T.H v. Novartis Pharmaceuticals

Filed 3/9/16 Certified for publication 3/9/16 (order attached)

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

T. H., a Minor, etc., et al., D067839

Plaintiffs and Appellants,

v. (Super. Ct. No. 37-2013-00070440-
CU-MM-CTL)
NOVARTIS PHARMACEUTICALS
CORPORATION,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of San Diego County, Joan M.

Lewis, Judge. Reversed.

Thorsnes Bartolotta McGuire, Benjamin I. Siminou and Kevin F. Quinn, for

Plaintiffs and Appellants.

Hollingsworth, Eric G. Lasker; Morrison & Foerster, Erin M. Bosman and Julie Y.

Park, for Defendant and Respondent.
 INTRODUCTION

May Novartis Pharmaceuticals Corporation (Novartis), a former manufacturer of a

brand-name asthma medication, be liable in negligence for neurological injuries allegedly

sustained by twin minors in utero after their mother was prescribed and consumed a

generic form of the medication nearly six years after Novartis sold its interests in the

medication?

The minors allege Novartis knew or should have known physicians prescribed its

asthma medication to pregnant women for the off-label purpose of preventing or

inhibiting preterm labor. They allege studies available to Novartis before it sold the

rights to its brand-name product in 2001 showed the drug was not effective for tocolysis

(inhibiting preterm labor), it could cross the placenta, and it could interfere with fetal

development. The minors more clearly contend on appeal Novartis had a duty to revise

the label warnings while it still owned the drug to indicate a risk to fetal development and

its failure to do so contributed to their injuries years later.

We conclude the minors have demonstrated they can amend their complaint to

state a claim under California law for negligent failure to warn and negligent

misrepresentation based on acts or omissions by Novartis prior to 2001, which allegedly

caused or contributed to the minors' injuries in 2007. In reaching our conclusion, we

follow the rationale of Conte v. Wyeth, Inc. (2008) 168 Cal.App.4th 89 (Conte), which

applied common law principles of duty and foreseeability to conclude a brand-name

pharmaceutical manufacturer should "shoulder its share of responsibility for injuries

caused, at least in part by its negligent … dissemination of inaccurate information" even

2
though the patient consumed a generic version of the medication manufactured by

another company. (Id. at pp. 103, 109-110.)

We reject Novartis's invitation to follow other state authorities, which have held a

brand-name manufacturer cannot be held liable under any theory for an injury caused by

a product other than its own. We also reject Novartis's contention Conte is no longer

viable after the Supreme Court decision in O'Neil v. Crane Co. (2012) 53 Cal.4th 335,

342 (O'Neil), which held a pipe and valve manufacturer may not be held liable in strict

liability or negligence for harm caused by separate products manufactured by other

companies, even if those products were used in conjunction with the pipes and valves.

The O'Neil court did not mention, let alone overrule Conte, supra, 168 Cal.App.4th 89,

and, even if a product liability analysis could apply, the facts alleged in this case fall

within an exception recognized by the Supreme Court for harm to which the defendant's

product substantially contributed. We reverse and remand with directions for the trial

court to enter a new order sustaining the demurrer with leave to amend the negligence

and negligent misrepresentation causes of action.

FACTUAL AND PROCEDURAL BACKGROUND1

A

Terbutaline sulfate (terbutaline) was originally developed and released for use as a

bronchodilator in the 1970s. It is a beta-agonist or beta-mimetic drug designed to act

1 Because we review a demurrer ruling, we derive the facts from the first amended
complaint, which we must accept as true. (Shirk v. Vista Unified School Dist. (2007) 42
Cal.4th 201, 205.)

3
upon the beta-2 receptors located in smooth muscle tissue to cause muscles to relax. The

United States Food and Drug Administration (FDA) approved the use of terbutaline for

the treatment of asthma in 1974. Novartis subsequently obtained a license to

manufacture and market the oral form of terbutaline under the trade name Brethine and it

owned the new drug application (NDA) for this brand-name drug until 2001.

Drug manufacturers allegedly perceived an opportunity to market terbutaline as a

tocolytic to relax uterine smooth muscle tissue to prevent or inhibit preterm labor. A

1976 study by a Swedish physician, allegedly with ties to the original drug manufacturer,

published results of a study of 30 women indicating terbutaline was safe and effective for

acute (24-48 hours) and maintenance (after 48 hours) tocolysis. The original

manufacturer allegedly promoted terbutaline as a tocolytic and its use for this purpose

gained wide acceptance. However, neither the original manufacturer nor any of its

successors or licensees sought FDA approval for the use of terbutaline as a tocolytic.

