new drug would be prevented merely
because of the incremental costs that would arise from the
imposition of a duty to warn generic drug consumers.
Meanwhile, imposing such a duty on brand-name manufacturers
would have undeniable benefits. We can be confident that, if
brand-name manufacturers owed generic drug consumers a duty to
warn, they would have a greater financial incentive to revise
their warnings through the change being effected process where
new information demonstrates the need to do so, in order to
prevent failure to warn suits. Without such a duty, the only
threat of a failure to warn suit would be from consumers of the
brand-name drug who, once the patent has expired and generic
24
drugs enter the market, might comprise as little as ten per cent
or less of the market for such drugs. As a result, no one --
neither the generic manufacturer nor the brand-name manufacturer
-- would have a complete incentive to maintain safe labels for
the overwhelming share of prescription drugs dispensed. State
tort law always has been an important source of consumer
protection with respect to prescription drugs, "provid[ing]
incentives for drug manufacturers to disclose safety risks
promptly." Wyeth v. Levine, 555 U.S. 555, 579 (2009). See
Kessler & Vladeck, A Critical Examination of the FDA's Efforts
to Preempt Failure-to-Warn Claims, 96 Geo. L.J. 461, 483, 491-
495 (2008). If generic drug consumers could not sue drug
manufacturers for a failure to warn, they would be denied an
important safeguard against future injuries.
We also recognize that, if we were to shield brand-name
manufacturers entirely from liability for the failure to warn
generic drug consumers, we would leave those consumers with no
chance of obtaining compensation for their injuries because
generic manufacturers are already immune from State law claims.
In PLIVA, 564 U.S. at 625, the United States Supreme Court
recognized "the unfortunate hand that [F]ederal drug regulation
has dealt" generic drug consumers, whose claims against
manufacturers are barred only because they ingested generic
rather than brand-name drugs. See id. at 643 (Sotomayor, J.,
25
dissenting) ("[Under PLIVA,] a drug consumer's right to
compensation for inadequate warnings now turns on the
happenstance of whether her pharmacist filled her prescription
with a brand-name drug or a generic"). Were we also to bar
their claims against brand-name manufacturers, we would only
exacerbate the unfairness of this regulatory scheme. Such a
result would be especially troubling given that, as discussed,
generic drugs represent close to ninety per cent of the
prescription drug market, and many drug consumers do not even
have a choice under State generic substitution laws whether they
receive a brand-name or generic drug when they fill a
prescription. See PLIVA, supra at 628 (Sotomayor, J.,
dissenting). The widespread use of generic drugs means that, if
we decline to impose any liability on brand-name manufacturers,
countless consumers would be left without a remedy.
The need to deter failures to warn, and to compensate for
the resulting harm, is especially urgent where the failure is
not merely inadvertent and the risk of harm is most serious. In
other types of cases where we have circumscribed liability for
public policy reasons, we have nevertheless consistently
recognized that there is a certain core duty -- a certain
irreducible minimum duty of care, owed to all persons -- that as
a matter of public policy cannot be abrogated: that is, the
duty not to intentionally or recklessly cause harm to others.
26
For instance, we have long held in premises liability cases that
a landowner owes no duty of reasonable care to a trespasser,
Schofield v. Merrill, 386 Mass. 244, 245-246 (1982), based on
the rationale that landowners should not be "bound to protect or
provide safeguards for wrongdoers." Sweeny v. Old Colony &
Newport R.R. Co., 10 Allen 368, 372 (1865). Yet, we have held
that a landowner still owes a trespasser a duty to "refrain from
wilful, wanton[,] or reckless disregard for the trespasser's
safety." Schofield, supra at 245-246. And in cases involving
contractual waivers, we have hewed to "the well-established
principle of contract law" that "while a party may contract
against liability for harm caused by its negligence, it may not
do so with respect to its gross negligence" or, for that matter,
its reckless or intentional conduct. Maryland Cas. Co. v. NSTAR
Elec. Co., 471 Mass. 416, 422 (2015), quoting Zavras v. Capeway
Rovers Motorcycle Club, Inc., 44 Mass. App. Ct. 17, 19 (1997).
