Appendix — Lederle Laboratories v. Feldman

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No. 91-

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1991

LEDERLE LABORATORIES, Division Of

American Cyanamid Company,

Petitioner,

v.

CAROL ANN FELDMAN,

Respondent.

APPENDIX TO PETITION FOR A WRIT OF CERTIORARI

TO THE SUPREME COURT OF NEW JERSEY

WILLIAM C. SLATTERY Louis R. COHEN

Norris, MCLAUGHLIN & Marcus’ RoNaALpD J. GREENE

721 Route 202-206 Counsel of Record

Somerville, New Jersey 08876 RoGerR W. YOERGES

(908) 722-0700 WILMER, CUTLER & PICKERING

2445 M Street, N.W.

RONALD J. CRACAS Washington, D.C. 20037-1420

ALICE GIANNI (202) 663-6000

AMERICAN CYANAMID COMPANY

One Cyanamid Plaza Counsel for Petitioner

Wayne, New Jersey 07470

(201) 831-2000

October 22, 1991

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

TABLE OF CONTENTS

Page

Feldman v. Lederle Laboratories, 125 N.J. 117

(1991) Opinion of Justice Clifford ................... la

Feldman v. Lederle Laboratories, 125 N.J. 117, 158

(1991) Dissenting Opinion of Justice

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SUPREME COURT OF NEW JERSEY

A-93 September Term 1990

CAROL ANN FELDMAN,

Plaintiff-Appellant,

v.

LEDERLE LABORATORIES, a Division of American

Cyanamid Company, a Maine corporation doing business

in the State of New Jersey,

Defendant-Respondent.

Argued January 14, 1991—Decided July 24, 1991

On certification to the Superior Court, Appellate Di-

vision, whose opinion is reported at 234 N.J. Super.

559 (1989).

James I. Peck, IV, argued the cause for appellant.

William C. Slattery argued the cause for respondent

(Morgan, Melhuish, Monaghan, Arvidson, Abrutyn &

Lisowski and Norris, McLaughlin & Marcus,

attorneys; Mr. Slattery and James L. Melhuish, of

counsel).

Marc S. Klein argued the cause for amici curiae phar-

maceutical Manufacturers Association and E.R. Squibb

& Sons, Inc. (Sills, Cummis, Zuckerman, Radin,

Tischman, Epstein & Gross, attorneys).

John L. McGoldrick submitted a brief on behalf of

amicus curiae Eli Lilly and Company (McCarter &

English, attorneys).

The opinion of the Court was delivered by CLIFFORD,

J.

In Feldman v. Lederle Laboratories, 97 N.J. 429 (1984)

(Feldman I), we held that under the doctrine of strict

products liability, ‘drug manufacturers have a duty to warn

of dangers of which they know or should have known on

2a

the basis of reasonably obtainable or available knowledge.”’

Id. at 434. At the retrial following our remand, plaintiff

argued that Declomycin, an antibiotic manufactured by

defendant, Lederle Laboratories (Lederle), had perma-

nently turned her teeth gray, and that the drug had been

defective during the years 1960 to 1963 (the time she had

used it) because it had lacked a warning that its ingestion

by young children might result in tooth staining. Defendant

attempted to show that relevant federal statutes and reg-

ulations had precluded it from performing its state-law

duty to warn, and asserted that it could not be held liable

for doing that which the federal law had compelled. The

trial court rejected that argument and submitted to the

jury plaintiff's strict-liability claim based on failure to warn.

On the basis of its finding that Declomycin had not been

defective in either 1960 or 1961 but that it had been de-

fective in 1962 and 1963, the jury found in favor of plaintiff

and awarded her $300,000.

The Appellate Division, concluding that ‘‘the theory of

liability which undergirded the jury verdict against Lederle

was preempted by federal law,” 234 N.J. Super. 559, 564

(1989), reversed and remanded the case for entry of judg-

ment in favor of defendant. We granted plaintiff’s petition

for certification, 122 N.J. 348 (1990), to determine whether

her strict-liability cause of action based on failure to warn

is preempted under the supremacy clause, U.S. Const. art.

VI, cl. 2. We hold that in the circumstances of this case

federal law does not preempt liability under state law.

Consequently, we reverse the judgment of the Appellate

Division and remand to that court for consideration of the

other issues previously raised on appeal there but not de-

cided. See 234 N.J. Super. at 564-65 n.3.

I

a

Tetracyclines, a group of antibiotics first introduced in

1948, are used to combat bacterial infections. A primary

3a

benefit of tetracyclines is that they are effective against

a wider variety of organisms than are other antibiotics.

In 1959 Lederle introduced a new tetracycline analogue,

demethylchlortetracycline, under the trade name Declo-

mycin. The 1959 edition of the Physicians’ Desk Reference

(PDR), an annual used by doctors to determine the ap-

propriate administration and effects of prescription drugs,

stated that Declomycin had “greater antibiotic potency that

made it possible to achieve therapeutic activity with less

weight of antibiotic,” that it had ‘‘a reduced renal clear-

ance rate that produced a prolongation of the antibacterial

levels in the body,” and that it was ‘‘therapeutically equally

effective as other tetracyclines in infections caused by or-

ganisms sensitive to the tetracyclines.’’ Feldman I, supra,

97 N.J. at 436. The description did not mention tooth

discoloration as a possible side effect. Jbid. Beginning some

time after 1963, the PDR contained a warning that admin-

istration of Declomycin during the developmental stage of

the permanent teeth—prenatal to approximately seven

years of age—could cause permanent tooth discoloration.

Ibid.

Plaintiff, Carol Ann Feldman, was born in 1960. Her

father, Dr. Harold Feldman, testified that he had treated

plaintiff with Declomycin two or three times a year be-

tween 1960 and 1963. He had not maintained records of

the administrations but said that he had given the anti-

biotic only nine or ten times during that period. (‘‘Times”’

refers not to individual administrations but to courses of

treatment lasting an indeterminate but brief period.)

Shortly after Declomycin was introduced, Dr. Feldman

became acquainted with it through a medical representa-

tive employed by Lederle. Dr. Feldman stated that the

representative ‘‘informed me as to its qualities, to its ef-

fectiveness, to how it was being suggested in its use,”

and that the representative had left samples with the doc-

tor after telling him ‘‘how useful the drug was in treating

upper respiratory infections and how that was palatable

4a

for children.’’ The drug had been made available in cherry-

flavored pediatric drops and syrup and custard-flavored

oral suspension, and in varying forms of packaging, in-

cluding clown-shaped bottles obviously intended for pedia-

tric use. That no warning of the potential side effect of

tooth discoloration accompanied the various forms of pack-

aging of Declomycin prior to December 1963 is not dis-

puted.

Plaintiff's baby teeth were discolored gray-brown. When

plaintiff's permanent teeth began to erupt around 1965,

Dr. Feldman became concerned because they too were dis-

colored. After the family dentist examined plaintiff, he

informed Dr. Feldman of ‘“‘the possibility of a correlation

between tetracycline and infant tooth staining.’’ On learn-

ing from other physicians that some of them also were

experiencing staining of teeth in patients treated with tet-

racyclines, Dr. Feldman stopped prescribing Declomycin

for pediatric use.

No one disputes that the discoloration of plaintiff’s teeth

is the result of ingestion of tetracycline during the de-

velopmental stage of her permanent teeth, nor does

defendant contest the jury’s finding that Declomycin was

the specific tetracycline involved. Rather, the dispute fo-

cuses on what action Lederle could and should have taken

on acquiring knowledge of the correlation between the use

of tetracyclines, particularly Declomycin, and staining of

teeth.

Plaintiff contends that Lederle knew or through the ex-

ercise of reasonable diligence should have known of the

possible serious and permanent side effects of Declomycin

before and at the time she ingested the drug. She also

asserts that Lederle “failed and refused to warn the

plaintiff, pediatric consumers, and their physicians of those

harmful effects in timely, adequate, and reasonable fash-

ion.” As evidence of Lederle’s actual or constructive

knowledge, plaintiff introduced at trial an internal Lederle

report dated August 28, 1962. The third page of the re-

port, under the heading ‘“‘Declomycin-Achromycin,’’ reads:

We are beginning to hear comments about the yel-

lowing discoloration of teeth in children following te-

tracycline therapy. One physician, already reported to

{Lederle’s corporate headquarters], also states his own

children’s second teeth are soft following tetracycline

therapy. This physician states he will discontinue us-

ing tetracyclines until this phenomenon is proven or

disproven.

Within three months of that report, Dr. Swanzey, an em-

ployee of Lederle from 1955 through the 1970s, wrote a

letter to the Food and Drug Administration (FDA) noti-

fying it of the possibility of a correlation between tooth

discoloration and tetracycline use. In the letter, dated No-

vember 16, 1962, Lederle proposed adding the following

warning to the labeling of all its tetracycline products:

“Use of any tetracycline during tooth development in the

neonatal period or early childhood may cause discoloration

of the teeth.’’ The letter continued: ‘‘Your early opinion

and consideration is requested in order that this statement

may be added at the earliest possible time.”’

Dr. Raymond Barzilai, a medical officer with the FDA,

responded to Dr. Swansey’s proposal by letter dated De-

cember 3, 1962. He indicated that the FDA had ‘‘not yet

reached any form of final opinion (= medical, scientific,

regulatory, etc.),”’ and was “currently devoting a great

deal of active attention to the matter.” Dr. Barzilai con-

cluded: “[The FDA] will notify you as soon as any con-

clusion is reached.’”’ One copy of that letter bears a

handwritten note suggesting that on its receipt, Lederle

requested permission to disseminate the proposed warning

in a circular but was ‘‘advised’”’ by the FDA not to do so.

On January 15, 1963, Dr. Swanzey wrote to Dr. Barzilai

with additional information relating to the possible cor-

6a

relation of tetracycline use and tooth discoloration. He

related that he had spoken with a Dr. Zegarelli, who

confirmed that this phenomenon was peculiar to ox-

ytetracycline, tetracycline, and chlortetracycline. He

had no experience with demethylchlortetracycline. He

felt that some statement is certainly indicated to be

included in our package literature but expressed real

concern that improper attention or publicity to this

phenomenon should be avoided at all costs.

We [Lederle] are conducting some further discussions

with others who may have had experience with the

use of tetracyclines during the various periods of tooth

developments, and based upon this we will arrive at

a statement concerning which I will discuss with you

later.

By letter dated February 4, 1963, the FDA informed

Lederle of the following:

1. After an extensive analytical review of the sub-

ject, this Administration has concluded that the ef-

fects on bone and teeth caused by the systemic use

of the Tetracycline(s) products are clinically substan-

tial and should be properly brought to the attention

of the medical profession.

2. At present, the alleged teratogenic effects from

tetracycline(s) have not been sufficiently documented

_as to justify any form of action within our authorized

functions.

The following warning statement is being proposed

for insertion in the printed matter of all your Tetra-

cycline products:

“Tetracyclines may form a stable calcium complex

in any bone forming tissue with no serious harmful

effects reported thus far in humans. However, use

of any tetracycline drug during tooth development

(= last trimester of pregnancy, neonatal period and

7a

early childhood) may cause discoloration of the teeth

(= yellow-grey-brownish). This effect occurs mostly

during long-term use of the drug but it has also

been observed in usual short treatment courses’.

** * *

In closing, I wish to mention that this Administra-

tion appreciated your initiative of offering construc-

tive suggestions as well as your cooperative spirit.

On February 14, 1968, Dr. Swanzey agreed to incor-

porate the FDA’s “suggested statement”’ in Lederle’s lit-

erature and stated: ‘‘I assume that this statement is being

proposed for chlortetracycline, oxytetracycline and deme-

thylchlortetracycline as well.’’ He continued:

Before incorporating this in our labeling, however, I

would like confirmation from you that it is acceptable

to other manufacturers or if appropriate changes are

to be made, thereby assuring that these effects com-

mon to all of the tetracycline antibiotics will be iden-

tical for all products.

[Emphasis added.]

A letter of Dr. Barzilai dated February 18, 1963, fur-

nished the requested confirmation:

1. This statement will have to appear only on the

labeling for: Tetracycline, Chlortetracycline and Ox-

ytetracycline. There is practically no specific clinical

evidence to substantiate such a labeling requirement

for Demethylchlortetracycline at present, but we in-

tend to remain alert for such a future possibility.

x * *

3. At any rate, I see no reasonable ground for any

change in the wording of the statement and we [the

8a

FDA] expect to see it reproduced as is in the appro-

priate labelings as soon as possible.

In fact, the text of the warning was changed slightly, as

Lederle learned from an FDA letter dated April 12, 1963.

That letter went on to state: ‘We [the FDA] now have

information that leads us to believe that this change in

labeling should be made immediately. Therefore, we are

asking that no further shipments be made of these drugs

until the change has been made.” Notably, although the

letter displays a sense of urgency with respect to the warn-

ing, it, as well as other correspondence submitted by

defendant, casts the FDA in a passive role. No change in

the exception for Declomycin is indicated. That status was

confirmed by a FDA press release issued April 18, 1963,

which read in part: ‘“There is no evidence to date that a

fourth drug, demethylchlortetracycline, causes the discol-

oration,’ FDA said.’”’ In fact there was such evidence at

that time, as indicated by subsequent correspondence, al-

though that evidence may not then have been available to

the FDA.

In response to the exchange with the FDA, Lederle is-

sued a memorandum to all its salespeople on April 23,

1963. With respect to Declomycin, the memorandum stated:

You will note that DECLOMYCIN is not included in

the list of tetracycline analogues involved in this cur-

rent revision. Therefore, the inserts and stickers are

not to be attached to DECLOMYCIN circulars and

literature. While DECLOMYCIN has not been offi-

cially implicated with tooth staining it probably will

be within a short period of time, therefore, any gain

by making an issue of this fact would rebound un-

favorably at a later date. In the meantime, in answer

to any questions from a doctor concerning DECLO-

MYCIN and tooth staining, your answer is, ‘‘DE-

CLOMYCIN has not as yet been officially implicated

with tooth staining.”’