B

Studies began to question the safety and efficacy of using terbutaline as a

tocolytic. In 1978, a study published in the British Journal of Obstetrics and Gynecology

by researchers from Johns Hopkins School of Public Health questioned the validity of the

Swedish report stating "relevant information about the effect of drugs on the mother and

infant was too scanty to make conclusions about side effects possible." It noted "[d]ata

from other sources show that labor inhibitors are potentially dangerous" and "may

unfavorably alter the fetal, placental, or maternal circulation." The study indicated, "the

role of drugs aimed at preventing or delaying premature birth is not yet established, and

4
further good clinical trials are urgently needed." The following year, the FDA ordered

discontinuation of protocols for intravenous terbutaline use. A study in the Journal of

Obstetrics and Gynecology reported pregnant patients who received acute tocolysis

experienced pulmonary edema and congestive heart failure and several neonatal

complications were reported including "hypoglycemia, hypotension, hypocalcemia, and

death."

In 1982, military clinical investigators found the Swedish study could not be

replicated. When they compared patients who had been given terbutaline for tocolytic

therapy with patients given a placebo they found "[n]o significant difference in

prolongation of pregnancy, birth weight, development of [respiratory distress syndrome],

or infant survival." A 1984 study from the University of Southern California found

similar results.

The Swedish physicians who conducted the original study acknowledged their

data demonstrated "a rapid transfer of [t]erbutaline across the human placenta" and that

concentrations of the drug in the fetus reached "levels similar to its mother," which they

concluded "may help to explain fetal metabolic side effects." Another study in 1985

published in the Journal of Pharmacology and Experimental Therapy found a single dose

of terbutaline given to pregnant rats produced stimulation of the beta receptors in the fetal

brain, which interfered with an enzyme required for neuronal development.

Reports published in the mid-to-late 1980's regarding other beta-agonist drugs

found: (1) six-year-old children born to mothers who received the drugs for tocolysis had

statistically poorer academic achievement than children born to mothers with no such

5
treatment, (2) children born to mothers who received tocolytic treatment were found

more often to be neurotic and more likely to have impairments with vision and language

development than children whose mothers did not receive tocolytic treatment, and (3)

biochemical evidence that terbutaline may interfere with fetal development. Ritodrine, a

similar beta-agonist drug approved by the FDA for tocolysis, was withdrawn from the

market by its manufacturer in the 1990's after the FDA advised against using it for

maintenance tocolytic therapy due to concerns about its toxicity and questionable

efficacy. Multiple other studies and trials conducted throughout the 1990's concluded

maintenance tocolysis with beta-agonist drugs such as terbutaline provided no benefit and

there were well-documented potential dangers to the mother and fetus.

The FDA invited terbutaline manufacturers in 1993 to submit applications for

approval of tocolytic use and to review their labeling to clarify the uses and risks of the

drug. The manufacturers allegedly decided not to voluntarily seek FDA review for

tocolytic use. The manufacturers revised their labels distributed in the United States to

warn against tocolytic use. Although not pleaded in the operative complaint, the opening

brief asserts the drug label revisions in the early 1990's warned against tocolytic use, but

only discussed minor risks to the mother and did not mention potential harm to the fetus.

The American College of Obstetricians and Gynecologists (ACOG) issued a

technical bulletin to its members in 1995 stating "[t]o date, no studies have convincingly

demonstrated an improvement in survival or any index of long-term neonatal outcome

with the use of tocolytic therapy. On the other hand, the potential damages of tocolytic

therapy to the mother and the neonate are well documented." Despite this information,

6
researchers from the University of Iowa reported in 1997 physicians were reluctant to

discharge patients who received acute tocolytic treatment without medication and usually

prescribed oral maintenance tocolysis because "the concerned patient often pressures her

doctor to prescribe medication" and because these prescriptions "reduce … patient phone

calls and complaints."

The FDA Associate Commissioner for Health Affairs issued a "Dear Colleague"

letter in 1997 expressing the FDA's concerns about the use of terbutaline as a tocolytic

agent. It noted adequate data establishing the safety and effectiveness of terbutaline for

this purpose had not been submitted to the FDA and the information available indicated

there was no documented benefit from prolonged treatment. It referred to and adopted

ACOG's 1995 warning. The FDA later rejected a protest to the "Dear Colleague" letter

noting, "[t]here is no approved application for the use of [t]erbutalineby any route for

administrationas a tocolytic agent, despite active promotion of subcutaneously

administered [t]erbutaline for such use by some commercial parties." The FDA noted its

review of articles and materials suggested oral terbutaline is "ineffective as a pregnancy

maintenance treatment" and was toxic to mother and fetus.

An evaluation of various treatments for preterm labor released by the Agency for

Healthcare Research and Quality of the United States Department of Health and Human

Services in 2000 concluded there was no benefit to using tocolytic for maintenance

therapy. A study published in 2001 reported children exposed to tocolytic treatment had

impairment in motor, socio-emotional and cognitive development as well as higher rates

of psychiatric disorders and reading disorders. Another study released the same year
7
identified the biological mechanism by which terbutaline can injure the developing brain.

