ATRA Disappointed in Massachusetts Supreme Court’s Decision to Adopt Expansive Theory of “Innovator Liability”

On March 16, 2018, in a very disappointing decision, the Massachusetts Supreme Court adopted an expansive theory of civil liability known as “innovator liability.” The state joins perennial Judicial Hellhole, California, as the only other state to adopt this dangerous theory of liability. The Alabama Supreme Court adopted “innovator liability” in 2014, but the decision was quickly overturned by the legislature.

In Rafferty v. Merck, the court held that a brand-name drug manufacturer can be sued for recklessness if it intentionally failed to update the label on its drug, knowing that there is a risk of death or injury with its use, that makers of generic versions must adopt as well.

“If allowed to flourish in practice, this theory could impose billions of dollars of unwarranted liability on companies that invest significant time and expense to develop new products that are later copied and sold by others,” explained ATRA president Tiger Joyce.  “This ruling effectively forces innovator companies to act as an insurer for their generic competitors’ products which will have the likely impact of diverting millions of dollars from research and development.”

“More broadly conceived, the always creative and bootstrapping personal injury bar’s theory of ‘innovator liability’ is a means to turn centuries of settled tort law on its head, subjecting original product designers or manufacturers to liability not only for harm allegedly caused by the products they made or sold, but also for harm from similar products made or sold by their competitors,”.

In this case, the liability issue is critical, since it unfairly subjects brand-name companies to unpredictable and potentially immense liability, stifling innovation and undermining public health. Brand-name companies do not owe a duty to users of generic medicines.

“At least 35 different courts, including six federal courts and eight different state courts have rejected innovator liability, recognizing that it would disrupt the innovators’ ability to invest further in innovation which could lead to more life-saving drugs,” said Joyce. “We are very disappointed that the court failed to recognize that innovator liability is fundamentally unfair and inconsistent with Massachusetts tort principles.”

ATRA filed a brief in the case that can be found here.