{Emphasis added.]

9a

Significantly, that response by Lederle does not indicate

any intention to prevent or curtail use of Declomycin by

the at-risk group; nor does there appear to have been any

consideration given to suspending production of Declo-

mycin in the form of flavored pediatric drops, syrup, or

oral suspension pending the probable implication of Declo-

mycin with tooth staining. The answer to be given in-

quiring physicians can be described accurately as evasive.

Lederle continued to correspond with the FDA regard-

ing the possibility of a correlation between Deciomycin and

tooth staining. That correspondence, however, did not at-

tempt to convince the FDA that a warning for Declomycin

was necessary. Rather, on May 8, 1963, Dr. Swanzey sub-

mitted additional information to the FDA with a letter

stating: “This is our total experience to date and is cer-

tainly still insufficient to establish clearly that demethylch-

lortetracycline may cause tooth staining. It is probably

premature to conclude that a warning in labeling is indi-

cated.”

Enclosed with that letter were publications and reports

from practitioners strongly suggesting a correlation be-

tween Declomycin—as distinguished from tetracycline drugs

in general—and tooth staining. The majority of those re-

ports were in the possession of Lederle or its affiliates in

1962, with the most recent report being submitted to Cy-

anamid of Canada Limited (an affiliate of Lederle) in Jan-

uary 1963. The responsive letter from Cyanamid, dated -

February 1, 1963, stated in part: ‘‘At the present time

and with the information available, it can only be postu-

lated that the discoloration has indeed been the result of

Declomycin administration, and one must admit that there

appears to be a likely association.”

On May 31, 1963, FDA Commissioner George Larrick

wrote to Dr. Swanzey regarding the warning and labeling

change for tetracycline drugs. With respect to Declomycin

10a

he stated: ‘Actually, the original statement was revised

to require the inclusion of the name of the drug in lieu

of the word ‘tetracyclines’ because to date we have no

evidence that your drug demethylchlortetracycline will stain

teeth. If the warning statement as originally proposed is

used, it automatically incriminates demethylchlortetracyc-

line.”

On July 1, 1963, Dr. Barzilai, responding to Lederle’s

letter of May 8th, stated:

We have reviewed your information and we believe

that it cannot as yet justify any change in our current

formal position on this matter.

You will realize, of course, that we need unequivocal

factual evidence of adverse reaction in man to sub-

stantiate any official regulatory decision or action. Dr.

Annett’s case is only ‘‘suggestive”’ but, since grossly

similar brown dental staining has long been observed

in conditions other than Tetracycline treatment (cystic

fibrosis is an example), this case would require further

analysis by proper means (chemical, fluorescence, etc.)

to eventually detect and identify the Tetracycline an-

alogue.

Your information will be filed in our records for future

reference and be assured that we are following the

development of this matter with utmost interest.

The record is silent on whether at any time Lederle un-

dertook ‘‘further analysis by proper means’ to confirm the

suggested adverse reaction.

On November 11, 1963, Lederle’s J. Kevin Rooney wrote

to Dr. Barzilai that the manufacturer would incorporate a

tooth-staining warning statement in all of its labeling for

demethylchlortetracycline products. That letter was ap-

parently a confirmation of a prior conversation authorizing

the labeling change. The record does not reveal what ad-

ditional information, if any, was brought to the FDA’s

lla

attention in order to justify the change in its “current

formal position.’’ Lederle submitted the revised labeling in

December 1963 and incorporated it into the packaging of

Declomycin shortly thereafter. The record contains no cor-

respondence from the FDA reflecting its authorization of

a change in labeling or its approval of the revised labeling

submitted.

In 1975, Dr. Feldman wrote Lederle regarding the dis-

coloration side effect. Lloyd S. Carr, then Lederle’s Prod-

uct Service Manager, replied in a letter stating that after

“the causal relationship between tooth staining and tetra-

cycline [had been] unquestionably demonstrated,’’ Lederle

had notified the FDA in November 1962 requesting per-

mission to place a warning regarding discoloration on the

labeling. Carr’s letter went on to indicate that in April

1963 the FDA had ‘directed all manufacturers of tetra-

cycline to include appropriate warnings in their labeling’”’

but that Declomycin had been specifically excluded.

As; a

Plaintiff, through her father as guardian ad litem, filed

suit in 1978 against Lederle and its parent corporation,

American Cyanamid Company, seeking recovery under the-

ories of negligence, gross negligence, breach of express

and implied warranties, and strict products liability, among

others. She alleged that Declomycin had been defective as

marketed during the period when she had ingested the

drug. A jury returned a verdict for defendant in 1980,

and the Appellate Division affirmed in an unreported opin-

ion. This Court granted plaintiff's petition for certification

and summarily remanded the cause to the Appellate Di-

vision, 91 N.J. 266 (1982), for reconsideration in light of

Beshada v. Johns-Manville Products Corp., 90 N.J. 191

(1982). The Appellate Division again affirmed, 189 N.J/.

Super. 424 (1983), holding that Beshada did not apply and

that prescription drugs are so important to society that

suppliers should not be subject to strict liability. This Court

12a

granted a secord petition for certification, 94 N.J. 594

(1983), and reversed and remanded for a new trial, holding

that prescription drug manufacturers are not immune from

strict-liability claims. Feldman I, supra, 97 N..J. 429.

At the second trial in 1985 Lederle moved at the close

of the evidence to dismiss the complaint on the basis of

preemption. More specifically, it claimed that federal reg-

ulations in effect at the time of marketing and plaintiff's

injury did not permit it to warn about the possibility of

tooth staining without prior approval of the FDA. Ac-

cording to Lederle, compliance with the obligation under

New Jersey law to communicate a warning based on sub-

sequently-acquired actual or constructive knowledge of a

danger ‘‘as soon as reasonably feasible,” Feldman I, supra,

97 N.J. at 456, would have placed it in violation of federal

regulations if the warning had been given without prior

FDA approval. Lederle contended, therefore, that

plaintiff’s claim is preempted.

The court denied the motion, holding that the regula-

tions at issue were not- mandatory but discretionary, and

[did] not in any way bar a drug manufacturer from,

in accordance with the language of Feldman [I], put-

ting out adequate warnings when information indi-

cating that the product may be dangerous to the public

comes to that drug manufacturer’s attention.

-_* & *

I am not satisfied that the defendant has in this re-

cord presented to the Court anything that would

change the Opinion of the New Jersey Supreme Court

in [Feldman I] to the effect that this area has been

pre-empted by the Federal Government.

The court noted specially that Lederle had cited no ad-

ministrative decisions or case law construing the regulation

to be mandatory. Moreover, the court observed that Dr.

Goddard, the commissioner of the FDA from 1966 to 1968,

13a

had testified at a hearing pursuant to Evidence Rule 8

that the FDA had not been enforcing labeling regulations

prior to his tenure as commissioner.

The jury returned a verdict for plaintiff on the sole

count—alleging strict liability for failure to warn—of her

amended complaint that the court had submitted. The ver-

dict form reflected the following specific findings:

1. Plaintiff ingested Declomycin between 1960 and

1963.

2. There was not a defect in Declomycin because it

failed to warn of tooth discoloration in 1960 and in

1961.

3. There was a defect in Declomycin because it failed

to warn of tooth discoloration in 1962 and in 1963.

4. The failure to warn was a proximate cause of

plaintiff’s losses and injuries.

Lederle renewed its motion for judgment pursuant to Rule

4:40-2(b), and the trial court again denied the motion.

On appeal, Lederle continued to assert that plaintiff's

claim based on failure to warn is preempted by federal

laws and regulations governing labeling of antibiotics and

prescription drugs. The Appellate Division reversed and

remanded for entry of judgment in favor of Lederle:

We conclude that the Food and Drug Administration’s

(FDA) regulation of the drug industry does not war-

rant a finding of implied federal preemption of all

State tort claims grounded in strict liability failure to

warn. However, under certain circumstances, such as

presented here, federal law may preempt a discrete

issue upon which liability is predicated because com-

pliance with State decisional law would require federal

law to be violated. Thus, plaintiff's entire cause of

action was not preempted. However, the theory of

liability not preempted was decided adversely to

l4a

plaintiff by the jury and is not challenged on appeal,

while the theory of liability which undergirded the

jury verdict against Lederle was preempted by federal

law. Thus, Lederle’s motion for judgment notwith-

standing the verdict should have been granted.

[234 N.J. Super. at 564.]

From that ruling plaintiff petitioned for certification,

which we granted. 122 N.J. 348 (1990). Plaintiff presents

two distinct issues. First, she contends that the Appellate

Division was bound by what she claims this Court decided

in Feldman I, namely, that plaintiff's strict-liability claim

based on failure to warn is not preempted by federal law.

Second, plaintiff argues that even if the Appellate Division

was free to consider the issue of preemption, its conclusion

that plaintiff's claim is preempted by federal law was er-

roneous.

II

The first issue is whether the Appellate Division was

free to address the issue of preemption at all. Plaintiff

contends that in Feldman I this Court determined that a

cause of action based on failure to warn was not preempted

by FDA regulations governing the labeling of prescription

drugs. According to plaintiff, the Appellate Division was

consequently precluded by the law-of-the-case doctrine from

reconsidering the issue after remand.

The law-of-the-case doctrine is a guide for judicial econ-

omy based on the sound policy that ‘‘when an issue is once

litigated and decided during the course of a * * * case,

that decision should be the end of the matter.” State v.

Hale, 127 N.J. Super. 407, 410 (App. Div. 1974) (citing

Umited States v. United States Smelting, Ref. & Mining

Co., 339 U.S. 186, 198, 94 L.Ed. 750, 760-61 (1950)).

Plaintiff's argument, however, is more accurately consid-

15a

ered as one of precedent and supremacy. If this Court

had conclusively resolved the preemption issue in Feldman

I, that determination would not have been open to re-

examination by the lower courts on remand. See Liptak

v. Frank, 206 N.J. Super. 336, 338-39 (App. Div. 1985),

certif. denied, 103 N.J. 471 (1986); In re Educ. Ass’n, 117

N.J. Super. 255, 261 certif. denied, 60 N.J. 198 (1972).

However, the precedential effect of an opinion depends on

the court’s intention to resolve an issue squarely pre-

sented. See, e.g., Lehigh Valley R.R. v. Chapman, 35 N.J.

177, 187, cert. denied, 368 U.S. 928, 7 L.Ed. 2d 192 (1961).

Our analysis, therefore, necessarily turns to a determi-

nation of what we did—and did not—intend to resolve in

Feldman I.

In Feldman I this Court noted that on the summary

remand to the Appellate Division, defendant had raised

for the first time the claim that federal regulations pro-

hibited it from fulfilling its duty to warn because they

precluded it from modifying its labeling without prior FDA

approval. 97 N.J. at 458. The issue of federal preemption

had been neither raised nor addressed at the first trial.

Ibid. Consequently, Lederle had not presented evidence

that FDA regulations had prevented it from warning as

soon as it became aware of the necessity. Jd. at 446-47.

We stated: ‘‘Under these circumstances we would ordi-

narily defer discussion of the issue. However, since the

trial court may be faced with the problem on the retrial,

*** some comments are in order.’”’ Id. at 458 (emphasis

added).

In contrast, we stated in a footnote to the antecedent

paragraph, addressing the proper jury charge on the ob-

ligation to warn to be used at the retrial, that

plaintiff did not object to the charge and did not raise

this issue on her initial appeal. Since the cause must

be retried, * * * and the issue was raised and argued

before us, we have decided the question.

l6a

(Id. at 458 n.7 (emphasis added).]

The quoted and emphasized language establishes that this

Court was not at a loss for precise expression when de-

claring the weight that should be accorded its pronounce-

ments. The language of Feldman I taken in its entirety

clearly indicates that it was not intended to resolve the

preemption issue and therefore did not preclude defendant

from making its preemption argument, with additional

proofs, on remand. See United States Smelting. Ref. &

Mining Co., supra, 339 U.S. at 198, 94 L.Ed. at 760-61.

III

The more substantial issue is whether the Appellate Di-

vision correctly decided that plaintiffs cause of action

based on failure to warn is preempted because of actual

conflict with the obligations imposed by federal laws and

regulations in effect at the time of distribution and inges-

tion. We conclude that plaintiff's cause of action is not

preempted, there being no direct conflict with federal law.

eg

The preemption doctrine, rooted in the second clause of

article VI of the United States Constitution, requires that

when the mandates of federal law and state law are not

consistent, the state law must yield. See Wisconsin Pub.

Intervenor v. Mortier, U.S. ——, 59 U.S.L.W. 4755,

4757 (1991). Federal regulations have the same preemptive

effect as federal statutes. Hillsborough County v. Auto-

mated Medical Laboratories, Inc., 471 U.S. 707, 713, 85

L.Ed. 2d 714, 721 (1985); Capital Cities Cable, Inc., v.

Crisp, 467 U.S. 691, 699, 81 L.Ed. 2d 580, 589 (1984).

Furthermore, the doctrine applies equally to state common

law and state statutory law. Chicago N.W. Transp. Co. v.

Kalo Brick & Tile Co., 450 U.S. 311, 325-26, 67 L.Ed. 2d

258, 270 (1981).

17a

Preemption may occur in several ways. Provided Con-

gress or the federal agency is acting within the scope of

its authority, express language may exclude state law.

Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 299, 99

L.Ed. 2d 316, 325 (1988). In the absence of a clear expres-

sion, the ‘“‘intent to preempt all state law in a particular

area may be inferred where the scheme of federal regu-

lation is sufficiently comprehensive to make reasonable the

inference that Congress ‘left no room’ for supplementary

state regulation.” Hillsborough County, supra, 471 U.S. at

713, 85 L.Ed. 2d at 721 (quoting Rice v. Santa Fe Elevator

Corp., 331 U.S. 218, 230, 91 L.Ed. 1447, 1459 (1947)).

Where ‘“‘the object sought to be obtained by federal law

and the character of obligations imposed by it may reveal

the same purpose,” the intent to preempt state law will

be inferred. Rice supra, 331 U.S. at 230, 91 L.Ed. at 1459.

A third situation in which preemption will be implied oc-

curs when “‘the Act of Congress may touch a field in

which the federal interest is so dominant that the federal

system will be assumed to preclude enforcement of state

laws on the same subject.’ Fidelity Fed. Sav. & Loan

Ass’n v. de la Cuesta, 458 U.S. 141, 153, 73 L.Ed. 2d 664,

675 (1982) (quoting Rice, supra, 331 U.S. at 230, 91 L.Ed.

at 1459).

Conflict preemption occurs when ‘‘compliance with both

federal and state regulations is a physical impossibility,”

Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S.

132, 142-43, 10 L.Ed. 2d 248, 257 (1963), or when state

law “stands as an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress,”’

Hines v. Davidowitz, 312 U.S. 52, 67, 85 L.Ed. 581, 587

(1941). Once the impossibility of dual compliance is estab-

lished, the importance to the State of its own law is im-

material. Felder v. Casey, 487 U.S. 131, 138, 101 L.Ed.

2d 123, 138 (1988); Brown v. Hotel Employees & Barten-

ders Int’l Union Local 54, 468 U.S. 491, 503, 82 L.Ed. 2d

373, 384 (1984). When there is a conflict, ‘‘the federal law

18a

must prevail.’’ Free v. Bland, 369 U.S. 663, 666, 8 L.Ed.

2d 180, 183 (1962); see also de la Cuesta, supra, 458 U.S.

at 153, 73 L.Ed. 2d at 675 (‘‘state law is nullified to the

extent that it actually conflicts with federal law’’). The

conflict, however, must be actual, not merely potential,

speculative, or hypothetical. Rice v. Norman Williams Co.,

458 U.S. 654, 659, 73 L.Ed. 2d 1042, 1049 (1982).

In de la Cuesta, the Supreme Court addressed an alleged

conflict between regulations issued by the Federal Home

Loan Bank Board (Board) that authorized due-on-sale

clauses (clauses that grant a lender the option to demand

immediate payment of the loan balance if the subject prop-

erty is sold or transferred without the lender’s consent)

in the loan contracts of federal savings and loan associ-

ations, and provisions of the California Civil Code that had

been interpreted by the state to limit enforceability of such

clauses. The Court found both a clear and manifest expres-

sion of an intent to preempt and an actual conflict:

(California law] explicitly bars a federal savings and

loan from exercising a due-on-sale clause to adjust a

long-term mortgage’s interest rate towards current

market rates—a due-on-sale practice the Board has

approved and views as critical to ‘financial stability

of the association.”

[458 U.S. at 156, 73 L.Ed. 2d at 677.]

Because the Court also found that the Board was acting

within its authority, the conflicting state regulations lim-

iting due-on-sale practices of federal associations were

preempted.

In contrast, in Silkwood v. Kerr-McGee Corp., 464 U.S.

238, 78 L.Ed. 2d 443 (1984), the Court found that the

Atomic Energy Act and its enacting regulations did not

preclude an award of punitive damages under state law.

The Court recognized that states had been expressly pro-

hibited from regulating the safety aspects of hazardous

19a

materials, but refused to extend that prohibition to state-

law remedies for persons injured from radiation exposure

in nuclear plants. Jd. at 250-51, 78 L.Ed. 2d at 453-54.

The Court rejected the contention that the award of dam-

ages would conflict with the federal remedial scheme, find-

ing that “(playing both federal fines and state-imposed

punitive damages for the same incident would not appear

to be physically impossible.”’ Jd. at 257, 78 L.Ed. 2d at

458. It concluded that

the provision cited by Kerr-McGee goes on to state

that atomic energy should be developed and utilized

only to the extent it is consistent ‘‘with the health

and safety of the public.” 42 U.S.C. § 2013(d). Con-

gress therefore disclaimed any interest in promoting

the development and utilization of atomic energy by

means that fail to provide adequate remedies for those

who are injured by exposure to hazardous nuclear

materials.

(Ibid. ]

The Supreme Court has since unanimously confirmed

that ‘‘‘{ojrdinarily, state causes of action are not pre-

empted solely because they impose liability over and above

that authorized by federal law.’”” English v. General Elec.

Co., __ U.S. __, —_, 110 L.Ed. 2d 65, 81 (1990) (quot-

ing California v. ARC Am. Corp., 490 U.S. 93, ——, 104

L.Ed. 2d 86, 97 (1989) (seven justices participating)). Fur-

thermore, as stated in English, ‘“‘[t]he ‘teaching of this

Court’s decisions * * * enjoin{s] seeking out conflicts be-

tween state and federal reguiation where none clearly ex-

ists.” Id. at __, 110 L.Ed. 2d at 81 (quoting Huron

Portland Cement Co. v. City of Detroit, 362 U.S. 440, 446,

4 L.Ed. 2d 852, 858 (1960)).

Although ‘‘any state law, however clearly within a

State’s acknowledged power, which interferes with or is

contrary to federal law, must yield,” Free, supra, 369 U.S.

at 666, 8 L.Ed. 2d at 183, the initiation point of the

20a

preemption analysis depends on the area of law involved.

Because plaintiff’s claims concern rights and remedies tra-

ditionally defined solely by state law, namely, tort com-

pensation, defendant here must overcome a presumption

against preemption:

When Congress legislates in a field traditionally oc-

cupied by the States, “‘we start with the assumption

that the historic police powers of the States were not

to be superseded by the Federal Act unless that was

the clear and manifest purpose of Congress.”

(California v. ARC Am. Corp., supra, 490 U.S. at

—__., 104 L.Ed. 2d at 94 (quoting Rice v. Santa Fe

Elevator Corp., supra, 331 U.S. at 230, 91 L.Ed. at

1459); accord Mortier, supra, —__ U.S. at __, 59

U.S.L.W. at 4757 (adopting initial assumption stated

in Rice “[wJhen considering pre-emption’’); see also

Hillsborcugh County, supra, 471 U.S. at 715, 85 L.Ed.

2d at 722 (recognizing a “‘presumption that state or

locai regulation of matters related to health and safety

is not invalidated under the Supremacy Clause’’).]

In Silkwood, the Court emphasized the absence of evidence

that Congress had intended to preempt state-law claims

or that it had even considered the issue. That absence of

a clear and manifest purpose to preempt took on ‘‘added

significance in light of Congress’ failure to provide any

federal remedy for persons injured by such [illegal] con-

duct.” 464 U.S. at 251, 78 L.Ed. 2d at 454.

We recently considered preemption of a claim “‘tradi-

tionally defined solely by state law’’—a strict-liability claim

based on failure to warn—in Dewey v. R.J. Reynolds To-

bacco Co., 121 N..J. 69 (1990). In Dewey this Court rejected

the argument that preemption was necessary because the

incidental regulatory pressure exerted by a jury verdict

would conflict with the Cigarette Act’s secondary goal of

uniform regulation. Jd. at 88-94. Quoting Silkwood, we

determined that such incidental regulatory effect does not

2la

necessarily create a conflict sufficient to require preemp-

tion, even where direct state regulation is preempted ex-

pressly:

“Tt may be that the award of damages based on the

state law of negligence or strict liability is regulatory

in the sense that a nuclear plant will be threatened

with damages liability if it does not conform to state

standards, but that regulatory consequence was some-

thing that Congress was quite willing to accept.”

(Id. at 89 (quoting Silkwood, supra, 464 U.S. at

256, 78 L.Ed. 2d at 457).]

Turning to an analysis of the actual regulatory effect

that the imposition of state-law liability would have, this

Court identified three options for the cigarette manufac-

turer: (1) ‘‘voluntarily’’ adding an additional warning, (2)

adding an insert, and (3) ‘“‘choosing to do nothing and

risking exposure to liability.”” Jd. at 90. Hence, the man-

ufacturer would not be compelled to act in contradiction

of the federal labeling requirement that expressly prohibits

mandatory state labeling regulations. Furthermore, we

stated that even if the manufacturer could not alter its

label, a jury could conclude that the manufacturer never-

theless should bear the loss that could have been prevented

with a more detailed warning label. Jd. at 91-92; see also

Ferebee v. Chevron Chem. Co., 736 F.2d 1529, 1541

(D.C.Cir.) (“Even if Chevron could not alter the label,

Maryland could decide that, as between a manufacturer

and an injured party, the manufacturer ought to bear the

cost of compensating for injuries that could have been

prevented with a more detailed label than that approved

by the EPA.”’), cert. denied, 469 U.S. 1062, 83 L.Ed. 2d

432 (1984). But see Papas v. Upjohn Co., —— F.2d —~—

(11th Cir. 1991) (available on Westlaw, CTA11 database,

1991 WL 25740) (holding state tort actions for inadequate

warning preempted by Federal Insecticide, Fungicide, and

Rodenticide Act (FIFRA) and its enacting regulations). This

22a

Court noted in Dewey that FIFRA, the statute addressed

in Ferebee and Papas, also contained a preemption clause

presumably intended to promote uniformity of labeling,

and agreed with the court in Ferebee that the existence

of such a goal did not necessarily require a finding of

preemption. 121 N..J. at 92; cf Burch v. Amsterdam Corp.,

366 A.2d 1079, 1085 (D.C. 1976) (manufacturer of hazard-

ous substance not immune from liability based on inade-

quate warning even though Federal Hazardous Substance

Act precludes a state requirement unless such requirement

is identical to the warning established by the Act);

MacDonald v. Ortho Pharmaceutical Corp., 394 Mass. 131,

__._, 475 N.E.2d 65, 70-71 (compliance with FDA-approved

labels does not immunize manufacturers from liability de-

spite implied goal of precise and nationally-uniform label-

ing), cert. denied, 474 U.S. 920, 88 L.Ed. 2d 258 (1985).

Adopting here the reasoning of Dewey, we agree with

the Appellate Division that plaintiff’s claim is not

preempted expressly or by implication. We diverge, how-

ever, from the Appellate Division’s reasoning that that

claim is barred because of a direct conflict between obli-

gations imposed by federal law and those under state tort

law. We did not reach that issue in Dewey. See 121 N.J/.

at 86. We also recognize that preemption in the regulation

of prescription drugs raises somewhat different concerns

from those related to regulating cigarettes that we ad-

dressed in Dewey. We therefore consider the reasoning of

other jurisdictions that have addressed preemption in the

context of FDA and similar regulations and focus our anal-

ysis on conflict preemption, specifically that body of case

law addressing impossibility of dual compliance.

The Appellate Division adopted the reasoning of Hurley

v. Lederle Laboratories Division of American Cyanamid,

851 F.2d 1536, modified, 863 F.2d 1173 (5th Cir. 1988),

in concluding that plaintiff's warning claims were

preempted due to conflict with obligations under federal

law. See 234 N.J. Super. at 591-92. In Hurley, the plaintiff

23a

alleged the failure to warn adequately of the possible se-

vere adverse reactions to a vaccine and the production and

marketing of an unreasonably-dangerous product. The dis-

trict court granted partial summary judgment in favor of

Lederle, finding that the Federal Food, Drug and Cosmetic

Act of 1938 (FDCA), the Public Health Service Act

(PHSA), and the regulations enacting them preempted any

state-law claims based on defective design of the vaccine

or on the inadequacy of its warning label. Hurley, supra,

851 F.2d at 1538.

Although the Fifth Circuit reversed and remanded, the

court, in addressing conflict preemption, stated that the

regulations at issue provide that the FDA determines a

warning it deems appropriate and ‘‘[mJost important(ly],

the manufacturers cannot change the language * * * with-

out FDA approval.” Jd. at 1542. The court then concluded

that

[i]t would be patently inconsistent for a state then to

hold the manufacturer liable for including that precise

warning when the manufacturer would otherwise be

liable for not including it. Thus, assuming that the

FDA has processed all the relevant and available in-

formation in arriving at the prescribed warning, its

decision as to the proper wording must preempt by

implication that of a state.

[Ibid. |

The court limited the inquiry on remand to whether Led-

erle had withheld information from the FDA; “‘[o]therwise,

the FDA-approved warning is sufficient.”” id. at 1543.

In Abbot v. American Cyanamid Co., 844 F.2d 1108,

cert. denied, 488 U.S. 908, 102 L.Ed. 2d 248 (1988), the

Fourth Circuit was faced with the same issue presented

in Hurley, namely, preemption of defective-design and fail-

ure-to-warn claims by FDA regulations governing vaccines.

That court reversed the district court’s finding of preemp-

24a

tion, rejecting as its bases the comprehensiveness of the

federal scheme and frustration of purpose. Jd. at 1112-14.

The Fourth Circuit also rejected the district court’s de-

termination that the warning given by the defendant was

adequate as a matter of law despite acknowledging that

the labeling ‘“‘once approved, cannot be changed without

FDA approval.” Jd. at 1112, 1115 (“‘adequacy of a warning

is a question of fact for the jury’’).

In Mazur v. Merck & Co., 742 F. Supp. 239 (E.D. Pa.