A physician from Duke Medical Center determined receptors in fetal brains do not

desensitize, as mature brains would, when subjected to continuous doses of terbutaline.

Instead, the sensitivity to terbutaline intensified and increased the response to the drug,

which warped cell development. The study noted "there are long-term liabilities of

tocolysis with [beta-adrenergic receptor] agonists, including abnormalities of

cardiovascular and metabolic function, impaired school performance, and subsequent

cognitive impairment and psychiatric disorders."

C

Novartis divested its interest in the NDA for Brethine in December 2001. Another

pharmaceutical company became the NDA holder for Brethine thereafter.

D

Over the next several years, other studies were published implicating the use of

terbutaline as a tocolytic in adverse neurological effects experienced by children and

explaining the mechanisms of injury. By November 2005 researchers published a study

finding a significant association between continuous terbutaline exposure and autism

disorders in fraternal twins. The report indicated male twins whose mothers received

terbutaline therapy and were born with a sibling outside the twin set who did not have

autism had more than four times the risk of developing autism than male twins born to a

similar family where the mother did not receive terbutaline.

8
 E

In early September 2007 the twins' mother was hospitalized due to concerns she

may go into premature labor. Her physician prescribed oral terbutaline to be given every

six hours. She was given a generic version of terbutaline. When she was discharged

from the hospital at the end of September 2007 another physician instructed her to

continue taking oral terbutaline every six hours until the 32nd week of her pregnancy.

She filled her prescription with another generic version of terbutaline and continued

taking the medication until the twins were born in early October 2007. When the twins

were approximately three years old, their pediatrician indicated they had developmental

delay. They were diagnosed with autism in 2012.

F

The minors, appearing by and through their father and guardian ad litem, sued

Novartis, other manufacturers of terbutaline, the physicians who prescribed the

medication, and the hospital. The operative complaint asserts causes of action against

Novartis for negligence, intentional misrepresentation, concealment, and negligent

misrepresentation.

Novartis filed a demurrer arguing it had no duty to the minors because it did not

manufacture the medication consumed by their mother and had no responsibility for the

label or prescribing information in 2007 since it sold the rights to terbutaline six years

earlier. It also argued the minors failed to plead with sufficient specificity any statement

or misrepresentation by Novartis to support its fraud causes of action and they further

failed to allege reliance on any statement by Novartis.

9
 The minors opposed the demurrer arguing Novartis owed a duty of care to

potential patients while it did own and manufacturer the product to adequately warn

physicians and their pregnant patients the use of its product was not effective for

tocolysis or safe for unborn children. The minors further argued their mother's

physicians likely would not have prescribed her or other women terbutaline in 2007 if

Novartis had either (1) not encouraged the off-label use as a tocolytic or (2) adequately

warned of the potential risks known in 2001. They argued the gap between when

Novartis owned the rights to the drug and when their mother consumed the drug did not

go to the issues of duty or breach, but to causation. They argued they sufficiently pleaded

the fraud causes of action.

The trial court sustained the demurrer without leave to amend concluding Novartis

owed the twins "no duty as a matter of law for claims that arise from the [prescribing] of

terbutaline medication in 2007." The court also sustained the demurrer to the causes of

action for intentional misrepresentation, concealment and negligent misrepresentation

because they failed to plead these fraud-based claims with sufficient specificity.

DISCUSSION

I

Standard of Review

"A demurrer is properly sustained when the complaint 'does not state facts

sufficient to constitute a cause of action,' or where the court 'has no jurisdiction of the

subject of the cause of action alleged in the pleading.' (Code Civ. Proc., § 430.10, subds.

(e), (a).) 'On appeal from a dismissal following the sustaining of a demurrer, this court

10
reviews the complaint de novo to determine whether it alleges facts stating a cause of

action under any legal theory. … [¶] Because the function of a demurrer is not to test the

truth or accuracy of the facts alleged in the complaint, we assume the truth of all properly

pleaded factual allegations. [Citation.] Whether the plaintiff will be able to prove these

allegations is not relevant; our focus is on the legal sufficiency of the complaint.' "

(Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 438.)

