High Court Sharply Limits Liability of Drug Makers

The state Supreme Court on Thursday granted broad protection to prescription drug makers, ruling that injured consumers cannot collect damages unless they prove that firms were negligent in making the drugs or in failing to warn of potential dangers.

The court held unanimously that unlike manufacturers of other products, drug makers cannot be held strictly liable for harm caused by product defects.

The justices, ruling in a case involving suits brought by 69 cancer victims claiming injury from the drug DES, said allowing suits without proof of fault could drive up the cost and limit the availability of badly needed drugs.

“Public policy favors the development and marketing of beneficial new drugs, even though some risks, perhaps serious ones, might accompany their introduction, because drugs can save lives and reduce pain and suffering,” Justice Stanley Mosk wrote for the court.

If drug makers were subject to strict liability, they might be reluctant to develop and market drugs because of the fear of damage suits and the costs of insuring against liability, the court said.

The ruling represented a substantial setback to plaintiffs’ lawyers and others who had urged the court to expand the pioneering legal doctrine it adopted 25 years ago allowing manufacturers to be held strictly liable for harm from defective products.

The doctrine, now established in some form in almost all states, was aimed at discouraging the sale of unsafe products and spreading the cost of any injuries to the consuming public through higher prices, rather than burdening individual victims.

But courts in other states have declined to expand the doctrine to prescription drug makers--and Thursday’s ruling brought California into line with the national pattern.

The justices noted that there were “important distinctions” between prescription drugs and other products--such as lawn mowers and perfume--whose makers have been held strictly liable.

Other products are made to make work easier or provide pleasure, the court pointed out, while drugs “may be necessary to alleviate pain and suffering or to sustain life.”

The decision drew strong criticism from LeRoy Hersh of San Francisco, an attorney representing some of the cancer victims who brought suit against about 170 makers of the drug DES.

More Difficult to Win

Hersh said the ruling would make it much more difficult to win damages for injuries from defective drugs, requiring plaintiffs in such suits to expend more time and money to gather proof that drug makers were negligent in making and marketing their products.

“What has happened is that the California Supreme Court, once looked on as a showcase in the protecting of consumers, is now a ‘me, too’ court,” Hersh said. “The question here was whether we protect property or people . . . and the court said its priority was property--the profits of the drug industry.”

James C. Martin of Oakland, one of the attorneys who represented the Eli Lilly Co. as a defendant in the suit, called the ruling “a milestone in the rational development of tort law.”

Martin, saying that he was speaking for himself and not the company, said the court had correctly recognized that “the pharmaceutical industry should not be penalized for things medical science did not know and could not have discovered at the time a product was being developed.”

Entitled to Protection

Kevin J. Dunne of San Francisco, a lawyer for Upjohn Co., also praised the decision, saying that drug companies were entitled to protection. Unlike other manufacturers, drug firms could not spread the cost of expanded liability for a particular product among large numbers of customers, he said. Their only alternative, he said, “is to just take that drug off the market.”

Lawyers in the case noted that the decision was confined to the prescription drug industry and were hesitant to speculate on its implications to makers of other products.

The case arose from 69 personal injury suits brought in San Francisco Superior Court against Abbott Laboratories, Eli Lilly, Upjohn and scores of other manufacturers of DES, an anti-miscarriage drug. DES was prescribed between 1947 and 1971 and is suspected of causing cancer in daughters of women who took the drug.

In a landmark ruling in another case in 1980, the justices had held that where plaintiffs could not identify the particular maker of the drug, they could sue major manufacturers as a group and collect damages based on the firms’ share of the market.

Sought Damages

In the case decided Thursday, lawyers for the 69 cancer victims contended that the drug makers should be held strictly liable for the injuries and that the plaintiffs were entitled to damages even without showing that the industry was careless in making the drug or knew, or should have known, of its potential dangers.

But both a Superior Court judge and a state Court of Appeal ruled against the plaintiffs, declining to expand the strict-liability doctrine to prescription drug manufacturers.

The justices, in a 41-page opinion by Mosk upholding the lower court rulings, said the drug industry was entitled to broad protection from liability suits.

Mosk conceded that it might seem unjust to grant the same protection “to those who gave us thalidomide” it was giving the makers of penicillin and other highly useful drugs.

Workable Standard

But under the law, there was no way to devise a workable standard to confine protections to products that eventually prove beneficial, he said.

“We know of no means by which this can be accomplished without substantially impairing the public interest in the development and marketing of new drugs,” he wrote.

Mosk stressed that the decision did not mean that manufacturers were free from all liability for defective products.

Firms may still be held liable for carelessly manufacturing a drug or for failing to warn of potentially dangerous side effects that were “known or reasonably knowable” at the time of its distribution, he said.

Further, he pointed out, consumers of prescription drugs “are afforded greater protection against defects” than consumers of other products because the drug industry is closely regulated by the federal Food and Drug Administration.

Another Key Issue

On another key issue, the court also granted the drug industry a victory in holding that defendants may be held liable for damages only in proportion to their share of the market--even if as a result the plaintiff cannot receive full compensation because some companies were insolvent.

Otherwise, the court said, a defendant company could improperly be held responsible for an entire judgment, even though its market share was insignificant.