Brand-name pharmaceutical manufacturers can be held liable for drugs they have neither sold nor even continue to own, says the California Supreme Court in a divided opinion issued Thursday.

An observer said the ruling will likely result in more product liability litigation being filed in California.

The case involves a woman who was prescribed terbutaline, a generic form of the band name drug Brethine, to suppress premature labor during her pregnancy, according to the ruling by the San Francisco-based Supreme Court in T. H. a Minor, etc., et al. v. Novartis Pharmaceuticals Corp. The asthma drug has been prescribed off-label to stop or slow preterm labor.

Her fraternal twin boys were diagnosed with developmental delays at age 3 and autism by the time they turned 5. A lawsuit filed on their behalf against San Carlos, California-based Novartis, the drug’s brand-name manufacturer, contended the firm knew, or should have known, of Brethine’s risk to fetal brain development.

Novartis had stopped manufacturing the drug and sold all its rights to it in 2001, six years before the mother was prescribed the drug.

Federal law says manufacturers have the responsibility to provide adequate warning labels for their drugs, and generic drug manufacturers are required to follow the brand-name manufacturer’s label, said the ruling.

A San Diego court dismissed the case, which a San Diego state appeals court reinstated in 2017. 

The California Supreme Court upheld that decision in a 4-3 ruling. The majority opinion said, “We find that brand-name drug manufacturers have a duty to use ordinary care in warning about the safety risks of their drugs, regardless of whether the injured party (in reliance on the brand-name manufacturer’s warning) was dispensed the brand- name or generic version of the drug.

“We also conclude that brand-name manufacturers’ sale of the rights to a drug does not, as a matter of law, terminate its liability for injuries foreseeably and proximately caused by deficiencies present in the warning label prior to the sale.”

The dissenting opinion said while “I accept the majority’s holding that brand-name drug manufacturers’ duty to warn extends to consumers of a generic bioequivalent,” the majority’s holding “would extend indefinitely a drug manufacturer’s duty to warn the customer of its successor, even after sale of the product line.”

It adds, “The majority cites no case holding a predecessor manufacturer liable for failing to warn about injuries caused by its successor’s product.”

Plaintiffs who were allegedly harmed by generic drugs have been suing original brand-name manufacturers because of U.S. Supreme Court decisions that have forestalled litigation against the generic pharmaceutical manufacturers.

The U.S. Supreme Court’s 2011 ruling in Pliva Inc. v. Messing and its 2013 ruling in Mutual Pharmaceutical Co. v. Bartlett essentially protected generic manufacturers, which constitute about 80% of the market, from state law liability for injuries caused by their products.

A case that predated the U.S. Supreme Court rulings, which was cited in Thursday’s California Supreme Court ruling, was a 2008 California appeals court decision in Conte v. Wyeth, which held that a name-brand pharmaceutical firm owed a duty of care to patients taking generic versions of its drug.

Steven J. Boranian, a partner with Reed Smith L.L.P. in San Francisco, who was not involved in the litigation, said the California Supreme Court’s ruling “raises many, many questions.”

In California and everywhere else, if someone alleges that he or she is injured by a defective product, the company that made or sold it is normally held responsible. “It’s been that way for decades,” he said.

“This ruling changes those rules. It makes a listed drug manufacturer potentially liable for products it did not make and did not sell,” said Mr. Boranian. “And even further, it makes the listed manufacturer potentially liable even after the drug manufacturer has divested itself of the product altogether, and that’s a major change.”

Mr. Boranian said he believes this ruling will lead to innovators, which include brand name drug manufacturers as well as technology companies, being named more often in product liability lawsuits in California.