"If the court sustained the demurrer without leave to amend, as here, we must

decide whether there is a reasonable possibility the plaintiff could cure the defect with an

amendment. [Citation.] If we find that an amendment could cure the defect, we conclude

that the trial court abused its discretion and we reverse; if not, no abuse of discretion has

occurred. [Citation.] The plaintiff has the burden of proving that an amendment would

cure the defect." (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)

II

Negligent Failure to Warn

A

"Negligence law in a failure-to-warn case requires a plaintiff to prove that a

manufacturer or distributor did not warn of a particular risk for reasons which fell below

the acceptable standard of care, i.e., what a reasonably prudent manufacturer would have

known and warned about." (Anderson v. Owens-Corning Fiberglas Corp. (1991) 53

Cal.3d 987, 1002.) "In the case of prescription drugs … the physician stands in the shoes

of the 'ordinary user' because it is through the physician that a patient learns of the

properties and proper use of the drug …. Thus, the duty to warn in these cases runs to the

11
physician, not the patient." (Valentine v. Baxter Healthcare Corp. (1999) 68 Cal.App.4th

1467, 1483.) This is known as the learned intermediary doctrine. As such, a

"pharmaceutical manufacturer may not be required to provide warning of a risk known to

the medical community." (Carlin v. Superior Court (1996) 13 Cal.4th 1104, 1116.)

A manufacturer is not required to warn about speculative harm. "Knowledge of a

potential side effect which is based on a single isolated report of a possible link between a

prescription drug and an injury may not require a warning. 'If we overuse warnings, we

invite mass consumer disregard and ultimate contempt for the warning process.'

[Citation.] Moreover, both common sense and experience suggest that if every report of

a possible risk, no matter how speculative, conjectural, or tentative, imposed an

affirmative duty to give some warning, a manufacturer would be required to inundate

physicians indiscriminately with notice of any and every hint of danger, thereby

inevitably diluting the force of any specific warning given. [Citations.] The strength of

the causal link thus is relevant both to the issue of whether a warning should be given at

all, and, if one is required, what form it should take." (Finn v. G. D. Searle & Co. (1984)

35 Cal.3d 691, 701.)

However, "[t]he application of the failure-to-warn theory to pharmaceuticals

requires determinations whether available evidence established a causal link between an

alleged side effect and a prescription drug, whether any warning should have been given,

and, if so, whether the warning was adequate. These are issues of fact involving, inter

alia, questions concerning the state of the art, i.e., what was known or reasonably

knowable by the application of scientific and medical knowledge available at the time of

12
manufacture and distribution of the prescription drug. They also necessarily involve

questions concerning whether the risk, in light of accepted scientific norms, was more

than merely speculative or conjectural, or so remote and insignificant as to be negligible."

(Carlin v. Superior Court, supra, 13 Cal.4th at p. 1116.)

B

The issue here is whether Novartis can be held liable under a negligent failure to

warn theory to minors allegedly injured as a result of their mother's ingestion of generic

terbutaline for tocolysis years after Novartis divested itself of the NDA for Brethine. The

minors do not claim Novartis had a duty to warn in the years after it divested the NDA.

As they have clarified on appeal, they contend Novartis had sufficient information before

it divested the NDA in 2001 to revise the drug label, package insert and corresponding

entry in the Physician's Desk Reference to include warnings of potential fetal harm when

terbutaline was used as a maintenance tocolytic. The minors assert they can amend their

complaint to contend if Novartis had provided such warnings when it owned the NDA it

is probable warnings would have remained in effect, or at least as strong, until 2007.

They further assert they can amend their complaint to contend it is more likely than not

their mother's physicians would not have prescribed terbutaline during her pregnancy if

these warnings were in place in 2001. If the minors can in good faith amend their

complaint to plead these facts, we conclude their claims for negligence and negligent

misrepresentation can survive demurrer based on California law.

In Conte, supra, 168 Cal.App.4th 89, a California appellate court held "the

common law duty to use due care owed by a [brand-name] prescription drug

13
manufacturer when providing product warnings extends not only to consumers of its own

product, but also to those whose doctors foreseeably rely on the [brand-name]

manufacturer's product information when prescribing a medication, even if the

prescription is filled with the generic version of the prescribed drug." (Id. at pp. 94-95.)

In reaching this conclusion, the court rejected the argument that Wyeth could not be

liable because it did not manufacture or sell the product that caused the alleged injury.

The court observed the argument would be sound if the plaintiff were pursuing a cause of

action for strict product liability, but she was not. "Negligence and strict products

liability are separate and distinct bases for liability that do not automatically collapse into

each other because the plaintiff might allege both when a product warning contributes to

her injury." (Id. at p. 101.) Rooting its decision in common sense and the common law

of California, the court stated, "[w]e are not marking out new territory by recognizing

that a defendant that authors and disseminates information about a product manufactured

and sold by another may be liable for negligent misrepresentation where the defendant

should reasonably expect others to rely on that information and the product causes injury,

even though the defendant would not be liable in strict products liability because it did

not manufacture or sell the product. (See Hanberry v. Hearst Corp. (1969) 276

Cal.App.2d 680 [misrepresentation claim permitted against magazine publisher that

endorsed manufacturer's product])." (Id. at p. 102.)

