Legislative Fixes to Keep Pharmaceutical Companies in NJ

In recent years, New Jersey has — at times — been deemed a “Judicial Hell Hole” by the American Tort Reform Association. The expense of defending thousands of mass tort products liability cases in New Jersey, as well as other costs of doing business in New Jersey, have resulted in some pharmaceutical companies relocating out of state. To halt the trend of businesses leaving New Jersey, the legislature could consider the following three actions to incentivize New Jersey companies to remain in-state.

  1. Provide an absolute defense to pharmaceutical companies sued for a failure to warn claim if the warning was approved by the Food and Drug Administration (“FDA”). Michigan has adopted, MCL 600.2946(5), which, subject to two exceptions, establishes an absolute defense for drug manufacturers and sellers in a products liability action, where the drugs complied with FDA standards and labeling. In New Jersey, a bill similar to MCL has been introduced. While N.J.S. 2A:58C-4 of the New Jersey Products Liability Act (“NJPLA”) provides for a rebuttable presumption of adequacy with respect to a drug label where the drug is approved by the FDA, an absolute defense in these circumstances would be more appropriate. The pharmaceutical industry is among the most heavily regulated industries in the United States. The unique approval process required by law before a prescription drug can be marketed, as well as the FDA’s continued involvement in evaluating product labeling during the post-marketing phase, certainly should suffice as means of determining an adequate warning under the NJPLA.
  2. Adopting an affidavit of merit requirement in drug and medical device product liability cases. In a professional malpractice matter, a plaintiff must comply with N.J.S.A. 2A:53A-27, the Affidavit of Merit Statute, in order to make a showing that the claim is meritorious so that meritless lawsuits can be readily identified in the early stages of litigation. A plaintiff’s failure to serve the affidavit of merit within the time prescribed is tantamount to the failure to state a cause of action, subjecting the complaint to dismissal with prejudice. The legislature could expand the Affidavit of Merit Statute to pharmaceutical and medical device personal injury actions. If affidavit of merit statutes can successfully reduce frivolous professional liability actions, similar statutes could also successfully reduce frivolous pharmaceutical and medical device products liability actions. In either type of litigation, affidavit of merit statutes require both the plaintiff and the attorney to invest time prior to or at the onset of the litigation (instead of years later) and make a frank determination regarding the merits of the suit. All parties, and society as a whole, benefit from limiting litigation to meritorious claims. In particular, permitting only meritorious actions to proceed would lower prescription prices for the public, since the cost of frivolous litigation costs would no longer be passed along to the consumer.
  3. Offer economic incentives for companies to manufacture in New Jersey, innovations that are developed and researched in New Jersey. New Jersey needs to create an environment where innovation at New Jersey’s institutions of higher learning is directed to the State’s economy to spur economic growth. In 1996, Dr. David Allard developed a revolutionary new test, Xpert MTB/RIF, for Tuberculosis that provides an accurate diagnosis in less than two hours. The test was developed at the University of Medicine and Dentistry, now Rutgers University, but is being manufactured in California.

While New Jersey has joined other states in promoting innovation via higher education, the Legislature could maximize their investment by developing incentives for institutions of higher education, professors, and entrepreneurial businesses to manufacture their inventions in New Jersey.

Jason J. Redd is Counsel in the Gibbons Government Affairs Department.
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