Post-Approval Testing By Pharmaceutical Manufacturers

Abstract

A pharmaceutical manufacturer currently has an incentive to remain ignorant about a drug’s side effects after the Food and Drug Administration (“FDAâ€) approves the drug for marketing. Any new information the manufacturer produces by post-approval testing can lead to tort liability or withdrawal of FDA approval. Furthermore, ignorance can be a defense to liability because a patient injured by a drug will be unable to recover damages unless testing data is available to prove that the drug caused their particular injury. In theory, this ignorance incentive can be eliminated by imposing liability for failure to test a drug. Punitive damages would be essential to counterbalance lack of enforcement, because the lack of testing will prevent some patients from successfully bringing suit for failure to test. However in practice, few courts uphold punitive damages for a failure to test. The need for punitive damages can be reduced by implementing specific immunity to liability. Following completion of a conclusive test, a pharmaceutical manufacturer should be immune to liability for injuries that are the subject of that test. This specific immunity will broaden the incentive for post-approval drug testing, which can in turn eliminate the need for liability. Once testing has established a drug’s risk of causing a particular side effect, FDA can make a rational decision whether to keep the drug on the market. Imposing tort liability at this point would not lead to a better decision.