See Sharon v. Newton, 437 Mass. 99, 110 n.12 (2002)
(distinguishing waivers for ordinary negligence from waivers for
"gross negligence, or reckless or intentional conduct");
Restatement (Second) of Contracts § 195(1), at 65 (1981) ("A
term exempting a party from tort liability for harm caused
intentionally or recklessly is unenforceable on grounds of
public policy").
27
We have applied this same reasoning in many other types of
cases where we have tolerated ordinary negligence but drawn the
line at recklessness. In defamation cases, a plaintiff who is a
public officer or a public figure cannot recover damages on
proof of the defendant's negligence, but can recover if the
defendant acted with "actual malice," meaning wilful or reckless
disregard of the truth. See Stone v. Essex County Newspapers,
Inc., 367 Mass. 849, 851 (1975). See also New York Times Co. v.
Sullivan, 376 U.S. 254, 279-280 (1964). In cases involving
bailments, the traditional rule has been that where bailments
are for the sole benefit of the bailor, the bailee is not liable
for ordinary negligence but can be liable for gross negligence.
See Altman v. Aronson, 231 Mass. 588, 590 (1919), quoting Foster
v. Essex Bank, 17 Mass. 479, 498-499, 507 (1821). Similarly, in
cases involving sporting events, we have held that athletes and
coaches cannot be liable for injuries caused by their
negligence, but will be held liable if they act in "reckless
disregard of safety." Gauvin v. Clark, 404 Mass. 450, 454
(1989). See Kavanagh v. Trustees of Boston Univ., 440 Mass.
195, 204-205 (2003).
In enacting statutes, the Legislature, too, has
distinguished between ordinary negligence and reckless conduct,
granting immunity or indemnification in some situations in
claims of negligence but not in claims of recklessness. See,
28
e.g., G. L. c. 21, § 17C (landowner who makes land open to
public for recreational use free of charge not liable for
personal injuries "in the absence of wilful, wanton, or reckless
conduct"); G. L. c. 229, § 2 (railroads not liable for
negligence in causing death of trespasser but liable for
reckless conduct). See also G. L. c. 258, § 9 (public employees
may not be indemnified for civil rights violations if employee
"acted in a grossly negligent, willful[,] or malicious manner);
G. L. c. 258, § 9A (police officers may not be indemnified for
violations of Federal or State law if officer "acted in a
wilful, wanton, or malicious manner").
Implicit in both our common and statutory law, then, is a
longstanding public policy that, although we may be willing in
certain circumstances to excuse ordinary negligence, we will not
tolerate the reckless disregard of the safety of others.
Having weighed these considerations, we conclude as a
matter of public policy that allowing a generic drug consumer to
bring a general negligence claim for failure to warn against a
brand-name manufacturer poses too great a risk of chilling drug
innovation, contrary to the public policy goals embodied in the
Hatch-Waxman amendments. But we also conclude that public
policy is not served if generic drug consumers have no remedy
for the failure of a brand-name manufacturer to warn in cases
where such failure exceeds ordinary negligence, and rises to the
29
level of recklessness. In cases where, for instance, a brand-
name manufacturer learns that its drug is repeatedly causing
death or serious injury, or causes birth defects when used by
pregnant mothers, and still fails to warn consumers of this
danger, public policy does not dictate that these consumers be
left with no remedy when those risks are realized, or that the
manufacturer have little financial incentive to reveal these
risks. We therefore hold that a brand-name manufacturer that
controls the contents of the label on a generic drug owes a duty
to consumers of that generic drug not to act in reckless
disregard of an unreasonable risk of death or grave bodily
injury. This recklessness standard strikes the most appropriate
balance between competing public policy interests, limiting
liability for brand-name manufacturers while also providing
remedies for the most serious injuries and deterring the most
dangerous forms of conduct.
Under our common law, a defendant's conduct is in reckless
disregard of the safety of another where
"he does an act or intentionally fails to do an act which
it is his duty to the other to do, knowing or having reason
to know of facts which would lead a reasonable man to
realize, not only that his conduct creates an unreasonable
risk of physical harm to another, but also that such risk
is substantially greater than that which is necessary to
make his conduct negligent."
30
Boyd v. National R.R. Passenger Corp., 446 Mass. 540, 546
(2006), quoting Restatement (Second) of Torts, supra at § 500,
at 587.