1990), the defendant asserted that the pervasive scheme

regulating all aspects of vaccines compelled a finding of

implied preemption. The court disagreed, despite finding

that: (1) the regulation of vaccines is comprehensive; (2)

the FDA had approved the package insert disseminated

by the defendant and alleged to be inadequate; (3) the

vaccine labeling must receive federal approval; and (4) the

language of the labeling cannot be changed without au-

thorization of the FDA. Id. at 244-46. Noting the strong

presumption against preemption both of state tort reme-

dies and in areas of health and safety, and recognizing

that preemption would leave Pennsylvania citizens harmed

by vaccines without a state tort remedy, that court agreed

“with the great majority of courts addressing this issue

that Congress did not impliedly preempt state regulation

of vaccine manufacture, distribution, and labeling.” Jd. at

246 (footnote listing other cases in which no preemption

was found omitted). See generally Annotation, Federal Pre-

emption of State Common-Law Products Liability Claims

Pertaining to Drugs, Medical Devices, and Other Health-

Related Items, 98 A.L.R. Fed. 124 (1990) (collecting cases).

The court also rejected the defendant’s narrower conflict

preemption argument based on two observations equally

appropriate to the circumstances here:

{[Mjere compliance with an FDA suggestion, or for

that matter, regulation or order, does not mean that

state tort law becomes irrelevant. First, compliance

va

25a

with an FDA regulation may establish that the man-

ufacturer met the appropriate minimum standards of

due care, but compliance does not necessarily absolve

the manufacturer of all liability. See, e.g., Brochw v.

Ortho Pharmaceutical Corp., 642 F.2d 652, 658 (1st

Cir. 1981). Manufacturers must meet state safety re-

quirements, whether codified or embodied in the com-

mon law, in addition to satisfying the initial FDA

requirements.

Second, federal regulation serves a very different

purpose [from] state tort law. Essentially, federal reg-

ulation serves a deterrent purpose by limiting the

manufacture of inherently dangerous products to those

applicants who meet certain stringent safety stand-

ards, while state tort law serves the equally important

purpose of compensating individuals injured by those

very same products. [Because] compliance with FDA

regulations will not ensure that a manufacturer’s

products will not cause injury, compliance will not-

necessarily exempt a manufacturer from liability.

When those products do cause injuries. the state tort

system provides a means of compensation. State tort

law is intended to supplement federal regulation by

providing a vehicle for compensation of vaccine-re-

lated injuries.

(Id. at 247 (footnote omitted) (emphasis added).]

In Ferebee v. Chevron Chemical Co., supra, 736 F.2d

1529, the issue was whether the extensive regulation of

paraquat by the Environmental Protection Agency (EPA)

and compliance therewith by a manufacturer precluded an

inadequate-warning claim under Maryland law. Chevron

contended that because the EPA, after careful consider-

ation, had approved the labeling of the paraquat used by

the plaintiff, the jury was bound by the EPA’s determi-

nation and therefore could not find the labeling inadequate.

Id. at 1540. ;

26a

The court disagreed, reasoning that state tort law may

have distinct and ‘“‘broader compensatory goals.” [bid.

[Clonceivably, a label may be inadequate under state

law if that label, while sufficient under a cost-benefit

standard, nonetheless fails to warn against any sig-

nificant risk. In addition, even if the ultimate purposes

of federal and state law in this area are the same, a

state (acting through its jurors) may assign distinct

weight to the elements which go into determining

whether a substance as labelled is of sufficient net

benefit as to warrant its use.

*_* * *

[I]t need not be the case, as Chevron apparently as-

sumes, that the company can be held liable for failure

to warn only if the company could actually have al-

tered its warning. ** * Maryland could decide that,

as between a manufacturer and an injured party, the-

manufacturer ought to bear the cost of compensating

for those injuries that could have been prevented with

a more detailed label than that approved by the EPA.

* * * Chevron can comply with both federal and state

law by continuing to use the EPA-approved label and

by simultaneously paying damages to successful tort

plaintiffs such as Mr. Ierebee.

(Id. at 1540-41.]

The Eleventh Circuit rejected the reasoning of Ferebee

in Papas v. Upiohn Co., supra, _— F.2d —__ , holding that

“FIFRA impliedly preempts state common law tori suits

against manufacturers of EPA-registered pesticides to the

extent that such actions are based on claims of inadequate

labeling.” Jd. at (slip op. at 18) (footnote omitted).

That court found preemption on several bases, including

a direct conflict via a jury determination of inadequate

warning with the EPA’s determination that the labeling

is adequate and with ‘‘the Congressional intent that the

27a

EPA Administrator determine the reasonableness of the

risks to man and the environment posed by pesticides.”’

Id. at __(slip op. at 13). It also noted that the federal

district courts are split on the issue. See zd. at —_n.l

(slip op. at 2-3) (collecting cases). The split among courts

addressing the issue suggests that there is not a “clear

and manifest’’ expression of congressional intent and calls

into question the reasoning and authority of Papas.

Those cases finding preemption based on direct conflict

typically have involved patently-incompatible affirmative

obligations under federal and state laws. An example is

Grocery Manufacturers of America. Inc. v. Gerace, 755

F.2d 993 (2d Cir.), affd, 474 U.S. 801, 88 L.Ed. 2d 29

(1985). In Gerace the plaintiff contended that New York

regulations requiring use of “imitation” on labeling of

cheese products directly conflicted with “‘imitation” as de-

fined for use by federal regulations promulgated pursuant

to the FDCA. Compliance with the state regulations would

subject a manufacturer to liability for misbranding under

federal regulations. The court agreed that compliance with

both state and federal law was impossible and held the

former to be preempted as applied to the specific area of

‘Imitation’ cheese. Jd. at 1001.

In Cosmetic, Toiletry & Fragrance Association v. Min-

nesota, 440 F. Supp. 1216 (D. Minn. 1977), aff'd, 575 F.2d

1256 (8th Cir. 1978), the court was faced with federal and

state labeling requirements for chlorofluorocarbons. The

state statute and the FDA regulation required identical

labels but differed on the location. Jd. at 1219. Addressing

the issue at the preliminary-injunction stage, the court

found that the plaintiffs, who contended that the state

regulations were invalid, had shown a substantial likelihood

of success at trial on the preemption issue. Jd. at 1225.

It therefore issued the injunction. Jd. at 1219.

We also note that in both Gerace and Cosmetic, Toiletry

& Fragrance Association the purpose of the state enact-

28a

ment was regulatory rather than compensatory. Here, the

obligations under federal and state law are neither patently

incompatible nor inconsistent regulatory efforts to accom-

plish the same purpose. See English v. General Elec. Co.,

supra, —_U.S. at —_, 110 L.Ed. 2d at 81; Silkwood,

supra, 464-U.S. at 263-64, 78 L.Ed. 2d at 462 (Blackmun,

J., dissenting).

a

Turning our attention to this case, we begin by iden-

tifying the relevant state and federal laws operating in

the field being considered. See Chamber of Commerce of

the United States v. State, 89 N.J. 131, 142 (1982). Under

New Jersey law a manufacturer is strictly liable for dam-

ages resulting from use of its products when the manu-

facturer fails to produce and distribute a product that is

fit, suitable, and safe for its foreseeable purposes. See Feld-

man I, supra, 97 N.J. at 450. A product may be unsafe,

and therefore defective, because of a failure to warn or

an inadequate warning. Freund v. Cellofilm Properties,

Inc., 87 N.J. 229, 242 (1981). A manufacturer is obligated

to communicate a warning based on subsequently-acquired

knowledge of a danger ‘‘as soon as reasonably feasible.”’

Feldman I, supra, 97 N.J. at 456. “Generally speaking,

the doctrine of strict liability assumes that enterprises

should be responsible for damages to consumers resulting

from defective products regardless of fault.’’ Jd. at 450.

When liability is premised on the failure to warn or an

inadequate warning, the issue becomes whether the man-

ufacturer knew or could have known of the danger and,

if so, whether it ‘‘acted in a reasonably prudent manner

in marketing the product or in providing the warnings

given.” Id. at 451-52. Under that standard negligence and

strict liability in failure-to-warn cases may be deemed to

be functional equivalents. Jd. at 452.

The manufacture, sale, and marketing of prescription

drugs is extensively regulated by the FDA pursuant to

29a

the FDCA and its many amendments and enacting regu-

lations. Specifically, section 331 of Title 21 of the United

States Code prohibits the introduction into interstate com-

merce of any drug that is misbranded. A drug is deemed

to be misbranded ‘‘i]f its labeling is false or misleading

in any particular,” 21 U.S.C.A. § 352(a), if its labeling does

not bear “‘adequate warnings against use in those patho-

logical conditions or by children where its use may be

dangerous to health,” id. § 352(f), or if it is an antibiotic

drug, ‘“‘unless (1) it is from a batch with respect to which

a certificate or release has been issued pursuant to section

357 of this title, and (2) such certificate or release is in

effect with respect to such drug.” Jd. § 352(1). For new

drugs the federal scheme has a separate provision that

‘“{njo person shall introduce * * * into interstate commerce

any new drug{] unless an approval of an application filed

pursuant to subsection (b) of this section is effective with

respect to such drug.” Jd. § 355(a). The approval process

includes review of the proposed labeling. The FDA will

deny or withdraw approval if the “labeling is false or

misleading in any particular” or ‘contains any untrue

statement of materia! fact,” or if ‘‘there is a lack of sub-

stantial evidence that the drug will have the effect it pur-

ports or is represented to have under the conditions of

use prescribed, recommended, or suggested in the pro-

posed labeling.” Jd. § 355(d) and (e).

As used in this subsection and subsection (e) of this

section, the term ‘‘substantial evidence’ means evi-

dence consisting of adequate and well-controlled in-

vestigations, including clinical investigations, by

experts qualified by scientific training and experience

to evaluate the effectiveness of the drug involved, on

the basis of which it could fairly and responsibly be

concluded by such experts that the drug will have the

effect it purports or is represented to have under the

conditions of use prescribed,

30a

recommended, or suggested in the labeling or pro-

posed labeling thereof.

(Id. § 355(d).]

Those statutory provisions are augmented by regulations

for enforcement of the FDCA and for certification of an-

tibiotic drugs. Lederle claims that the versions of those

regulations in effect at the relevant time did not permit

it, without prior approval of the FDA, to warn about the

possibility of tooth staining. The pertinent regulations state

in part:

A supplemental application should be submitted for

any change beyond the variations provided for in the

application * * * that may alter the conditions of use,

the labeling, the safety, identity, strength, quality or

purity of the drug ** *. Labeling changes include

deviations from the authorized brochure in any mail-

ing or promotional piece used after the drug is placed

on the market. When necessary for the safety of the

drug, a supplemental application may be required to

specify a period of time within which the proposed

change will be made; and in such case the distribution

of the drug after such time without such change con-

stitutes distribution without an effective new-drug ap-

plication. If a material change is made in the * * *

labeling or advertising from the representations in an

effective application for a new drug, and the drug is

marketed before a supplement is effective for such

change, the application may be suspended under

§ 130.27 on the grounds that it contains an untrue

statement of a material fact.

[21 C.F.R. § 130.9(a) (1960).]

Lederle also claims that warning without prior FDA ap-

proval would have violated regulations governing certifi-

cation of batches of antibiotics, which stated:

(b) A certificate shall cease to be effective:

3la

-_*s & *

(2) With respect to any immediate container * * *

when its label or labeling is altered, mutilated, de-

stroyed, obliterated, or removed in whole or in part,

or ceases to conform to any labeling requirement pre-

scribed by the regulations in this part, except that:

~*~ * *

’

(i) If the drug in such container is repackec

and certification of the batch thus made is requested,

such certificate shall continue to be effective for a

reasonable time * * * ; [or]

-_s * *

(iii) If its label or labeling is removed in whole or

in part for the purpose of relabeling and supplemental

certification of the relabeled drug is requested * * *.

(21 C.F.R. § 146.4 (1955).]

According to Lederle, compliance with the obligation under

New Jersey law to communicate a warning based on sub-

sequently acquired actual or constructive knowledge of a

danger ‘‘as soon as reasonably feasible,” Feldman I, supra,

97 N.J. at 456, would have placed it in violation of the

federal statutes and regulations if the warning had been

given without prior FDA approval. Relying heavily on sub-

sequent amendments and statements regarding the labLel-

ing regulations and the FDA’s interests with respect to

drugs, the Appellate Division agreed, concluding that ‘“‘the

clear wording of [section 130.9(a)] required Lederle to seek

the approval of the FDA to change the package inserts

dispensed with the drug.” 234 N.J. Super. at 588. The

court felt constrained to conclude, based on the jury’s find-

ings on when Declomycin was defective, that the jury had

found liability based on Lederle’s failure to warn during

the period it had corresponded with the FDA—November

1962 to December 1963. Jd. at 573. The court then held

32a

that principles of conflict preemption precluded the as-

sessment of liability for failure to warn without prior ap-

proval during that period.

Implicit in the Appellate Division’s conciusion is the no-

tion that compliance with the letter of section 130.9(a)

precludes finding for plaintiff on her strict-liability claim

for failure to warn. Reading that provision in the context

of the FDCA, however, and recognizing, as found by the

Appellate Division, that ‘‘Congress’ overriding purpose in

enacting the FDCA was to protect consumers from dan-

gerous drugs and antibiotics,’ id. at 581, we are satisfied

that federal law did not clearly require that Lederle obtain

prior approval from the FDA before warning of a known

or knowable danger. Accordingly, we find nothing in the

federal scheme to support the assertion that manufacturers

of prescription drugs and antibiotics who literally comply

with that isolated provision must be immune from state

tort liability for injuries caused by their products. In the

absence of a clear and manifest purpose to preclude the

traditional workings of the tort compensation system, we

find no conflict and hence no preemption.

