Just as a company CEO can overrule a midlevel manager, federal law has the authority to supersede or preempt state law when the two conflict. The issue of preemption was examined by the Supreme Court of the State of Nevada in Teva Parenteral Medicines Inc. et. al. v. The Eighth Judicial District Court of the State of Nevada, which found that, when compliance with both state and federal law is possible, the preemptive power of federal law does not excuse failure to comply with state law.
Background
Teva Parenteral Medicines, Inc., Baxter Healthcare Corporation and McKesson Medical-Surgical, Inc. manufacture and sell the generic drug propofol (commonly branded as Diprivan). The U.S. Food and Drug Administration approved use of propofol as an anesthetic in 1989 and granted the companies permission to make and distribute generic propofol in three vial sizes: 20, 50, and 100 mL. The label on each vial clearly states that it is for single-patient use only.
The companies sold propofol to nonparty and now deceased Dr. Depak Desai for use at his endoscopy centers in Las Vegas, Nevada. Although 20 mL is a common dose for many patients and procedures, Dr. Desai was able to realize economic gains by improperly using 50 mL single-patient vials to dose multiple patients. Cross-contamination of propofol occurred when needles from more than one patient were used to redraw from the anesthetic from the vial. This resulted in direct injury to numerous patients who became infected with HIV and viral hepatitis. Dr. Desai was criminally charged for misuse of propofol as well as for reusing single-use injection syringes on multiple patients from 2004 to 2008. His patients received warning letters from public health authorities advising them of a risk infection with Hepatitis B, Hepatitis C, and/or HIV. About 800 warning letter recipients who tested negative for these diseases sued the manufacturers to obtain compensation for the testing costs as well as pain and suffering. Their complaint, which demanded punitive damages, alleged strict product liability, breach of implied warranty of fitness for a particular purpose, negligence and violation of the Nevada Deceptive Trade Practices Act. Specifically, the plaintiffs alleged that the manufacturers knew or should have known that selling 50 mL vials, as opposed to the smaller 20 mL vials, to Dr. Desai’s ambulatory surgical centers with high patient turnover was unsafe because it would entice use of each vial on multiple patients, which increases the risk of contamination.
In three actions (which have since been consolidated in the Eighth Judicial District Court), the manufacturers filed motions to dismiss, alleging the plaintiffs’ claims conflicted with the federal Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act. The district courts summarily denied the motions, finding that the plaintiffs’ claims were not preempted by federal law.
Nevada Supreme Court Decision
The manufacturers petitioned the Supreme Court of the State of Nevada to overturn district court orders denying their motions to dismiss. Concluding that some but not all of the plaintiffs’ claims were preempted, The Nevada Supreme Court granted the petition in part and denied it in part in a March 2021 decision.
According to the Supremacy Clause of the U.S. Constitution, federal law supersedes or preempts conflicting state law. The petitioners argued that conflict preemption applies here because the Hatch-Waxman Act imposes duties on them as generic drug manufacturers that clash with duties imposed under state tort law, making it impossible to comply with both. The petitioners relied on U.S. Supreme Court decisions in two cases, Mensing and Bartlett, which, read together, hold that the Hatch-Waxman Act imposes a duty of sameness on generic drug manufacturers that requires the labels and design of generic drugs to be the same as their brand-name counterparts and precludes manufacturers from unilaterally altering the label or design of the drug. A state law claim that imposes a duty on a generic drug manufacturer to alter either the label or design of a generic drug, thus making it impossible for the generic drug manufacturer to avoid liability under state law without also violating its federal duty of sameness, is preempted. Further, preemption cannot be avoided simply because the manufacturer could have stopped selling the drug to avoid liability under state law.
State vs. Federal Law
The petitioners contended that the four causes of action asserted by the plaintiffs – strict product liability, breach of implied warranty, deceptive trade practice, and negligence – would have required them to alter either the design or the formulation of the 50 mL vial, change its warning labels, or stop selling it altogether to avoid liability.
In oral arguments, the plaintiffs conceded that their claims for strict product liability and breach of implied warranty were essentially failure-to-warn claims and were thus preempted under Mensing and Bartlett.
The court turned its attention to the other two causes of action, which the plaintiffs claimed were not premised on the labeling or design of the drug. Regarding the deceptive trade practice claim, the plaintiffs alleged that the petitioners made representations about the 50 mL vials that were false and omitted material facts, but the plaintiffs failed to identify any representations made other than those contained in the FDA-approved labeling. Under Mensing and Bartlett, the petitioners could not have rectified any alleged misrepresentation without violating federal law because they were required to adhere to the brand-name drug’s labeling. Thus, this cause of action is preempted, the court held.
Regarding negligence, the plaintiffs alleged that the petitioners owed them a duty “to distribute, market, and package the propofol in safe single-use vials that are not conducive to multi-dosing.” The plaintiffs further alleged that the petitioners knew or should have known that distributing the drug to high-turnover clinics in 50 mL vials was likely to encourage or facilitate multi-dosing. The plaintiffs claimed the petitioners had a duty under state law not to package, market, or sell 50 mL vials of propofol to Dr. Desai’s clinics.
To the extent that the negligence claim alleges the petitioners provided improper warnings or descriptions in the labeling and packaging, such a claim would be preempted, the court said. But with respect to the plaintiffs’ claim that the petitioners had a duty not to sell the 50 mL vials to the clinics, the court concluded that this cause of action was not preempted, as petitioners had not demonstrated that it would be impossible to comply with state law without violating federal law. The petitioners, who allegedly knew their vials were being misused, could have stopped selling 50 mL vials and sold only 20 mL single-dose vials, for which they had already obtained FDA approval, to those centers. Thus, the court said, the petitioners would not be required to make any unilateral changes to the drug’s design to comply with state law.
The court directed the lower court to dismiss all of the plaintiffs’ claims except their cause of action for negligence and their request for punitive damages, to the extent it was derived from the negligence claim