The Conte court relied upon common law and civil law principles regarding

foreseeability and duty noting, "[i]n California, the general rule is that 'all persons have a

duty to use ordinary care to prevent others from being injured as the result of their

14
conduct.' " (Conte, supra, 168 Cal.App.4th at p. 103 & fn. 10, citing Civ. Code, § 1714.)

It also looked to the rules set forth in the Restatement Second of Torts sections 310 and

311 regarding intentional and negligent misrepresentations involving risk of physical

harm to others. (Conte, at pp. 103-104.) For conscious or intentional misrepresentation,

section 311 provides for liability if an actor makes a misrepresentation and "should

realize that it is likely to induce action by the other, or a third person, which involves an

unreasonable risk of physical harm to the other." For negligent misrepresentations,

section 311 states " '[o]ne who negligently gives false information to another is subject to

liability for physical harm caused by action taken by the other in reasonable reliance upon

such information, where such harm results [¶] (a) to the other, or [¶] (b) to such third

persons as the actor should expect to be put in peril by the action taken.' " (Conte, at p.

104, italics omitted.) The court noted the close connection between duty and reasonable

reliance. " 'The likelihood that one's statements about personal safety will be taken

seriously is a primary factor in determining whether one has a duty to exercise care in

making such statements. As the Restatement puts it, such a duty "extends to any person

who, in the course of an activity which is in furtherance of his own interests, undertakes

to give information to another, and knows or should realize that the safety of the person

or others may depend on the accuracy of the information." ' " (Ibid.)

The Conte court concluded it was foreseeable a patient could be injured by relying

on product information provided by a brand-name drug manufacturer even though the

patient took a generic form of the drug. "In California, as in most states, pharmacists

have long been authorized by statute to fill prescriptions for [brand-name] drugs with

15
their generic equivalents unless the prescribing physician expressly forbids such a

substitution. [Citations.] It is therefore highly likely that a prescription for [a brand-

name drug] written in reliance on [the manufacturer's] product information will be filled

with [a generic drug]. And, because by law the generic and [brand-name] versions of

drugs are biologically equivalent [citations], it is also eminently foreseeable that a

physician might prescribe generic [medication] in reliance on [the manufacturer's]

representations about [its brand-name drug]." (Conte, supra, 168 Cal.App.4th at

p. 105.)2

2 The United States Supreme Court has since confirmed generic drug manufacturers
have an ongoing duty to keep their drug labels the same as those for the brand-name drug
and generic manufacturers may only change their labels "to match an updated brand-
name label or to follow the FDA's instructions." (PLIVA, Inc. v. Mensing (2011) ___
U.S. ___ [131 S.Ct. 2567, 2575, 180 L.Ed.2d 580, 589-590] (PLIVA).) As a result, the
Supreme Court concluded federal law preempts failure-to-warn claims against generic
drug manufacturers based on state law, even though such claims are not preempted
against brand-name manufacturers. (Id. at ___ [131 S.Ct. at pp. 2580-2581, 180 L.Ed.2d
at p. 595].)
In Wyeth, Inc. v. Weeks (Ala. 2014) 159 So.3d 649, the Alabama Supreme Court
noted the holding in PLIVA undermines the rationale of Foster v. American Home
Products Corp. (4th Cir. 1994) 29 F.3d 165, 168-170 (Foster), which is the leading case
holding a brand-name manufacturer cannot be held liable under any theory for harm
resulting from consumption of a generic product. "[T]he Foster court relied on the
finding that a generic manufacturer of a prescription drug is responsible for the accuracy
of labels placed on its product. Foster was issued before the Supreme Court decided
PLIVA, in which it held that a generic manufacturer's label must be identical to the brand-
name label and that a generic manufacturer cannot unilaterally change its label to update
a warning. The Foster court's finding that manufacturers of generic drugs are responsible
for the representations they make in their labeling regarding their products is flawed
based on the 'sameness' requirement subsequently discussed in PLIVA." (Wyeth, Inc. v.
Weeks, supra, at pp. 669-670.) The Alabama Supreme Court further concluded the
analysis in Foster confused strict liability and tort law. (Id. at p. 670.)

16
 In addition to foreseeability, the court considered other policy factors such as "the

degree of certainty that the plaintiff suffered injury; the closeness of the connection

between the defendant's conduct and the plaintiff's injury; the moral blame attached to the

defendant's conduct; the policy goal of preventing future harm; the burden to the

defendant and consequences to the community of imposing a duty of care; and broader

consequences including the availability, cost, and prevalence of insurance for the risk

involved." (Conte, supra, 168 Cal.App.4th at pp. 105-106, citing the factors identified in

Rowland v. Christian (1968) 69 Cal.2d 108, 113 (Rowland).) The court concluded the

application of these factors did not support a departure from the general rule "that all

persons have a duty to use ordinary care to prevent harming others." (Conte, at p. 106.)