We conclude that there is not a sufficient basis on which

to find a direct conflict between state and federal] law.

The correspondence between Lederle and the FDA in 1962

and 1963 does not foreclose a finding either that state

damage actions could act as compensatory supplements to

the existing regulatory framework or that the FDA had

neither considered nor addressed the preemptive effect of

the regulations at that time. In light of the Supreme

Court’s concern, expressed most recently in English and

ARC America Corp., that injured plaintiffs not be denied

a remedy in the absence of a clearly-expressed intention,

we adopt the reasoning of Abbot, Mazur, and Ferebee here.

Applying their reasoning will advance the primary pur-

poses of both federal and state law, respectively, protect-

ing the public health and compensating those injured when

33a

that protection fails, without compelling drug manufactur-

ers to violate federal statutes or regulations.

oC.

The FDCA ‘‘as a whole was designed primarily to pro-

tect consumers from dangerous products.’ United States

v. Sullivan, 332 U.S. 689, 696, 92 L.Ed. 297, 303 (1948).

We continue to believe, as we stated in Feldman I, that

for the FDA to have prevented a drug manufacturer from

warning the public of a newly-discovered danger pending

development of unequivocal factual evidence of adverse

reaction in man ‘‘would seem anomalous.” 97 N.J. at 459.

A direct conflict is not clear from the evidence presented—

or attempted to be presented—at trial. Dr. Swanzey tes-

tified only to an industry understanding that the FDA

regulations required prior approval. Dr. Goddard’s report

indicated that he believed the regulations required prior

approval, but the relevant time period for this case was

before his tenure as commissioner. Furthermore, his tes-

timony at the Evidence Rule 8 hearing indicated that the

labeling regulations had not been enforced before his ar-

rival. The assertion that Lederle would have been subject

to punishment for ‘“‘misbranding’’ or would have had its

product barred from the market if it had added an un-

approved warning is based merely on Lederle’s interpre-

tation of the regulations then in effect. Lederle presents

no evidence indicating that the FDA ever took such action

for adding a warning suggesting a limitation on use rather

than an unapproved representation of a benefit, nor does

the record reflect any statement by the FDA to the effect

that it would have taken action had a manufacturer at-

tempted to warn without prior approval.

Lederle relies heavily on the modification of the new-

drug labeling regulations in 1965 and subsequent state-

ments of the FDA to support its argument that Congress

and the FDA intended that modification of labeling without

prior approval had not been allowed previously, namely,

34a

at the time plaintiff had ingested the drug. The relevant

FDCA-enforcement regulations were amended in 1965 to

permit expressly “‘plac{ing] into effect at the earliest pos-

sible time’? proposed additions to labeling ‘‘ef additional

warning, contraindication, side-effect, and precaution in-

formation.”’ 30 Fed. Reg. 993 (1965) (codified at 21 C.F.R.

§ 130.9(d)). The amendment went on to add:

It will be the policy of the Food and Drug Admin-

istration to take no_action against a drug or applicant

solely because changes of the kinds described in par-

agraph (d) of this section are placed in effect by the

applicant prior to [its] receipt of a written notice of

approval of the supplemental new drug application.

(Ibid. (codified at 21 C.F.R. § 130.9(e)).]

The additions to section 1380.9 were made effective im-

mediately on publication in the Federal Register because

they were in the interest of ‘‘drug safety” and ‘‘the public

health, [were] noncontroversial, and relax{ed] existing re-

quirements.” Ibid. The regulations controlling antibiotics

were similarly modified in 1966 to permit dissemination of

modified labeling without awaiting advance approval. See

31 Fed. Reg. 11,415 (1966).

Although we recognize that subsequent actions of an

agency are relevant to determining prior intent, see Grove

City College v. Bell, 465 U.S. 555, 567, 79 L.Ed. 2d 516,

528 (1984), we do not agree that the conclusion that Led-

erle asserts necessarily follows. It contends that the mod-

ification shows that independent action was not permitted

under the former regulations. An equally-compelling con-

clusion, however, is that the FDA had not addressed itself

to the issue before. 3A Frumer & Friedman, Products

Liability § 50.03(1), 50-255 n.37 (1990) (“‘One could argue

that the changes made in § 130.9 in 1965 * * * indicate

that FDA approval of precautionary information was re-

quired prior thereto. One could also argue that the change

in language was meant to clear up a misconception.”’’).

35a

Arguably, then, on squarely considering the issue, the FDA

determined that warning of possible dangerous side effects

“at the earliest possible time,’ 30 Fed. Reg. 993 (1965),

was consistent with its primary purpose to protect the

public health.

There is additional support for that conclusion. The 1965

modifications did not materialize out of a vacuum. The

changes were made to implement the Kefauver-Harris Drug

Amendments enacted on October 10, 1962. See U.S. Food

and Drug Administration, Annual Reports 1950-1974 374-

75, 480-81, 527-28 (Dep’t of Health, Education and Welfare

1976). The FDA understood those amendments to require

that prescription-drug advertisements ‘contain a brief

summary of information as to adverse side effects of the

drug and warnings of when it should not be administered.”’

Id. at 375. Dr. Goddard testified that the FDA regulations

had not been enforced prior to his appointment as com-

missioner. That inaction could be explained rationally as

recognition that the regulations in effect did not reflect

the requirements of the FDCA as amended. The 1965 mod-

ifications to the regulations, then, demonstrate not an in-

tent to require FDA pre-approval of warnings prior to

1965 but rather only an effort to clarify that in accordance

with the purposes of the FDA, warnings of side effects

were required. See 25 Fed. Reg. 12,595 (1960) (regulations

governing labeling of new drugs were amended in 1960

for the express purpose of “‘requiring manufacturers to

furnish adequate information for the professional use of

prescription drugs and devices’’).

When the issue is viewed as which party should bear

the loss occasioned by a product marketed without warning

of its dangerous propensities, Lederle’s contention based

on the subsequent revision of the labeling regulations is

even less persuasive. The 1965 modification and the pre-

existing regulations are equally mute on the intention to

deny compensation to persons injured by the use of an-

tibiotic drugs. Lederle has not presented any evidence—

36a

such as legislative history or an administrative decision—

displaying a congressional intent to preempt all or any

methods of tort compensation. The majority in Silkwood

found no inconsistency in letting persons injured by nuclear

hazards recover under state tort law despite Congress’

express intent to have the Nuclear Regulatory Commission

exclusively regulate the safety of nuclear facilities. 464

U.S. at 257-58, 78 L.Ed. 2d at 458. Notably, the dissenting

justices agreed concerning the award of compensatory

damages. See id. at 263-64, 78 L.Ed. 2d at 462 (Blackmun,

J., dissenting) (“‘Because the Federal Government does not

regulate the compensation of victims, and because it is

inconceivable that Congress intended to leave victims with

no remedy at all, the pre-emption analysis established by

[Pacifie Gas & Electric Co. v. State Energy Resources Con-

servation & Development Commission, 461 U.S. 190, 75

L.Ed. 2d 852 (1983),] comfortably accommodates—indeed

it compels—the conclusion that compensatory damages are

not preempted whereas punitive damages are” (footnote

omitted).); id. at 275, 78 L.Ed. 2d at 469 (Powell, J.,

dissenting) (‘“‘Where injury is sustained as a result of the

operation of a nuclear facility, it is not contested that

compensatory damages under state law properly may be

awarded.”’). We reach a similar conclusion here.

Finally, we note that a finding of preemption would

leave plaintiff remediless, a fact that, based on Silkwood

and Dewey, strengthens the presumption against preemp-

tion. See Silkwood, supra, 464 U.S. at 251, 78 L.Ed. 2d

at 454; Dewey, supra, 121 N.J. at 84-85. However ,the

action is viewed, the revision does not display a “clear

and manifest” intent to preclude either (1) warning with-

out prior FDA approval or (2) determining under state law

that the manufacturer should bear the loss caused by a

defective product, namely, a product marketed without a

warning of a known or knowable dangerous side effect.

The Appellate Division, interpreting two cases from

other jurisdictions addressing the regulations in effect at

37a

the time of plaintiff’s ingestion of Declomycin, found that

both cases concluded that FDA approval was required prior

to making a labeling change. 234 N.J. Super. at 588. One

case, Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832

(2d Cir. 1967), assumed that advance permission from the

FDA was required apparently because neither party had

raised the issue. Jd. at 835, 848. That court dic not render

a specific finding, nor did it indicate any authority com-

pelling its conclusion. The other case merely cited Rogin-

sky. See Miller v. Upjohn Co., 465 So. 2d 42 (Ct. App.),

writ denied, 467 So. 2d 533 (La. 1985). To the extent

those cases addressed preemption of failure-to-warn claims,

the analyses are uncompelling, and we decline to follow

them.

The Appellate Division also strongly emphasized’ the

FDA’s interest in “rational prescribing.’’ See 234 N.J.

Super. at 593-95. However, the Commissioner of the FDA

has stated that ‘ijt is not the intent of the FDA to in-

fluence the civil tort liability of the manufacturer.” 44 Fed.

Reg. 37,437 (1979). In light of that unequivocal statement,

we are unpersuaded that the asserted interest in rational

prescribing precludes imposition of liability. Lederle’s cor-

respondence and internal documents establish that it knew

or believed that there was an adverse causal association

between Declomycin and tooth-staining. Lederle knew or

believed that a portion of Declomycin users would be per-

manently injured by using the product as marketed. We

are convinced that marketing Declomycin with that knowl-

edge and belief constitutes the very conduct that the FDA

intended not to absolve.

Finally, we note that Dr. Goddard testified that a man-

ufacturer remained free to choose not to distribute a drug,

an option cited in Dewey and Ferebee as additional support

for a finding of no conflict. Lederle believed that a warning

was necessary and proper for Declomycin. We find no basis

to conclude that the FDA through its regulations mandated

that Lederle disregard its determination and continue to

38a

produce a drug that it believed to be unsafe as distributed.

The testimony of Dr. Goddard persuasively suggests a con-

trary conclusion. Irrespective of what the regulations may

have required with regard to changes in labeling, we find

no basis for concluding that Lederle was required to con-

tinue marketing Declomycin in forms and packaging in-

tended for use by those it believed to be at risk—or indeed

to continue marketing at all. Such a requirement would

conflict with the predominant, express purpose for which

the FDA was created and for which the new drug regu-

lations were enacted.

We also note that Lederle is not faced with the Hobson’s

choice of either complying with federal regulations and

continuing to be subject to damages in state tort actions

or providing additional warnings and thereby violating fed-

eral law. The regulations in question have long since been

changed expressly te allow pharmaceutical companies to

implement necessary changes in labeling while a supple-

mental new-drug application is pending. See 30 Fed. Reg.

993 (1965). Furthermore, the present regulations govern-

ing labeling of prescription drugs require that the labeling

“describe serious adverse reactions and potential safety

hazards, [and] limitations in use imposed by them.” 21

C.F.R. § 201.57(e) (1990). Interestingly, that provision

states that “‘labeling shall be revised to include [such] a

warning as soon as there is reasonable evidence of an

association of a serious hazard with a drug; a causal re-

lationship need not have been proved.” Jbid.

The issue then is what choices, if any, did Lederle have

in 1962 and 1963. Even if we assume Lederle could not

have provided a warning, an assumption we find unsup-

ported by the evidence, it could have suspended production

of Declomycin for what it termed the ‘“‘probably * * * short

period of time” be.ore which Lederle anticipated that that

drug too would be “‘officially implicated with tooth stuin-

ing.” Alternatively, Lederle could have quite reasonably

and responsibly removed from the market those forms and

md lined

39a

methods of packaging of Declomycin that were geared to-

ward pediatric use. It could have raised the price as a

form of loss-spreading insurance against claims. Lederle

also could have continued to press for FDA approval of

a warning for Declomycin after the administration’s initial

response declining to change its official position. (The re-

cord is conspicuously silent on any continuing efforts by

Lederle to confirm the association of Declomycin with tooth

staining or to gain FDA sanction of a warning for Declo-

mycin. Cf. Feldman I, supra, 97 N.J. at 453 (“at least in

some fields, such as those impacting on public health, a

manufacturer may be expected to be informed and affirm-

atively to seek out information concerning the public’s use

of its own product’’).) The suggestion that Lederle was in

some way compelled to continue distributing a drug with-

out warning of the strong likelihood of serious side effects

for some child users and that Congress and the FDA in-

tended that it would be immune from liability for doing

so cannot be reconciled with the primary purpose of the

FDA to promote and protect the health of the citizens of

the United States.

We find nothing in the record to justify a belief that

Declomycin was different from the other tetracycline an-

alogues in such a way that the discoloration side effect

was unlikely to materialize. In fact, Lederle believed the

evidence respecting Declomycin to be inevitably forthcom-

ing ‘“‘within a short period of time.’’ The obvious reason

for the lack of sufficient information on Declomycin was

that Declomycin had been developed and introduced to the

market later than the other members of the family of

tetracyclines. The nature of the side effect precluded con-

clusive scientific information from being available until the

permanent teeth of pediatric patients began to erupt. The

issue, then, was not whether there would be evidence of

tooth discoloration associated with Declomycin sufficient

to justify the FDA in requiring a warning, but rather when

such evidence would be available.