Recklessness is distinguishable from negligence in two key
respects. See Manning v. Nobile, 411 Mass. 382, 387-388 (1991).
First, the reckless conduct must be intended. "While negligence
may result from 'inadvertence, incompetence, . . . or a failure
to take [adequate] precautions,' recklessness 'requires a
conscious choice of a course of action, either with knowledge of
the serious danger to others involved in it or with knowledge of
facts which would disclose this danger to any reasonable man.'"
Boyd, 446 Mass. at 547, quoting Restatement (Second) of Torts,
supra at § 500 comment g, at 590. Importantly, only the conduct
need be intended; the resulting harm need not be. Boyd, supra
at 548.
Second, reckless conduct must involve a substantially
greater risk than is required for ordinary negligence.
"Reckless failure to act involves an intentional or unreasonable
disregard of a risk that presents a high degree of probability
that substantial harm will result to another." Sandler v.
Commonwealth, 419 Mass. 334, 336 (1995). "The risk of death or
grave bodily injury must be known or reasonably apparent, and
the harm must be a probable consequence of the defendant's
election to run that risk or of his failure reasonably to
31
recognize it." Id. The difference between recklessness and
mere negligence is therefore not only "a difference in degree
but also a difference in kind." Id. at 337.
Under this standard, a brand-name manufacturer that
intentionally fails to update the label on its drug to warn of
an unreasonable risk of death or grave bodily injury, where the
manufacturer knows of this risk or knows of facts that would
disclose this risk to any reasonable person, will be held
responsible for the resulting harm.
We acknowledge that, by imposing on brand-name
manufacturers any duty to warn generic consumers, we find
ourselves in the minority of courts that have decided this
issue. We also are the only court to limit the scope of
liability arising under this duty to reckless disregard of the
risk of death or grave bodily injury. As Merck has repeatedly
reminded us, most courts have held that brand-name manufacturers
owe no duty to generic drug consumers who have been injured by
inaccurate or inadequate labels. See, e.g., Johnson v. Teva
Pharms. USA, Inc., 758 F.3d 605, 616 (5th Cir. 2014); Guarino v.
Wyeth, LLC, 719 F.3d 1245, 1250-1253 (11th Cir. 2013); Smith v.
Wyeth, Inc., 657 F.3d 420, 424 (6th Cir. 2011), cert. denied,
566 U.S. 974 (2012); Mensing v. Wyeth, Inc., 588 F.3d 603, 613-
614 (8th Cir. 2009), vacated on other grounds, 564 U.S. 604, and
revised, 658 F.3d 867 (2011); Foster v. American Home Prods.
32
Corp., 29 F.3d 165, 171 (4th Cir. 1994); Huck, 850 N.W.2d at
378.5 We note that many of these decisions are distinguishable,
some because they were resolved under the products liability
statutes of other States, see Johnson, supra at 615-616
(applying Louisiana Products Liability Act); Smith, supra at
423-424 (applying Kentucky Products Liability Act), and others
because they were issued by Federal courts that are constrained
in their interpretation of State law in the absence of clear
guidance from State appellate courts. See Guarino, supra at
1251 ("[C]onsiderations of comity and federalism counsel that we
proceed gingerly when venturing into uncharted waters of [S]tate
substantive law"). Further, to the extent that several of these
decisions predate the United States Supreme Court's decision in
PLIVA, 564 U.S. at 613, 624, we find them less persuasive
because they failed to consider the Federal preemption of State
tort law claims against generic manufacturers and the unique
remedial gap that this has created.6
Only a few courts have held otherwise. See Wyeth, Inc. v.
5
Weeks, 159 So. 3d 649, 676 (Ala. 2014), superseded by statute,
Ala. Code § 6-5-530(a); Conte v. Wyeth, Inc., 168 Cal. App. 4th
89, 114 (2008). See also Kellogg v. Wyeth, 762 F. Supp. 2d 694,
706 (D. Vt. 2010).
