Bulking Up

We’ve been thinking lately about the bulk supplier doctrine in the context of prescription drugs.  We haven’t discussed this topic at any length, although we did touch upon aspects of it some time ago here and here.  It’s due for another, more detailed, look.  Also, thanks to Reed Smith's Melissa Wojtylak for research assistance in the preparation of this post.

The doctrine generally comes into play when the manufacturer of an allegedly defective prescription drug or medical device is out of the picture – judgment-proof, protected by preemption, etc. – and the enterprising plaintiff in search of a deep pocket has instead sued a company that supplied an active ingredient or component part to the manufacturer.  Section 5 of the Restatement (Third) of Torts addresses the liability of bulk suppliers and suppliers of component parts, and provides:

One engaged in the business of selling or otherwise distributing product components who sells or distributes a component is subject to liability for harm to persons or property caused by a product into which the component is integrated if:

 (a) the component is defective in itself . . . and the defect causes the harm; or

 (b)(1) the seller or distributor of the component substantially participates in the integration of the component into the design of the product; and

(b)(2) the integration of the component causes the product to be defective . . .; and

(b)(3) the defect in the product causes the harm.

In the context of prescription drugs, FDA regulations exempt bulk suppliers from liability for failure to warn claims if the packaging for the bulk product contains certain language indicating that the contents are for use in manufacturing, processing, or repacking, and/or is for prescription use only.

A drug in a bulk package, except tablets, capsules, or other dosage unit forms, intended for processing, repacking, or use in the manufacture of another drug shall be exempt from section 502(f)(1) of the act [involving requirements for labeling] if its label bears the statement “Caution: For manufacturing, processing, or repacking”; and if in substantially all dosage forms in which it may be dispensed it is subject to [the prescription drug provisions] of the act, the statement “Rx only”. . . .

21 C.F.R. §201.122.  There follow several involved exceptions (§201.122(a-c)) for “new drugs” (those not yet FDA approved)), but this language is the generally applicable bulk drug FDA regulation.

In addition, the Biomaterials Assurance Act of 1998, 21 U.S.C. § 1601 et seq., discussed here, protects suppliers of materials used in the manufacture of implantable medical devices by preempting claims against them.  See Marshall v. Zimmer, 1999 WL 34996711, at *3 (S.D. Cal. Nov. 5, 1999) (applying statute).  This act was the direct consequence of the jaw implant litigation discussed below.

In the failure to warn context, the rationale for these sorts of statutory provisions is simple: generally, bulk suppliers are not well situated to give any kind of warning to end users – or even learned intermediaries – about the characteristics of their product.  Even if they could, differing warnings from different sources would be confusing.  As recognized years ago by one appellate court, “[t]he rigorous testing and reporting required of final manufacturers by federal law . . . renders superfluous detailed warning by bulk suppliers to those same manufacturers.”  White v. Weiner, 562 A.2d 378, 385 (Pa. Super. 1989), aff’d without op., 583 A.2d 789 (Pa. 1991).  “It is the final manufacturer and the medical community, however, who are in a better position to assess the risks associated with the administration of the prescription drug.”  Id., at 386. 

Thus, courts have found that compliance with the FDA’s bulk drug component labeling regulation satisfies common-law warning duties as a matter of law.  George v. Parke-Davis, 733 P.2d 507, 515-16 (1987); White, 562 A.2d at 382-385; Sokoloski v. American Home Products Corp., 59 Pa. D. & C.4th 225, 237-40 (Pa. C.P. Philadelphia Co. 2003); Kalinowski v. E.I. DuPont de Nemours & Co., 851 F. Supp. 149, 156 (E.D. Pa. 1994); Styck v. E.I. DuPont de Nemours & Co., 1993 WL 761301, at *4 (C.D. Ill. Nov. 12, 1993), aff’d, 41 F.3d 1103 (7th Cir. 1994); Veil v. Vitek, Inc., 803 F. Supp., 229, 235-37 (D.N.D. 1992).  The bulk supplier must, of course, be able to establish compliance.  See Fisher v. Professional Compounding Centers, Inc., 311 F. Supp.2d 1008, 1021-22 (D. Nev. 2004) (defendant’s compliance with §201.122 raised issues of fact).

