New Law Overrules State Supreme Court’s “Innovator Liability” Decision

Guest Contributor
Guest Contributor May 4, 2015

New Law Overrules State Supreme Court’s “Innovator Liability” Decision.

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On Friday, May 1, Alabama Governor Robert Bentley signed into law legislation that overturns the Alabama Supreme Court’s adoption of a novel tort theory that severely threatened Alabama’s innovator and manufacturing sectors, as well as the State’s broader business climate. This important legislation restores longstanding Alabama law and prohibits damages against a brand-name manufacturer, in any industry, for physical injuries resulting from use of a generic product made and sold by a different company.

Catalyst_Promo4The legislation garnered wide bipartisan support, passing in the Alabama Senate 32-0 and House 86-14.  The new law became necessary only after the Alabama Supreme Court stunned observers in 2013 by holding, in a case called Weeks v. Wyeth, that a manufacturer of brand-name prescription medicines could be held liable for physical injuries caused by a generic drug that it neither made nor sold—and then, again surprisingly, reaffirmed that decision in August 2014.  To their credit, the Legislature and Governor acted swiftly on the heels of the court’s second decision to correct the anomalous result.

The Weeks decision threatened to unleash plaintiffs’ lawyers to evade traditional tort limitations that require a product-liability lawsuit to be filed against the entity that manufactured or marketed the particular product that caused the alleged harm.  Chucking that requirement could have imperiled the Alabama pharmaceutical industry that supports more than $3.2 billion in economic output and nearly 17,000 jobs. As The Wall Street Journal observed, “The effect would be to make brand-name companies the de facto insurers of the entire industry, depleting their profitability and reducing the incentive to invest in new products.”

Significantly, the Supreme Court’s decision also threatened Alabama’s growing automotive, aerospace, and biotech industries. As The Journal further explained, “[p]harmaceuticals aren’t the only industry that would feel the pain if [Weeks] stands,”  because the “innovator liability” theory could apply “in any market served by brand-name companies that actively promote their wares but face competition from largely identical but lower-priced store brands.”

The Business Council of Alabama filed a brief in the Weeks case alongside PhRMA and the U.S. Chamber of Commerce, urging the Alabama Supreme Court reject plaintiffs’ novel “innovator liability” theory and warning that adoption of the theory would once again make Alabama a haven for frivolous lawsuits.  Sadly, the Supreme Court refused to right its own wrong when it declined to rehear its initial decision—but happily, Senator Cam Ward and Representative Jack Williams sponsored legislation to restore some common sense to the law.  The bill, now signed into law by Governor Bentley, is enormously important because it returns predictability to the tort system and reaffirms settled expectations for companies doing business in Alabama.  

On the national scene, the Alabama Legislature’s rapid reversal of the Alabama Supreme Court’s overreach should serve as a warning to other state courts across the country, and finally close the books on rogue liability theory.  Weeks and a handful of other ill-reasoned decisions aside, the theory appropriately has been relegated to obscurity—more than 100 decisions, applying the laws of 30 states (including every state that borders Alabama) have flatly rejected it. Thanks to the good sense of the Alabama Legislature and Governor Bentley, Alabama has now joined the ranks of states that protect businesses against such an unhinged liability theory.

The Business Council of Alabama is Alabama’s foremost voice for business. The BCA is a non-partisan statewide business association representing the interests and concerns of nearly 1 million working Alabamians through its member companies and its partnership with the Chamber of Commerce Association of Alabama. BCA is Alabama’s exclusive affiliate to the U.S. Chamber of Commerce and the National Association of Manufacturers.

Conversations and healthy debate about issues facing our industry and the health care system are critical to addressing some of today’s challenges and opportunities. The Catalyst welcomes guest contributors including patients, stakeholders, innovators and others to share their perspectives and point of view. Like in our Conversations series, views represented here may not be those of PhRMA, though they are no less key to a healthy dialogue on issues in health care today. 

Topics: Research and Development