The Conte court considered and rejected the analysis in Foster, supra, 29 F.3d

165. It recognized its holding was a departure from a majority of state and federal courts,

but concluded "California law is well established that concurrent tortfeasors whose

separate acts contribute to an injury are each liable." (Conte, supra, 168 Cal.App.4th at

pp. 109-110.) The court found nothing novel or unjust in applying this principle to

require a brand-name manufacturer "to shoulder its share of responsibility for injuries

caused, at least in part, by its negligent … dissemination of inaccurate information."

(Ibid.)

The Sixth Circuit in Germain v. Teva Pharms., USA, Inc. (In re Darvocet, Darvon,

& Propoxyphene Prods. Liab. Litig) (6th Cir. 2014) 756 F.3d 917, 937-938 conducted a

state-by-state analysis to determine if misrepresentation claims consolidated in a

multidistrict litigation (MDL) would stand under the laws of each implicated state. In

17
doing so, the court observed the majority of state courts reject " 'the contention that a

name brand manufacturer's statements regarding its drug can serve as the basis for

liability for injuries caused by another manufacturer's drug.' " (Id. at pp. 937-938, citing

Foster, supra, 29 F.3d 165.) However, it recognized California and other states hold a

contrary view finding "generic consumers' injurious reliance foreseeable" and "brand

manufacturers know or should know that a significant number of patients whose doctors

rely on their product information for brand name drugs are likely to have generic drugs

dispensed to them." (Id. at pp. 938-939, citing Conte, supra, 168 Cal.App.4th 89.)

The federal district court overseeing the MDL action concluded plaintiffs asserting

tortious misrepresentation claims under California law could state a claim based upon

Conte, supra, 168 Cal.App.4th 89. (In re: Darvocet (E.D.Ky. Sept. 5, 2012, No. 2:11-

md-2226-DCR) 2012 U.S. Dist. LEXIS 125816, at *17-21.) The court rejected the

argument O'Neil, supra, 53 Cal.4th 335 overruled Conte, supra, 168 Cal.App.4th 89 and

noted "[t]he reason for the … complete lack of citation to Conte is, therefore, most likely

that the court believed the case to be irrelevant to determination of the issue at hand." (In

re: Darvocet, supra, 2012 U.S. Dist. LEXIS 125816, at *18, fn. 6.) It also distinguished

the O'Neil case noting the plaintiffs were not basing their claims on a combination of the

use of a manufacturer's product with the product of another company, but, instead, upon

representations made about a pharmaceutical drug "that caused them to 'ingest and suffer

harm from a generic version of [the] drug.' " (Id. at *18-19.)

We conclude the Conte court's analysis applies with equal force to the facts

presented in this case. We are not persuaded by Novartis's argument Conte applies only

18
to brand-name manufacturers who own the NDA at the time a generic medication causes

injury. Although Novartis did not own the NDA for Brethine in 2007, it did own it until

2001 and was responsible for the label information prior to that time. (21 C.F.R.

§ 314.80(b).) The minors allege there was sufficient information prior to 2001 regarding

the risk of fetal harm in using terbutaline as a maintenance tocolytic to require Novartis

to revise the drug label.3 The minors allege they were injured as a result of their mother's

ingestion of the generic version of Brethine, which allegedly bore the same label

information in 2007 as it did in 2001. They allege it was foreseeable physicians and their

patients would continue to rely on Novartis's product label for adequate warnings. They

also allege it was foreseeable a subsequent manufacturer would not change the label

information, at least not to weaken any warnings about fetal harm Novartis should have

included.4 Whether or not these facts can be proven remains to be seen, but is not the

3 In the FAC, the minors allege the manufacturers revised their labels in the early
1990s. On appeal, the minors' opening brief admits Novartis revised its label to warn
against tocolytic use. However, they claim the warning only disclosed minor maternal
risks and was silent about fetal risks. Although not clearly alleged in the FAC, the
minors contend on appeal their mother's physicians would not have prescribed, and their
mother would not have agreed to take, terbutaline if there were adequate warnings of
fetal risks. This contention has some resonance. A mother might disregard minor risks
to her own health to take a medication not recommended for tocolysis if it meant
prolonging a pregnancy to give her child the best chance to fully develop in utero.
However, if a mother were informed there was no benefit to taking the medication and
there was actually a risk to the fetus, she might make a different choice.

4 The minors describe federal law regarding drug labels as a "one-way ratchet"
whereby manufacturers may add or strengthen existing warnings, but may not remove or
weaken warnings without FDA approval. (See Wyeth v. Levine (2009) 555 U.S. 555, 568
["Generally speaking, a manufacturer may only change a drug label after the FDA
approves a supplemental application. There is, however, an FDA regulation that permits
19
issue before us. Accepting these facts as true, we conclude they are sufficient to establish

foreseeability and a connection between the alleged injuries and the harm.5

As to moral culpability, the Conte court noted "if [a brand-name manufacturer]

misrepresented the risks of taking its medication, any moral culpability it might bear for

that misrepresentation is not lessened if the person who is harmed by his or her reliance

on it happened to ingest a generic version as a result, rather than [the brand-name]."