Notably, federal bulk labeling standards have been adopted as coextensive with the common law not by way of federal preemption, but rather through voluntary “deference” to federal law (akin to, but not quite the same as "primary jurisdiction") in this heavily regulated area.  At the time White was decided (and also today) Pennsylvania’s own statutes had explicitly adopted FDA drug standards, so the court held “[o]ur legislature unequivocally has expressed a policy of deference to the federal scheme in the area of drug labeling, and we can ascertain no reason not to extend that policy to civil cases.”  562 A.2d at 383.  The FDA’s extensive labeling requirements for drug manufacturers mean that there’s no reason for the common law to impose any safety-related parallel duty on bulk suppliers.

[T]he United States [FDA] requires the tablet manufacturers . . . to account for and warn of a drug’s properties.  It would therefore be anomalous to require the raw manufacturer to conduct separate tests to determine the adverse effects of the drug when by federal statute, the tablet manufacturer bears this responsibility.

George, 733 P.2d at 515; accord White, 562 A.2d at 385 ("[i]n light of federal law . . . a separate warning from a bulk supplier to the medical community would be duplicative”); Sokoloski, 59 Pa. D. & C.4th at 239 (a duty that there be separate bulk supplier warnings would be “superfluous”).

George and White were also applied in the context of medical devices, where after the manufacturer of a defective jaw implant went bankrupt, the plaintiffs en masse went after the bulk supplier of a chemical (Teflon) used to make the device:

[W]e agree with [the bulk supplier] that it owed no duty to [plaintiff] to assure the safety of [the manufacturer’s] specialized use of its raw material. . . .  The supplier of a raw material which is not inherently dangerous or defective cannot reasonably be held liable for injuries caused by a purchaser's subsequent manufacturing of the raw material into a defective or dangerous product. [The device manufacturer], designed, formulated, tested, manufactured, advertised, and sold [the device].  [The bulk supplier] had no duty to assure the safety of [the] implants.

Nor did [the bulk supplier] have a duty to warn the plaintiff here. Such a duty is imposed on the manufacturer of a product which is incorporated into a second product only if the manufacturer knows or has reason to know that the product is likely to be dangerous for the use for which it is being supplied, and has no reason to believe that the eventual user will realize the dangerous condition of the product. . . .  [T]here was nothing about which [the bulk supplier] had a duty to warn [plaintiff].  [The manufacturer] as the inventor, manufacturer, patent-holder and federal licensee [footnote about FDA approval] of [the device], knew more about its product and applications of its product than [the bulk supplier] did.  Any duty to warn [plaintiff] was owed by [the device manufacturer].

Collins v. E.I. DuPont de Nemours & Co., 1993 WL 521229, at *2 (Ariz. App. Oct. 26, 1993) (unpublished).  See also Parker v. E.I. DuPont de Nemours & Co., 909 P.2d 1, 10 (N.M. App. 1995) (“it is clear that the FDA had regulatory authority over the sale of the [medical device] and [the bulk supplier] received written assurances from [the manufacturer]  that it would comply with FDA requirements”); Bond v. E.I. DuPont De Nemours & Co., 868 P.2d 1114, 1121 (Colo. App. 1993) (“there is again even less reason to impose such a duty when, as here, the designer of the final product presumably possesses highly specialized knowledge of the field in which the product exists and that designer is under a duty imposed by the government to conduct specific tests and provide particular warnings”); Anguiano v. E.I. DuPont de Nemours & Co., Inc., 808 F. Supp. 719, 726 (D. Ariz. 1992) (“it was enough that the bulk supplier comply with the labelling requirements”; [the bulk product] is not a medical device and [its supplier] is not a manufacturer of medical devices  . . . [t]he reasoning in both the George and White cases is applicable”), aff’d, 44 F.3d 806 (9th Cir. 1995); In re TMJ Implants Products Liability Litigation, 872 F. Supp. 1019, 1033 (D. Minn. 1995) (“Similarly [to George], it would be anomalous to require [a bulk supplier] to conduct separate tests to determine the potential risks of using [its product] in [a medical device] when [the manufacturer] was already required [by the FDA] to do so”), aff’d 97 F.3d 1050 (8th Cir. 1996).