40a

Simply stated, immunizing a drug manufacturer agains

liability for marketing a product without a warning of |

known or knowable risk is in conflict with Congress’ well

recognized purpose in enacting the FDCA, particularly a

amended in 1962. We will not recognize such an anomalou

claim of immunity based solely on a manufacturer’s rep

resentations of the industry’s belief. Here the evidence wa:

conclusive that tetracycline analogues were not safe fo.

children and that all other tetracyclines in existence long

enough to provide data did not furnish adequate infor

mation as labelled previously. The exclusion of Declomycir

from the group approved for a label change was an un.

fortunate turn of events. We decline to visit the harm

inflicted by a product on an innocent end-user by holJing

as a matter of law that Congress and the agency charged

with protecting the public health intended to absolve from

liability a manufacturer aware of the risk of that very

harm.

We recognize that (assuming the price of Declomycin

did not already include a ‘buffer factor’’ for unforeseen

costs, an uncompelling assumption at best) Lederle might

have had to increase the price of the product in order to

absorb and spread the cost of the harm. So be it. Unlike

the vaccines reviewed by the dissent, see post at __ (slip

op. at 21-25), Declomycin was not a wonder drug, without

substitute or equipollent. The FDA “‘determination”’ in this

case was really a non-decision—namely, that the evidence

was not yet unequivocal or “‘substantial”’ as defined in the

FDCA. It does not reflect a carefully-considered risk-ben-

efit analysis of Declomycin’s utility such that it should

shield Lederle from plaintiff's claims for the harm caused

by Declomycin. Lederle, believing that a warning would

soon be required and that pediatric use of Declomycin

would have harmful side effects, could not reasonably sit

idly by, immunized from responsibility for those anticipated

repercussions by legislation intended to promote the public

4la

health. See MacDonald v. Ortho Pharmaceutical Corp., su-

pra, 394 Mass. 131, 475 N.E.2d 65.

IV

The record does not contain any formal administrative

decision demanding deference from this Court. See Young

v. Community Nutrition Inst., 476 U.S. 974, 90 L.Ed. 2d

959 (1986). The subsequent amendments relied on so heav-

ily by Lederle are susceptible of varying interpretations

supporting both parties’ positions. A finding of direct con-

flict is not compelled. This Court will not seek out a basis

for such a finding. See English v. General Elec. Co., supra,

up Ueth O ., 110 L.6. Za at $1.

The presence of the following factors reinforces the tra-

ditional presumption against preemption: that there was

no explicit provision for preemption of state tort claims;

that the subject matter infringes on the State’s inherent

powers to protect and promote the health and safety of

its citizens; and that preemption would effectively elimi-

nate all means of recourse for the plaintiff. See Dewey,

supra, 121 N.J. at 84-85; Forster v. R.J. Reynolds Tobacco

Co., 423 N.W.2d 691 (Ct. App. 1988), affd in part and

rev'd in part, 487 N.W.2d 655 (Minn. 1989). If there had

been a need to immunize prescription drug and antibiotic

manufacturers from tort liability, the determination of that

need should have been ‘‘made by Congress in an unam-

biguous mandate and not by the courts.” Forster, supra,

423 N.W.2d at 701. To date Congress has not seen fit to

express such a mandate. We will not do so in its stead.

Vv

As a final point in opposition to this appeal, Lederle

raises the contention that ‘“‘[i]f this case were again retried,

there is no way that plaintiff could prevail.’’ Lederle bases

that contention on the hopeful conclusion that the rebutt-

able presumption created by N.J.S.A. 2A:58C-4 will be

42a

conclusive on remand. We believe Lederle overstates the

import of the statute.

Section four of the Products Liability Law, N.J.S.A.

2A:58C-4, creates a rebuttable presumption that a warning

or instruction is adequate “‘if the warning or instruction

given in connection with a drug * * * has been approved

or prescribed by the federal Food and Drug Administra-

tion.’’ The section also defines adequate warning as fol-

lows:

—

An adequate product warning or instruction is one

that a reasonably prudent person in the same or sim-

ilar circumstances would have provided with respect

to the danger and that communicates adequate infor-

mation on the dangers and safe use of the product,

*** in the case of prescription drugs, taking into

account the characteristics of, and the ordinary knowl-

edge common to, the prescribing physician.

(Ibid. ]

Because the legislation affects the weight to be given FDA

approval but does not change the burden of proof, it would

apply to this cause on remand. N.J.S.A. 2A:58C-1 (section

8, not codified, provides for immediate effect); see Shackil

v. Lederle Laboratories, 116 N.J. 155, 214 (1989) (O’Hern,

J., dissenting).

The actual effect of the statute, however, is less clear.

Its plain language defies the conclusion that the presump-

tion cannot be overborne. Once the determination goes to

the jurors, irrespective of an instruction from the court,

they are free to disregard evidence of ‘‘approval’’ by the

FDA. Cf McCormick on Evidence § 344, at 978-79 (E.

Cleary 3rd ed. 1984) (discussing instructions to jury when

there is a presumption). Moreover, the statutory provision

was enacted in the context of present FDCA, PHSA, and

regulatory provisions that explicitly require warning of

possible adverse side effects as soon as reasonably feasible

43a

and based on “reasonable evidence.” See 21 C.F.R.

§ 201.57(e) (1990). Consequently, under the unique circum-

stances of this case, compliance with the ‘‘determination”’

of the FDA not to require a warning for Declomycin due

to the lack of ‘“‘unequivocal factual evidence of adverse

reaction in man,” although evidence of the adequacy of

the labeling, should not be accorded the same presumptive

weight now given to warnings approved or prescribed by

that agency, and certainly does not create a conclusive

presumption that the labeling contained an adequate warn-

ing.

VI

We hold that Lederle has failed to establish that civil

tort liability is precluded because of an actual conflict with

federal law and regulations. The case is remanded to the

Appellate Division for consideration of those issues raised

before that court but not addressed by it.

Chief Justice Wilentz and Justices Handler, Pollock,

O’Hern, and Stein join in this opinion. Justice Garibaldi

filed a separate dissenting opinion.

44a

SUPREME COURT OF NEW JERSEY

A-93 September Term 1990

CAROL ANN FELDMAN,

Plaintiff-Appellant,

v.

LEDERLE LABORATORIES, a Division of American

Cyanamid Company, a Maine corporation doing business

in the State of New Jersey,

Defendant-Respondent.

GARIBALDI, J., dissenting.

The majority’s narrow view of this case and the role of

the Food and Drug Administration (FDA) prevent it from

understanding the untoward implications its decision could

have on the health of the many members of our society

other than Carol Ann Feldman. The process that allows

a prescription drug to be developed, tested, and marketed

involves a complex balancing of the medical needs of every-

one in our society against the risk that such drugs may

present to any one person in that society. The majority’s

opinion upsets that balance.

Bad public policy emerges from the majority’s intrusion

into the field of prescription drug regulation. Its decision

jeopardizes research and development of new drugs. It also

will increase the cost of marketed drugs, thus escalating

the nation’s already spiraling health-care costs. Pharma-

ceutical manufacturers will be reluctant to develop and

market drugs, in some instances, either withholding or

withdrawing them from the market. People who need the

drugs will be deprived of them because they are either

not available or too expensive. Either way the public suf-

fers. For those reasons, and because I am convinced that

the majority introduces an unnecessary and unreasonable

degree of confusion in this highly regulated area, I dissent.

45a

I

Congress gave the FDA an explicit mandate ‘‘to act as

both a public health promoter by facilitating the approval

of important new safe and effective therapies, and as a

public health protector, by keeping off or taking off the

market drugs not shown to meet safety and efficacy stand-

ards.” 50 Fed. Reg. 7452 (1985) (emphasis added). The

FDA’s mission is to ensure that each drug’s “benefits

outweigh its risks.’’ Jd. at 7469. The FDA must balance

the “‘expected therapeutic gains” of each drug against the

“risks entailed by its use.’’ United States v. Rutherford,

442 U.S. 544, 555, 61 L.Ed. 2d 68, 79 (1979). The FDA

cannot fulfill its role if state courts are allowed to require

certain actions by pharmaceutical manufacturers that are

prohibited under federal law and that supplant, rather than

supplement, the carefully-considered regulations of a fed-

eral government agency. See Rose-Ackerman, Tort Law in

the Regulatory State, in P. Schuck, Tort Law and the Pub-

lic Interest: Competition, Innovation and Consumer Wel-

fare 80, 100 (1991) (hereinafter Ackerman) (‘Retaining

conventional tort actions in the face of regulatory statutes

can undermine the behavioral impact of [those] statutes.’’).

To enable the FDA to make those risk-utility determi-

nations, Congress gave control to the FDA over virtually

“every aspect of drug formulation, production, testing and

labeling.”” Comment, Federal Preemption of Prescription

Drug Labeling, 22 J. Marshall L. Rev., 629, 656 (1989)

(hereinafter Comment, Federal Preemption). The FDA pro-

motes and protects health through a pervasive regulatory

system that is exacting and time consuming. Even today

‘“{p]harmaceutical product development is a long, tedious

and expensive process ... development time now averages

twelve years.’”’ Comment, Developing, Testing and Mar-

keting An Aids Vaccine: Legal Concerns for Manufacturers,

139 U. Pa. L. Rev. 1077, 1083 (1991) (Comment, Legal

Concerns for Manufacturers).

46a

In making its risk-utility analysis the FDA relies on a

greater accumulation of information and expertise about

the subject drug than can be found anywhere else. ‘‘The

FDA has developed the highest level of competence in

pharmaceutical investigation in the world.’’ Comment, F'ed-

eral Preemption, supra, 22 J. Marshall L. Rev. at 629.

As was noted in 1967,

[tloday, side-effect data from numerous sources

feeds into the FDA’s Information Center on Ad-

verse Reactions and Hazards, where it is studied

and catalogued. Some 6600 hospitals supply the

FDA with drug information. The agency also col-

laborates with the AMA central registry of ad-

verse reactions, which receives drug news from

hospitals not reporting to the FDA and from doc-

tors in private practice. All federal medical ser-

vices and agencies send side-effect reports to the

FDA, and eight countries will exchange infor-

mation through an international center created

by the World Health Organization to provide a

worldwide early warning system for new drugs.

[Ruge, Regulation of Prescription Drug Advertis-

ing: Medical Progress and Private Enterprise, 32

Law & Contemp. Probs. 650, 659-60 (1967).]

See also 50 Fed. Reg. 7476-77 (1985) (calling for physicians

to provide the FDA with direct information concerning

suspected adverse reactions to drugs by means of form

called Drug Experience Report (DER) or Form 1639). In

addition to reaching out for such information, the FDA

investigates and prosecutes violations and publishes

“monthly reports on adverse reactions and a weekly jour-

nal of literature abstracts, which are sent to competing

hospitals and other groups.’”’ Ruge, supra, 32 Law & Con-

temp. Probs. at 660.

‘“{Blecause drug labeling is intended to advise health

care professionals about potential hazards in the use of a

47a

drug and convey documented statements about its safety,”’

44 Fed. Reg. 37,447 (1979), the FDA also makes a risk-

utility determination about drug labeling. Because of its

importance, drug ‘‘labeling’’ is expansively defined and ex-

tensively regulated by the FDA.

“Labeling” is defined to include ‘all labels or other

written, printed, or graphic matter’? on the container or

“accompanying such article.’ 21 U.S.C.A. §321(m).

‘A]ecompanying such article’’ means any information that

“supplements or explains” the labeling and “‘[nJo physical

attachment one to the other is necessary.” Kor'del v. United

States, 335 U.S. 345, 350, 93 L.Ed. 52, 57, reh’gs. denied,

335 U.S. 900, 93 L.Ed. 435 (1948), and 336 U.S. 911, 93

L.Ed. 1075 (1949). The “‘textual relationship” of the com-

munication to the article is what is significant. Jbd. Thus,

package inserts and all other communications to physicians

with respect to the use or safety of the drug are consid-

ered to be ‘“‘labeling’’ subject to FDA approval.

Even today, the FDA allows “labeling statements with

respect to safety [only] if they are supported by scientific

evidence,” 44 Fed. Reg. 37,441 (1979). It demands that

the ‘‘pharmacological information’’ in the label be ‘“‘clini-

cally relevant,’’ id. at 37,442, and warn only of “known

hazards and not theoretical possibilities.” 21 C.F.R.

§ 201.57(d) (1991). The FDA has determined that a warn-

ing may not include a “statement of differences of opinion

with respect to warnings (including contraindications, pre-

cautions, adverse reactions, and other information relating

to possible product hazards) required in labeling food,

drugs, devices, or cosmetics under this act,’ 21 C.F.R.

§ 1.21(c) (1991) (emphasis added). Simultaneously, following

its “long-standing agency policy,’”’ the FDA demands that

drug manufacturers continuously report to the FDA any

unexpected or new side-effects, adverse reactions, or tox-

icity, ‘‘whether or not considered to be caused by the drug

in question.” 50 Fed. Reg. 7476 (1985). The FDA decision

that a drug label is “‘an authoritative docwment which con-

48a

tains only those indications and usages which are based

upon substantial evidence,”’ 40 Fed. Reg.15,394 (1975) (em-

phasis added), reflects a conscious policy choice that cer-

tain information it gathers not be included in drug labeling.

Despite their portrayal by the majority, today’s pre-

scription drug manufacturers enjoy only a “very limited

freedom,” a freedom not enjoyed at all before 1965, to

make temporary, conditional labeling changes. Note, Fed-

eral Preemption: A Vaccine Manufacturer’s Defense, 56 U.

Mo.-K.C. L. Rev. 515, 529 (1988) (hereinafter Note, A Vac-

cine Manufacturer’s Defense). Even that freedom evapo-

rates once the FDA has ruled. See ibid. The FDA must

enforce its best assessment of the proper risk-benefit bal-

ance because of the unique concerns associated with phar-

maceuticals.

Prescription drugs are unlike typical consumer goods,

on which stringent warnings of possible dangers have no

appreciable negative impact on the utility and use of the

product and should rarely be omitted. See, e.g., Freund v.