(Conte, supra, 168 Cal.App.4th at p. 106.) A similar analysis applies to the facts here. If

Novartis knew or should have known about fetal risk associated with tocolytic use and

failed to disclose the risk while it owned the NDA, Novartis's moral culpability is not

lessened simply because it no longer owned the NDA when the minors were allegedly

harmed by their mother's ingestion of the generic form of the medication, particularly

since the label allegedly was the same as that prepared by Novartis. On the other hand,

the chance to prevent future harm is increased by imposing a duty on pharmaceutical

a manufacturer to make certain changes to its label before receiving the agency's
approval. Among other things, this 'changes being effected' (CBE) regulation [21 CFR
§ 314.70(c)(6)(iii)(A), (C)] provides that if a manufacturer is changing a label to 'add or
strengthen a contraindication, warning, precaution, or adverse reaction' or to 'add or
strengthen an instruction about dosage and administration that is intended to increase the
safe use of the drug product,' it may make the labeling change upon filing its
supplemental application with the FDA; it need not wait for FDA approval"].)

5 These factual allegations distinguish this case from Cadlo v. Owens-Illinois, Inc.
(2004) 125 Cal.App.4th 513. In that case, the court determined, for pleading purposes, a
prior manufacturer of an asbestos-containing product knowingly misrepresented its
product was safe and concealed its hazardous nature. However, the plaintiff in that case
could not allege he ever saw the advertisements or representations made by the prior
manufacturer and, therefore, could not establish reliance. (Id. at pp. 519-520.) In
contrast, the minors state they may amend their complaint to allege actual reliance on
Novartis's representations.
20
manufacturers to warn based on medical and scientific evidence available to them as long

as they own a product line and are responsible for labeling under the FDA requirements.

Based on the limited record before us, we are unable to fully assess the remaining

policy considerations regarding the burden to the defendant and consequences to the

community of imposing a duty of care or broader consequences such as cost or insurance.

(Conte, supra, 168 Cal.App.4th at p. 107.) At this juncture, however, we conclude there

is no compelling reason in this case to depart from California's general rule of requiring a

manufacturer to exercise ordinary care to prevent harm to others. (Randi W. v. Muroc

Joint Unified School Dist. (1997) 14 Cal.4th 1066, 1077.)

C

We are also not persuaded by Novartis's argument Conte is no longer good law

based on the Supreme Court's decision in O'Neil, supra, 53 Cal.4th 335 , which held "a

product manufacturer may not be held liable in strict liability or negligence for harm

caused by another manufacturer's product unless the defendant's own product contributed

substantially to the harm, or the defendant participated substantially in creating a harmful

combined use of the products." (Id. at p. 342.) In O'Neil, a manufacturer of valves and

pumps used in Navy warships was sued for wrongful death allegedly caused by asbestos

released from external insulation and internal gaskets and packing used with the pumps

and valves, all of which were products made by third-party manufacturers. The plaintiffs

alleged the manufacturer of the pumps and valves should be held strictly liable and

negligent because it was foreseeable asbestos products would be used in conjunction with

their products and workers would be harmed by the exposure. (Id. at p. 342.)

21
 The Supreme Court declined to expand strict products liability to prevent injuries

"caused by other products that might foreseeably be used in conjunction with a

defendant's product" or to require manufacturers "to warn about the dangerous

propensities of products they do not design, make, or sell." (O'Neil, supra, 53 Cal.4th at

pp. 342-343.) The court recognized "exceptions to this rule arise when the defendant

bears some direct responsibility for the harm, either because the defendant's own product

contributed substantially to the harm [citation], or because the defendant participated

substantially in creating a harmful combined use of the products." (Id. at p. 362.) After

analyzing the Rowland factors6 for the negligence claims, the court determined, under the

specific facts of the case before it, an "expansion of the duty of care as urged here would

impose an obligation to compensate on those whose products caused the plaintiffs no

harm." (Id. at p. 365.)