In addition, the learned intermediary rule has been cited as a basis for barring product liability claims involving components used in drugs and medical devices – there’s no duty to warn end users, and physicians have other sources of information.  Even more remotely situated bulk suppliers have no duty to circumvent the learned intermediary rule with direct warnings.  White, 562 A.2d 378, 385-86; Lyons v. Premo Pharmaceutical Labs, Inc., 406 A.2d 185, 191-92 (N.J. Super. App. Div. 1979); Sokoloski, 59 Pa. D. & C.4th at 240-42; Kalinowski, 851 F. Supp. at 156-57; Baker v. E.I. DuPont de Nemours & Co., 1994 WL 762406, at *2-3 (M.D. Pa. Feb. 7, 1994); Veil, 803 F. Supp. at 234-37.

This combination of FDA regulations adopted by the states and the learned intermediary rule distinguishes prescription medical product cases from other bulk supplier situations.  In a recent opinion, issued earlier this year, Union Carbide Corp. v. Aubin, 97 So.3d 886 (Fla. App. 2012), the court held that, theoretically (the plaintiff ultimately failed to prove causation), a bulk supplier of asbestos could be liable for a “design defect” because the “design” (not a pure raw material because it had been processed) was “manifestly unreasonable” – i.e., “the extremely high degree of danger posed by its use . . . so substantially outweighs its negligible social utility that no rational, reasonable person, fully aware of the relevant facts” would choose to use it.  Id. at 897 (applying Restatement Third §2, comment e).  A pure (that is, properly manufactured) drug or device component, sold in bulk in compliance with FDA regulations, would have no basis for falling within this comment – particularly given the labeling requirements imposed upon the manufacturers of finished drugs.  Indeed, the court in Aubin recognized that “products are not generically defective merely because they are dangerous.”  Id. at 898. 

Aubin’s treatment of failure to warn is also of interest.  The plaintiff’s failure to warn claim could go to the jury under the Third Restatement because a bulk supplier had to warn the ultimate user of the product if it was reasonably feasible to do so – a question it found was clearly reserved for the trier of fact.  Id. at 898-99.  Notably, the court distinguished asbestos from a drug or medical device manufacturer’s duty to warn a learned intermediary:

Florida courts are clear that prescription drug manufacturers may discharge their duty to warn end-users as a matter of law by adequately warning physicians regarding the hazards associated with prescription drugs.  See Felix [v. Hoffmann-LaRoche, Inc.], 540 So.2d [102,] 104 [(Fla.1989)] (determining that while drug companies have the duty to warn of a drug's dangerous side effects, that duty to warn is directed to physicians rather than patients under the ‘learned intermediary’ doctrine); see also Hoffmann-LaRoche Inc. v. Mason, 27 So.3d 75, 77 (Fla. [App.] 2009) (‘[T]he duty of a drug manufacturer to warn of the dangers involved in the use of a drug is satisfied if it gives an adequate warning to the physician who prescribes the drug.’).

In Florida, a variant of the learned intermediary doctrine has been extended outside of the prescription drug context, although not as a complete defense.  Instead, the intermediary's level of education, knowledge, expertise, and relationship with the end-users is informative, but not dispositive.

Aubin, 97 So.3d at 899-900 (emphasis added).  Thus unlike other bulk suppliers, who are not subject to the unique regulatory and distribution system that applies to prescription medical products, the “education, knowledge, expertise, and relationship” id. at 900, of licensed physicians is recognized as satisfying those elements of the bulk supplier defense as a matter of law.

Bulk supplier liability is one of those novel and expansive causes of action that we’ve been trying to keep out of product liability litigation involving prescription medical products for much longer than we’ve been blogging (White was Bexis' first ever appellate argument).  Because the other side is still trying – we’ll keep trying as well.