For example, in Foster v. American Home Prods. Corp., 29
6
F.3d 165, 169-171 (4th Cir. 1994), the United States Court of
Appeals for the Fourth Circuit held that a brand-name
manufacturer owed no duty to a generic drug consumer based in
part on the premise that generic manufacturers have some control
over the contents of their labels and can therefore be held
33
We also conclude that, by limiting liability to
circumstances where there has been reckless disregard of an
unreasonable risk of death or grave bodily injury, we adequately
address the many policy concerns that have led other courts to
deny liability altogether. See, e.g., Huck, 850 N.W.2d at 376-
380. First, our ruling does not undo the careful balance struck
in the Hatch-Waxman amendments by imposing unwarranted new
burdens on brand-name manufacturers. We emphasize that,
although we limit the brand-name manufacturer's duty to warn
generic drug consumers, we do not limit its duty to warn its own
customers; as to them, brand-name manufacturers still owe a duty
to "exercise reasonable care in warning [them] of hazards
associated with use of [their] product." Laaperi, 787 F.2d at
729. In addition to this common-law duty they already owe to
their own customers, brand-name manufacturers also have a duty
under the act to ensure that the labels on their products are
accurate and adequate. 21 U.S.C. § 355(b)(1), (d). FDA
regulations impose on all drug manufacturers, both brand-name
and generic, an ongoing obligation to monitor a drug's risks and
report any adverse drug experiences that may not be indicated by
the drug's label. 21 C.F.R. §§ 314.80, 314.81, 314.98. Drug
liable for negligent failure to warn. This premise is obviously
no longer true in light of the United States Supreme Court's
decision in PLIVA, Inc. v. Mensing, 564 U.S. 604, 613, 624
(2011).
34
manufacturers also have a regulatory obligation to revise their
labeling "to include a warning about a clinically significant
hazard as soon as there is reasonable evidence." 21 C.F.R. §
201.57(c)(6)(i) (2017). See 21 C.F.R. § 201.80(e) (2017). To
avoid liability for recklessness toward generic drug consumers,
a brand-name manufacturer need only fulfil those obligations it
already has towards its own customers. Cf. Coombes v. Florio,
450 Mass. 182, 191 (2007) (Ireland, J., concurring) (extension
of doctor's duty to warn to nonpatients "d[id] not impose a
heavy burden" where it "require[d] nothing . . . not already
required by his duty to his patient").
Second, to the extent that our decision makes investments
in new drugs any "riskier" -- by exposing manufacturers to
additional liability -- we expect that this marginal risk will
not materially chill innovation or increase drug prices. After
all, what drug manufacturer, when deciding whether to invest in
a new drug or in setting prices during its patent monopoly,
would factor in substantial liability costs that might be
incurred after its patent expires, premised on the probability
that it will act in reckless disregard of an unreasonable risk
of death or grave bodily injury?
Third, we do not believe that by recognizing liability for
recklessness we overstep our bounds and intrude into matters for
which "courts are not institutionally qualified." Huck, 850
35
N.W.2d at 377. In enacting the Hatch-Waxman amendments,
Congress has determined that public health and safety is best
served by a particular allocation of labeling responsibilities
between brand-name and generic manufacturers. We cannot (nor do
we seek to) disturb that allocation. Congress recognized and
expected that its Federal regulatory scheme would be
supplemented with traditional State law remedies. When Congress
enacted the act, it rejected an earlier draft that would have
provided a Federal cause of action for injured consumers,
"[e]vidently, [because] it determined that [State law] provided
appropriate relief." Wyeth, 555 U.S. at 574 & n.7.
Fourth, our decision does not subvert the fundamental
principles of tort law. On the contrary, it is fully consistent
with them. As earlier noted, the relief we provide, limited to
reckless disregard of an unreasonable risk of death or grave
bodily injury, is coextensive with the irreducible minimum duty
of care that as a matter of public policy cannot be abrogated,
even where a trespasser invades a person's property or when the
parties contractually agree to a waiver of liability.
In this case, the question whether Rafferty has stated a
failure to warn claim that meets the standard of a reckless
disregard of an unreasonable risk of death or grave bodily
injury must be determined by a trial judge. Because Merck owed
Rafferty a limited duty to warn, and because Rafferty, to state
36
a claim that falls within this limited duty, must allege facts
supporting a finding that Merck acted recklessly, not just
negligently, we vacate the dismissal of this claim and remand
the case to the Superior Court. We direct the court to grant
leave to Rafferty to amend his complaint if he believes that he
can state facts sufficient to support such a claim. Cf. Cheney
v. Automatic Sprinkler Corp. of Am., 377 Mass. 141, 150 (1979)
(plaintiff given opportunity to amend complaint where court "for
the first time . . . [indicated] the relevant considerations"
for his claim).