O'Neil, supra, 53 Cal.4th 335 did not overrule or even mention Conte, supra, 168

Cal.App.4th 89 and its facts are distinguishable from those present in Conte. In Conte,

the court determined the brand-name manufacturer bore direct responsibility for alleged

harm arising from misrepresentations in the brand-name label even though the

prescription was filled by a generic version of the same drug. (Conte, at p. 111.) As

observed in Wyeth, Inc. v. Weeks, "[i]n the context of inadequate warnings by the brand-

name manufacturer placed on a prescription drug manufactured by a generic

manufacturer, it is not fundamentally unfair to hold the brand-name manufacturer liable

6 (Rowland, supra, 69 Cal.2d at p. 113.)
22
for warnings on a product it did not produce … based, not on manufacturing defects in

the product itself, but on information and warning deficiencies, when those alleged

misrepresentations were drafted by the brand-name manufacturer and merely repeated, as

allowed by the FDA, by the generic manufacturer. [¶] … Nothing in this opinion

suggests that a plaintiff can sue Black & Decker for injuries caused by a power tool

manufactured by Skil based on labeling or otherwise. The unique relationship between

brand-name and generic drugs as a result of federal law and FDA regulations, combined

with the learned-intermediary doctrine and the fact that representations regarding

prescription drugs are made not to the plaintiff but to a third party, create the sui generis

context in which we find prescription medication." (Wyeth, Inc. v. Weeks, supra, 159

So.3d at p. 677.)

Similarly here, Novartis manufactured the brand-name drug terbutaline and was

responsible for the label warnings through 2001. Its formulation of the product was

biologically identical to the product that allegedly caused the minors harm in 2007.

Additionally, the label was allegedly the same in 2007 as it was in 2001. If the minors

can prove Novartis failed to adequately warn about fetal risks it knew or should have

known were associated with tocolytic use before it divested the product in 2001, they

may be able to establish Novartis's conduct bore some direct relationship to the alleged

harm in this case. Thus, even if the O'Neil rule precluding liability of a product

manufacturer for injuries arising from another manufacturer's product could be viewed as

applying to negligent failure to warn claims regarding pharmaceutical drugs, the facts

23
alleged in this case would fall within the recognized exception of liability for a defendant

who bears at least some direct responsibility for the alleged harm.

III

Fraud Causes of Action

"The elements of fraud are (1) the defendant made a false representation as to a

past or existing material fact; (2) the defendant knew the representation was false at the

time it was made; (3) in making the representation, the defendant intended to deceive the

plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff

suffered resulting damages. [Citation.] The elements of negligent misrepresentation are

the same except for the second element, which for negligent misrepresentation is the

defendant made the representation without reasonable ground for believing it to be true."

(West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792.) "The elements

of an action for fraud based on concealment are: (1) the defendant concealed or

suppressed a material fact; (2) the defendant had a duty to disclose the fact to the

plaintiff; (3) the defendant intentionally concealed the fact with the intent to defraud the

plaintiff; (4) the plaintiff was unaware of the fact and would not have acted as he did if he

had known of the concealed fact; and (5) as a result of the concealment of the fact, the

plaintiff sustained damage." (Knox v. Dean (2012) 205 Cal.App.4th 417, 433.)

Fraud must be pleaded with specificity rather than with " 'general and conclusory

allegations.' " (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The

specificity requirement is necessary to (1) give the defendant sufficient notice of the

24
charges and (2) permit a court to weed out meritless fraud claims. (West v. JPMorgan

Chase Bank, N.A., supra, 214 Cal.App.4th at p. 793.)

In this case, we conclude the minors have provided sufficient additional

information on appeal to demonstrate they may amend their complaint to adequately

allege a cause of action for negligent misrepresentation as recognized by Conte, supra,

168 Cal.App.4th at page 102. However, the minors have not met their burden of

demonstrating they can amend their complaint to allege causes of action for intentional

misrepresentation or concealment with sufficient specificity. As a result there is no basis

upon which to grant leave to amend as to these causes of action. (Schifando v. City of

Los Angeles, supra, 31 Cal.4th at p. 1081.)

DISPOSITION

The judgment is reversed and the matter is remanded with directions for the trial

court to enter a new order sustaining Novartis's demurrer, but granting the minors leave

to amend only the causes of action for negligence and negligent misrepresentation.

Appellants are awarded their costs on appeal.

MCCONNELL, P. J.

WE CONCUR:

NARES, J.

IRION, J.

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Filed 3/9/16

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

T. H., a Minor, etc., et al., D067839

Plaintiffs and Appellants,

v. (Super. Ct. No. 37-2013-00070440-

NOVARTIS PHARMACEUTICALS CU-MM-CTL)

CORPORATION,

Defendant and Respondent. ORDER CERTIFYING OPINION

FOR PUBLICATION

THE COURT:

The opinion in this case filed March 9, 2016, was not certified for publication.

IT IS HEREBY CERTIFIED that the opinion meets the standards for publication

specified in California Rules of Court, rule 8.1105(c); and
 ORDERED that the words "Not to Be Published in the Official Reports" appearing

on page 1 of said opinion be deleted and the opinion herein be published in the Official

Reports.

MCCONNELL, P. J.

Copies to: All parties

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