Cellofilm Properties, Inc., 87 N.J. 229, 242 (1981). Phar-

maceuticals also differ from some other products, such as

cigarettes, in respect of which a negative impact on ‘‘util-

ity’”’ or use is not only a tolerated byproduct of a warning

but often a targeted goal. See, e.g., Dewey v. R.J. Reynolds

Tobacco Co., 121 N.J. 69, 100 (1990) (noting legislative

attempts to discourage smoking); see also Recent Devel-

opment, Tort Law—Strict Products Liability—New Jersey

Supreme Court Preserves Claims Against Tobacco Com-

panies—Dewey v. R. J. Reynolds Co., 121 N.J. 69, 577

A.2d 1239 (1990), 104 Harv. L. Rev. 1728, 1727 (1991)

(“A second defense of strict liability * * * argues that forc-

ing the industry to internalize the health costs of smoking

will raise cigarette prices and thus encourage smokers to

cut back or quit.’’) Despite those differences the majority’s

analysis proceeds uninfluenced by the conflicting policy

considerations this case presents.

49a

The uses and benefits of prescription drugs like Declo-

mycin, and the analysis of those uses and benefits, differ

markedly from an appraisal of the social benefits of paint

mixers or cigarettes. See Brown v. Superior Court, 44 Cal.

3d 1049, 1063, 751 P.2d 470, 478-79, 245 Cal. Rptr. 412,

420 (1988) (decision in any given pharmaceutical case must

recognize and reflect broad policy considerations occa-

sioned by ‘important distinction between prescription drug

and other products’). Warning of the possible but not

scientifically-verifiable side-effects of prescription drugs can

have a significant anti-utilitarian effect, especially if re-

quired only in certain states. Cf. ibid. (‘broader public

interest in availability of drugs at affordable prices must

be considered in deciding appropriate standards of liability

for injuries resulting from their use’’ because beneficial

drugs are necessary despite fact that ‘“‘harm to some users

is unavoidable’). As the FDA has said, “{t]o permit or

require statements of conflicting opinion on all these mat-

ters would destroy the present usefulness of prescription

drug labeling.” 39 Fed. Reg. 33, 232 (1974). It would also

destroy the FDA’s hope of “ ‘bringing consistency and

uniformity to the marketplace’’”’ or of succeeding in its

‘ ‘well-established policy of promoting uniformity in the

area.’ ’’ See Comment, Legal Concerns for Manufacturers,

supra, 139 U. Pa. L. Rev. at 117 n.190 (quoting 51 Fed.

Reg. 8181 (1986), and 50 Fed. Reg. 51,403 (1985), respec-

tively).

The FDA has expressed two serious concerns about drug

labeling. First, it has an interest in “rational prescribing,”’

1.@., ensuring that the risks and benefits of a particular

drug be fairly presented so that a physician can compare

them with other available therapies. That goal is not ad-

vanced if a drug is made to appear riskier than other

drugs and other therapies due to the over-dramatization

of risk information. To allow a warning based on incon-

clusive evidence or scientific hunches results in doctors not

50a

prescribing effective drugs to a patient because of the

erroneous belief that a side-effect might occur.

In addition to promoting ‘“‘rational prescribing,” the FDA

must prevent “information overload.” As one court has

noted:

The quality of evidence supporting a causal con-

nection between product and injury may change

from extremely vague to highly certain. * * * [I]f

every report of a possible risk, no matter how

speculative, conjectured, or tentative, imposed an

affirmative duty to give some warning, a man-

ufacturer would be required to inundate physi-

cians indiscriminately with notice of any and

every hint of danger, thereby inevitably diluting

the force of any specific warning given.

[Finn v. G.D. Searle & Co., 35 Cal. 3d 691, 701,

677 P.2d 1147, 1153, 200 Cal. Rptr. 870, 876

(1984). ]

The FDA has legitimate concerns that information over-

load may lead physicians to ignore drug labels or package

inserts or to read them without any intention of modifying

their prescription practices because substantial parts of

what they have found in them in the past had not been

useful or had later been disproved. See Note, A Question

of Competence: The Judicial Role in the Regulation of Phar-

maceuticals, 103 Harv. L. Rev. 773, 783 (1990) (hereinafter

Note, Pharmaceutical Regulation).

The FDA has an interest in promoting health. Ensuring

that drug scares do not occur and that unsubstantiated

claims, good or bad, do not appear on the label is a way

of achieving that goal. Even today, under 21 C.F.R.

§ 310.303(a) (1991), the FDA receives information regard-

ing every possible side-effect, but issues warnings based

only on reasonable evidence, because “‘statements of con-

flicting opinion * * * would destroy the present usefulness

5la

of prescription drug labeling.” 39 Fed. Reg. 33,232 (1974).

That policy balance represents the expert appraisal of how

best to maximize aggregate health benefits. The dual func-

tion of the FDA ensures that drug companies produce and

market medications that ‘‘decrease aggregate health risks

as safely and inexpensively as possible,’’ Note, Pharma-

ceutical Regulation, supra, 103 Harv. L. Rev. at 780, be-

cause “‘Americans insist on the best available medications

to treat those suffering from illness.’”” Comment, Federal

Preemption, supra, 22 J. Marshall L. Rev. at 629.

Against that background, we review this case.

II

wie

I agree with the Appellate Division. Although the com-

prehensive nature of FDA regulations and the national

goal of uniformity in drug labels tempts me to find implied

preemption, I need not reach that issue here. The Appel-

late Division’s narrower holding disposes of this case and

addresses those concerns that force me to disagree with

my colleagues:

We conclude that the Food and Drug Administration’s

(FDA) regulation of the drug industry does not war-

rant a finding of implied federal preemption of all

State tort claims grounded in strict liability failure to

warn. However, under certain circumstances, such as

presented here, federal law may preempt a discrete

issue upon which liability is predicated because com-

pliance with State decisional law would require federal

law to be violated.

[234 N.J. Super. at 564.]

“‘[E]ven in the absence of express language on implied

congressional intent to occupy the field, state law may be

preempted ‘to the extent that it actually conflicts with

52a

federal.’”’ Dewey, supra, 121 N.J. at 78 (quoting Brown

v. Hotel Employees Int’l Union, 468 U.S. 491, 510, 82

L.Ed. 2d 373, 383 (1984)). Federal regulations have the

same preemptive effect as federal statutes, Hillsborough

County v. Automated Medical Laboratories, Inc., 471 U.S.

707, 713, 85 L.Ed. 2d 714, 721 (1984), and state common

law and state statutory law stand equally subject to

preemption. Chicago N.W. Transp. Co. v. Kalo Brick &

Tile Co., 450 U.S. 311, 325-26, 67 L.Ed. 2d 258, 270 (1981).

I agree with the Appellate Division that the ‘‘clear word-

ing” of the regulations in place before 1965 prevented the

defendant, Lederle Laboratories, from complying with the

common-law duty this Court now imposes on it. 234 N.J.

Super. at 588; see Roginsky v. Richardson-Merrell, Inc.,

378 F.2d 832, 835, 848 (2d Cir. 1967) (interpreting pre-

1965 regulations to require prior FDA approval before a

labeling change could be made); Miller v. Upjohn Co., 465

So. 2d 42, 45 (La. Ct. App. 1985) (same), cert. denied, 467

So. 2d 533 (1985) (same); see also Hurley v. Lederle Lab-

oratories, 863 F. 2d 1173, 1179, modifying 851 F. 2d 1536,

1542 (5th Cir. 1988) (because it is ‘[mJost important [that]

the manufacturers cannot change the language in the prod-

uct insert without FDA approval,” court found that direct

conflict preempted adequacy of warning issue as long as

Lederle had met its duty to disclose all relevant infor-

mation to FDA).

The plain wording of the two regulations relevant here

support that position. The first, 21 C.F’.R. § 130.9(a) (1960),

states in part:

A supplemental application should be submitted for

any change beyond the variations provided for in the

application * * * that may alter the conditions of use,

the labeling, the safety, identity, strength, quality or

purity of the drug * * *. Labeling changes include

deviations from the authorized brochure in any mail-

ing or promotional piece used after the drug is placed

53a

on the market. When necessary for the safety of the

drug, a supplemental application may be required to

specify a period of time within which the proposed

change will be made; and in such case the distribution

of the drug after such time without such change con-

stitutes distribution without an effective new-drug ap-

plication. If a material change is made in the * * *

labeling or advertising{] from the representations in

an effective application for a new drug, and the drug

is marketed before a supplement is effective for such

change, the application may be suspended under

§ 130.27 on the grounds that it contains an untrue

statement of a material fact.

The other regulation of primary relevance, which defined

the FDA’s position on the certification of batches of an-

tibioties, stated:

(b) A certificate shall cease to be effective:

*_ * *& *

(2) With respect to any immediate container * * *

when its label or labeling is altered, mutilated, de-

stroyed, obliterated, or removed in whole or in part,

or ceases to conform to any labeling requirement pre-

scribed by the regulations in this part, except that:

(i) If the drug in such container is repacked * * *,

and certification of the batch thus made is requested,

such certificate shall continue to be effective for a

reasonable time * * * ; [or]

s_ * & *

(iii) If its label or labeling is removed in whole or in

part for the purpose of relabeling and supplemental

certification of the relabeled drug is requested, as

provided by § 146.18.

(21 C.F.R. § 146.4 (1955).]

54a

Each of those regulations clearly indicates the need to

obtain approval before altering labels. See L. Tribe, Amer-

ican Constitutional Law § 6-26 at 482 (1988) (Implication

can still amount to direct preemption because “state and

federal law need not be contradictory on their face for the

latter to supersede the former. There are more subtle

forms of actual conflict.’’).

Subsequent history also discloses that Lederle could not

alter its label without approval under the FDA regulations

governing changes in drug labeling in effect during 1962

and 1963. In January 1965, the FDA amended the form

of the New Drug Application prescribed in 21 C.F.R.

§ 130.4 (1956), and the requirement of filing a supplemen-

tal application set forth in 21 C.F.R. § 130.9 (1960), to

allow a manufacturer to incorporate additional warnings

of side-effects in its labeling prior to receiving a written

notice of approval of the supplemental new drug appli-

cation from the FDA. See 30 Fed. Reg. 993 (1965). In

Feldman v. Lederle Laboratories, 97 N.J. 429 (1984) (Feld-

man I) we mistakenly suggested, on an incomplete record,

that those amendments might have merely clarified exist-

ing procedures. Id. at 459. We know now that that is not

so. The former Commissioner of the FDA explained that

the regulations were ‘“‘amended *** to enable prompt

adoption” of changes,’ and that the amendments were

intended to “relax existing requirements.” 30 Fed. Reg.

993-94 (1965) (emphasis added).

History is particularly telling in the case of antibiotics.

Although Congress immediately recognized that antibiotics

‘are spectacularly efficacious in many serious diseases suf-

fered by large numbers of our population,’ it was very

concerned about the complicated manufacture and safe use

of antibiotics. Hearings Before a Subcommittee of the House

Committee on Interstate and Foreign Commerce, 81st

Cong., lst Sess. 5 (1940). Accordingly, Congress imposed

on antibiotics “‘even n.ore stringent regulations” than those

generally irmposed on prescription drugs. See Pfizer, Inc.

55a

v. Richardson, 434 F.2d 536, 538 (2d Cir. 1970). After the

initial approval of an antibiotic, but not other drugs, the

manufacturer was required to request certification of each

batch before it was marketed. See 21 C.F.R. §§ 146.2 &

146.3 (1963). Thus, before a batch of antibiotic could be

certified, the FDA was required to find affirmatively that

the labeling did not contain any ‘“‘untrue statement of a

material fact,” that it contained ‘“‘all words, statements,

and other information required by the regulations,” and

that it otherwise met all the statutory standards for ad-

equate warnings. See 21 C.F.R. §§ 146.3 & 146.4 (1963).

Moreover, the FDA precluded drug manufacturers from

altering approved labeling in any respect without prior

authorization. The certification of any batch of antibiotics

was immediately void if the “labeling [had been] altered

*** in whole or in part, or [had ceased] to conform to

any labeling requirement.” 21 C.F.R. § 146.4(b) (2) (1963).

Even the 1965 amendments did not change the batch cert-

ification requirements applicable to antibiotics. Only in 1966

did the FDA modify its antibiotic regulations to allow man-

ufacturers to use ‘‘mailing and promotional pieces that are

essentially the same as the previously approved labeling”

without ‘‘advance approval’’ from the agency. 31 Fed. Reg.

11,415 (1966). In explaining that change, the then-Com-

missioner of FDA stated that “heretofore, the regulations

have required specific advance approval of each mailing

piece.” Ibid. (emphasis added). Except for that minor

change, however, the FDA approval procedures for changes

in antibiotic labeling remained intact.

The FDA’s intent to prevent pharmaceutical manufac-

turers from changing drug labels without the FDA’s ap-

proval is confirmed by the regulations. See Grove City

College v. Bell, 465 U.S. 555, 567, 79 L.Ed. 2d 516, 528

(1984). The 1965 amendments “relaxe[d]’’ existing stand-

ards and “‘enable{d]’’ manufacturers to take previously-

prohibited actions. See 30 Fed. Reg. 993-94 (1965). Neither

did the FDA then, nor does it now, believe ‘warning of

56a

possible dangerous side effects * * * [to be] consistent with

its primary purpose.”’ Ante at —— (slip op. at 41-42) (em-

phasis added). Labels should warn only of “‘known hazards

and not theoretical possibilities,” 21 C.F.R. § 201.57(d)

(1991) (emphasis added), and these ‘‘warnings” should de-

scribe only those ‘‘adverse reactions” and ‘‘safety hazards’’

that have a demonstrated ‘‘association’’ with the subject

drug. 21 C.F.R. § 201.57(e) (1991).