2. Chapter 93A claim. To state a claim under the consumer
protection statute, G. L. c. 93A, § 9, a plaintiff must allege
facts sufficient to establish four elements: first, that the
defendant has committed an unfair or deceptive act or practice;
second, that the unfair or deceptive act or practice occurred
"in the conduct of any trade or commerce;" third, that the
plaintiff suffered an injury; and fourth, that the defendant's
unfair or deceptive conduct was a cause of the injury.
See G. L. c. 93A, § 2 (a); Herman v. Admit One Ticket Agency
LLC, 454 Mass. 611, 615-616 (2009).
Under § 2, "unfair or deceptive acts or practices" are
"declared unlawful" only where they occur "in the conduct of any
trade or commerce." "Trade" and "commerce" are defined in
§ 1 (b) to include "the advertising, the offering for sale,
37
. . . the sale, . . . or distribution of any services and any
property, tangible or intangible, . . . and any other article,
commodity, or thing of value wherever situate, and shall include
any trade or commerce directly or indirectly affecting the
people of this [C]ommonwealth."
To satisfy the "trade or commerce" requirement in a failure
to warn claim under G. L. c. 93A, § 9, a plaintiff need not have
purchased the product directly from the defendant. See Kattar
v. Demoulas, 433 Mass. 1, 14-15 (2000) ("Parties need not be in
privity for their actions to come within the reach of c. 93A").
It suffices that the plaintiff used the product, even if it was
sold to another, and was injured as a result of the defendant's
failure to warn. See Maillet v. ATF-Davidson, Co., 407 Mass.
185, 190 (1990) (injured printing press operator could sue
manufacturer of printing press purchased by his employer, even
though he was "neither a consumer nor in privity with the
defendant"). See also Ciardi v. F. Hoffmann-La Roche, Ltd., 436
Mass. 53, 65 (2002) (indirect purchaser of product could assert
c. 93A claim for unfair competition against manufacturer of that
product, notwithstanding lack of privity, because she "alleged a
connection between herself and the defendants, albeit an
indirect one, as parties to consumer transactions").7
7 It is important to distinguish between claims brought
under G. L. c. 93A, § 9, typically by consumers against
38
Here, however, Rafferty does not allege that he used
Merck's brand-name drug. Rather, he alleges that he suffered
injury from the use of a drug that Merck did not advertise,
offer to sell, or sell. Although c. 93A does not require
privity, it is limited "only to actions taken in the course of
'trade or commerce'" (emphasis added). Morrison v. Toys "R" Us,
Inc., Mass., 441 Mass. 451, 457 (2004). In this context,
Merck's alleged unfair and deceptive action -- that is, its
failure to warn Rafferty of the side effects of the drug -- was
not taken in the course of "any trade or commerce" because it
was not taken in the course of the advertising, offer to sell,
or sale of any Merck product. Of course, if one of Merck's own
consumers was injured from Merck's brand-name version of the
drug as a result of its failure to warn, that failure would have
been in the course of Merck's sale of its own product, and
therefore "in the conduct of any trade or commerce." G. L.
c. 93A, § 2 (a). But where the failure to warn is with respect
to a drug that Merck has never advertised, offered to sell, or
sold, it would stretch the limits of c. 93A to hold that such
businesses, and claims brought under § 11, typically by
businesses against other businesses. Unlike claims under § 9,
claims under § 11 require not only that the defendant's conduct
occur in "trade or commerce" but also that there be a commercial
transaction between the parties. See Linkage Corp. v. Trustees
of Boston Univ., 425 Mass. 1, 22-23, cert. denied, 522 U.S. 1015
(1997).
39
failure occurred "in the conduct of any trade or commerce." Id.
We therefore conclude that Rafferty has failed to allege
sufficient facts to state a claim under c. 93A, § 9.
Conclusion. For the reasons stated above, the order
dismissing Rafferty's common-law claim is vacated and the case
is remanded to the Superior Court, with instructions that
Rafferty be granted leave to amend his complaint within thirty
days of the date of the rescript. The order dismissing
Rafferty's c. 93A claim is affirmed.
So ordered.