Punitive Damages Claim Against Patch Maker Found Preempted

A federal court has found that federal law preempts a state law that allows plaintiffs to seek punitive damages from the makers of defective drug products if the drug company knowingly withheld information from the Food and Drug Administration. Grange v. Mylan Laboratories Inc., 2008 WL 4813311 (D.Utah 10/31/08).

Plaintiffs’ estate sued over an allegedly defective drug patch. Defendants sold the Fentanyl Patch, which is applied directly to the skin to deliver fentanyl, a strong pain medicine. Doctors prescribe the Fentanyl Patch to relieve chronic moderate to severe pain. The patch should be worn for seventy-two hours and is supposed to deliver the medicine at a regulated rate. Plaintiff alleged that due to a design and/or manufacturing defect, some Fentanyl Patches contain and deliver fentanyl in amounts far in excess of what is advertised. Plaintiff alleged that defendants knew that the Fentanyl Patch was defective, but did not warn of the potential risk of overdose.

Defendants moved to dismiss the claims for punitive damages. A Utah statute, Utah Code Ann. § 78B-8-203, completely bars punitive damages for harm caused by FDA approved drugs. But that statute has an exception for cases where a plaintiff can show that a defendant withheld information from the FDA. Plaintiffs, of course, alleged that the exception applied here. But defendants contended that this exception is preempted by federal law.

As the court noted, this statutory limitation on liability for punitive damages does not apply if it is shown by clear and convincing evidence that the drug manufacturer knowingly withheld or misrepresented information required to be submitted to the Federal Food and Drug Administration under its regulations, which information was material and relevant to the claimant's harm. Defendants contended that the statutory exception amounts to a de facto “fraud on the FDA” claim, which is preempted by federal law.

In support of this argument, defendants relied on Buckman Co. v. Plaintiff's Legal Comm'n., 531 U.S. 341, 348 (2000), which held that state law fraud-on-the-FDA claims conflict with, and are therefore impliedly preempted by, federal law. The Buckman Court gave two primary reasons for this holding. First, allowing state law claims of fraud on the FDA would interfere with the FDA's objectives and judgment. See id. at 350-51. Second, such claims could cause the FDA to face a deluge of unnecessary information in the approval process by drug companies attempting to avoid state law liability, jamming up the regulatory system.

The court decided that the decision in Buckman did not directly reach the issue presented here. In this case, unlike in Buckman, the state statute does not predicate liability on fraud on the FDA, but rather would allow certian damages based on such fraud. The question of whether this type of statute is preempted, said the court, has created a split of authority. Compare Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir.2004)(extending Buckman's logic to a statute similar to Utah's), with Desiano v. Warner-Lambert & Co., 467 F.3d 85, 97 (2d Cir.2006)(same Michigan statute was not preempted by Buckman), affirmed sub nom, Warner-Lambert Co., LLC v. Kent, 128 S.Ct. 1168 (2008)(4-4 vote).

Despite a mention of the so-called presumption against preemption, the court found that the Sixth Circuit's decision in Garcia was more persuasive here. The chief problems that Buckman sought to counteract are present whenever a plaintiff, as a prerequisite to collecting damages, is required to put on evidence that there was what amounts to fraud on the FDA. When such evidence is considered, state courts are essentially second-guessing the FDA, and drug companies, nervous about state litigation, will have an incentive to flood the FDA with information. To the extent that the Utah law allows for an exception in cases where a plaintiff puts on his or her own independent evidence of information being withheld from the FDA, this statute was found to be preempted. There is no preemption, however, in a situation where a plaintiff invokes the Act to seek punitive damages in cases where the FDA itself has found that there was fraud in the application process.
 

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