-B-

The facts also support the position that if Lederle had

piaced on its label for Declomycin the additional warning

now required by the majority, it would have been in direct

conflict with the FDA’s strict drug-labeling regulations.

I agree with much of the majority’s discussion of the

facts, including the observation that the ingestion of De-

clomycin during the developmental stages of plaintiff's

teeth caused the injury alleged here. However, I highlight

those facts that are most salient to the present inquiry.

Tetracyclines, a generic label for a group of antibiotics,

of which Declomycin is one,! marked a great advance in

the fight against bacterial infections. See United States v.

An Article of Drug, 394 U.S. 784, 785, 22 L.Ed. 2d 726,

729 (1969) (describing tetracyclines as “wonder drugs’’).

‘“‘A primary benefit of tetracyclines is that they are ef-

fective against a wider variety of organisms than are other

antibiotics.”” Ante at __ (slip op. at 3).

Declomycin ‘“‘had greater antibiotic potency that made

it possible to achieve therapeutic activity with less

weight of antibiotic,” *** it had ‘‘a reduced renal

clearance rate that produced a prolongation of the

antibacterial level in the body,’ and *** it was

“therapeutically equally effective as other tetracy-

‘1 Declomycin is the trade name used by Lederle for demethylchlor-

tetracycline, a tetracycline analogue.

57a

clines in infections caused by organisms sensitive to

the tetracyclines.”

(Ibid. (quoting Feldman I, supra, 97 N.J. at 436.]

Those proven qualities made Declomycin a beneficial ad-

dition to medical-treatment programs throughout this coun-

try when it was introduced in 1959.

In 1962, defendant began to receive anecdotal reports

regarding a possible link between the use of tetracycline

by children during their developmental years and the sub-

sequent yellowing of some users’ teeth. Lederle quickly

notified the FDA of the possible link and proposed a warn-

ing label. The FDA responded that it had been ‘“‘devoting

a great deal of attention to the matter” over ‘‘the past

several months” Letter from FDA to Lederle (Dec. 3,

1962). The FDA had received reports ‘‘of this type from

here and abroad,” and, although it was “acutely inter-

ested’”’ in the problem and was ‘“‘fully aware of the im-

portance of the various implications of this problem,’ it

did not order Lederle to augment or alter its current label.

Ibid.

Defendant continued to supply information to the FDA

during the agency’s research on Declomycin. In early 1963,

the FDA directed that a warning label be placed on certain

tetracycline analogues to alert users to a demonstrated

link between these drugs and tooth staining. The FDA had

removed the generic label ‘‘tetracycline’”’ from its proposed

warning and specifically excluded Declomycin because there

was “practically no specific clinical evidence to substan-

tiate such a labeling requirement.”’ Thus, the FDA refused

to approve immediately Lederle’s desired warning for De-

clomycin’s labeling, and it further forced Lederle to ex-

clude its originally-approved blanket statement from

declomycin labeling because there was insufficient infor-

mation to ‘‘substantiate” the clinical association necessary

to support such a labeling requirement.

58a

On April 18, 1963, the FDA issued the following press

release to all medical and dental journals, and to the gen-

eral media, with respect to tooth discoloration and tetra-

cyclines. That release, in pertinent part, said:

“Children’s teeth can be seriously discolored by three

types of tetracycline antibiotics,” the Food & Drug

Administration said in a message to physicians and

dentists.

“The three drugs are: tetracycline, chlortetracycline,

and oxytetracycline. There is no evidence that a fourth

drug, [Declomycin] causes the discoloration,” F'DA

said.

[Emphasis added.]

Thus, if Lederle had issued the warning required by the

majority, it would not only have proceeded without the

FDA’s approval of its desired warning, it also would have

directly contradicted the public position of the FDA. Cf.

L. Tribe, supra, § 6-26 at 483 (state law will be preempted

“if its effect is to discourage conduct that federal action

specifically seeks to encourage’’).

Accordingly, this record unambiguously demonstrates a

direct conflict. The majority need not search it out. It

emerges clearly from the totality of the evidence in this

record.

-C-

The majority’s opinion’s assumptions and inferences have

no basis in the record. The majority unfairly casts Lederle

as a scheming dissembler that provided evasive answers

and caused some sort of knowing delay in FDA decisions

by suppressing information. Were that true, my position

here might be different. Cf. Silkwood v. Kerr-McGee Corp.,

464 U.S. 238, 257, 78 L.Ed. 2d 443, 458 (1984) (when

“federal standards have been violated,’ paying both fed-

59a

eral administrative fines and state tort damages does not

“frustrate any purpose” of a pervasive federal scheme). I

would not countenance a result that insulated a manufac-

turer who violated federal standards by delaying or dis-

rupting, through action or inaction, the flow of information

to the FDA, by refusing to investigate independently the

possibility that its drugs were harmful, or by using ad-

ministrative delay as an opportunity to unload on the pub-

lic drugs known to be unsafe. See Hurley, supra, 863 F.2d

at 1179-80.

However, nothing like that occurred here. Lederle vio-

lated no federal standards—indeed, Lederle went so far

beyond mere adherence that it drew praise from the FDA.

Although Lederle certainly had information implicating a

potential connection between tooth staining and tetracy-

clines, no one, including the FDA, “could * * * come to

any conclusions as to what exactly was going on,” ac-

cording to one witness. Another witness noted that De-

clomycin, unlike two other tetracycline analogues, had not

been demonstrably linked to tooth discoloration by 1963.

Another witness stated that Declomycin had “initially

[been] thought to have even less effect on tooth staining

than the original tetracyclines.” Moreover, Lederle warned

its sales staff not to use the FDA’s exemption of Declo-

mycin from its order for revised warnings to gain market

advantage. I see no evasion in the answer ‘“Declomycin

has not as yet been officially implicated in tooth staining.”

(Lederle memorandum dated April 23, 1963) (emphasis

added). Indeed, the modifying language ‘‘as yet’ and “of-

ficially” indicates even to the most unsophisticated phy-

sician that that status might change. Despite that evidence,

the majority makes the unsupported assumption that evi-

dence that would have demonstrated a known hazard and

not a theoretical possibility would ‘‘not then have been

available to the FDA,” ante at (slip op. at 9), yet

existed for Lederle. Indeed, the record shows just the

opposite. The FDA’s information-gathering mechanisms

60a

were pervasive even in the 1960s—they reached into the

experiences of manufacturers, hospitals, and doctors’ of-

fices. See Ruge, supra, 32 Law & Contemp. Probs. at 659-

60. The evidence had not yet convinced the FDA; that

does not mean that it was concealed from the FDA.

Ill

The exclusion of Declomycin from the original list of

tetracycline analogues that had to carry a label warning

against tooth staining was not merely ‘‘an unfortunate

turn of events.”’ Ante at (slip op. at 48). It was a

deliberate administrative response by the FDA. Available

information did not substantiate such a labeling require-

ment.

The Court’s single-case focus inevitably diverts any risk-

benefit analysis away from the proper medication-market

balance to an improper medication-patient one. Unlike cig-

arette cases, in which the offending substance provides

neither society nor the individual with any appreciable

medical benefit, pharmaceutical cases demand the most

accurate risk assessment possible:

(I]n the event that the tort system fails to assess

appropriately the relative risk calculus, and thereby

deters the development, forces the removal, or skews

the pricing of medications that lower aggregate harm,

certain individuals will be unable to receive net ben-

eficial medications. As such, total harm wiil increase.

* * * Although the tort system undeniably provides

the only compensation for some individuals, tort law

in the pharmaceutical context distorts the availability

and price of beneficial medications, thereby harming

more individuals in the first instance.

[Note, Pharmaceutical Regulation, supra, 103 Harv.

L. Rev. at 784-85.]

Announcing such fears is neither crying wolf nor aping

Chicken Little. ‘‘The histories of Oculinum, Bendectin and

6la

DPT vaccine symbolize a developing crisis in health care.”’

Id. at 775. The manufacturers of Oculinum could not obtain

insurance on the drug, and hence it could not be marketed,

despite six years of experimental success in treating eye

problems. Id. at 774; see also Brown, supra, 44 Cal.3d at

1065, 751 P.2d at 480, 245 Cal. Rptr. at 421 (‘a manu-

facturer was unable to market a new drug for the treat-

ment of vision problems because it could not obtain

adequate liability insurance at a reasonable cost’’). The

story of Bendectin illustrates how net health benefits can

be evaporated by non-expert juries without any demon-

strable basis.

Bendectin is a drug effective in remedying the diffi-

culties of morning sickness. The drug continues to

enjoy the approval of the FDA, and studies have con-

sistently concluded that the drug is safe. Nonetheless,

Bendectin became such a popular target for tort law-

suits alleging that it was responsible for birth defects

that the drug’s manufacturer withdrew it—the only

available morning sickness medication—and submitted

to a $120 million class action settlement. Although

the manufacturer had not lost a case on appeal,

‘{slince even wins were only adding to the costs of

defense, the company * * * decided to settle.’’

[Note, Pharmaceutical Regulation, supra, 103 Harv.

L. Rev. at 774 (quoting “Morning Sickness, Legal Mis-

carriage,’ N.Y. Times, July 30, 1984, at A20, col. 1).]

The diphtheria-pertussis-tetanus (DPT) vaccine saga is a

bit more complicated but no less revealing. At one time,

pertussis, or whooping cough, ‘‘was a major cause of child-

hood morbidity and mortality in the United States.” Note,

A Vaccine Manufacturer’s Defense, supra, 56 U. Mo.-K.C.

L. Rev. at 519. It caused 36,013 deaths and over 800,000

cases between 1926 and 1930. Ibid. Because of the de-

velopment and use of an effective vaccine, no more than

3,000 cases a year, and between five and twenty deaths

62a

a year, were reported from 1960 to 1982. However, the

disease may ravage our children again—‘‘skyrocketing lit-

igation costs,” id. at 516, prompted seven of the eight

DPT vaccine manufacturers to withdraw from the market

and caused the price per dose to rise from 11¢ to $11

between 1981 and 1986. Note, Pharmaceutical Regulation,

supra, 103 Harv. L. Rev. at 775 n.10; see also Viscusi &

Moore, “‘Rationalizing the Relationship Between Product

Liability and Innovation,” P. Schuck, supra, at 111. (‘‘Ris-

ing liability costs” caused ten of the thirteen manufactur-

ers of vaccines for five serious childhood diseases to cease

production between 1981 and 1990). These are events with

which we are familiar. See Schackil v. Lederle Laborato-

ries, 116 N.J. 155, 178-80 (1989). Drug manufacturers re-

fused to supply a newly discovered vaccine for influenza

on the ground that mass innoculation would subject them

to enormous liability. The government therefore assumed

the risk of lawsuits resulting from injuries caused by the

vaccine. See Feldman v. Lederle Laboratories, 189 N.J.

Super. 424, 435-36 (App. Div. 1983); Franklin & Mais, Tort

Law and Mass Immunization Programs, 65 Calif. L. Rev.

754, 769 (1977).

The majority’s view of the issue of “what choices, if

any, did Lederle have in 1962 and 1963,” ante at —_ (slip

op. at 46), demonstrates its failure to understand the im-

portance of risk utility analysis in the development and

marketing of prescription drugs. It determines that Led-

erle could have discontinued the production or raised the

price to cover its potential liability. Ignored entirely in the

majority’s assessment is the effect the drug’s removal from

the market or its increased price will have on the nu-

merous people who are helped by the drug. The majority

does not consider the good the drug does, the lives it may

save, or the suffering and pain it may prevent. The ma-

jority’s suggestion that suspending production or raising

the price of Declomycin in response to then-unverified pos-

sibilities ignores the widespread disutility of such practices,

lee

63a

especially if the possibilities proved to be false alarms.

Drugs would go unproduced or produced only at high

prices: each prevents many in need from using them.

That is not an unrealistic appraisal. To assume or posit,

as the majority does, that tort liability judgments do not

have a profound regulatory effect on the prescription drug

market is naive. As noted by the California Supreme Court,

“the possibility that the cost of insurance and of defending

lawsuits will diminish the availability and increase the price

of pharmaceuticals is far from theoretical.’ Brown, supra,

44 Cal.3d at 1064, 751 P.2d at 479, 245 Cal. Rptr. at 421;

see also id. at 1065, 751 P.2d at 480, 245 Cal. Rptr. at

421 (rejecting a failure-to-warn claim for the ‘‘same rea-

sons of policy” that led court to reject strict liability). In

Shackil v. Lederle Laboratories, we recognized the ‘“im-

portant societal goals of maintaining an adequate supply

of life-saving vaccines and of developing safer alternatives

to current methods of vaccinations.’’ 116 N.J. at 190. In

finding for the defendant, we stated that ‘our aim is not

to insulate vaccine manufacturers from liability, but to

acknowledge a painful reality—that the excessive exposure

to liability * * * would inevitably discourage highly useful

activity.”” Jd. at 190-91. Whatever the validity of the “in-

cidental effects’ distinction of Dewey, supra, 121 N.J. at

90-94, the examples of Oculinum, Bendectin, and DPT vac-

cine demonstrate that the prescription-drug market has

directly felt the regulatory effect of the threat or payment

of court-awarded damages. Brown, supra, 44 Cal. 3d at

1064-65, 751 P.2d at 479, 245 Cal. Rptr. at 421 (noting

300% increase in cost of Bendectin and “‘hundredfold”

increase in price of DPT vaccine that parallelled increase

in lawsuits from one in 1979 to 219 in 1985).

[T]he tort system undermines the availability of phar-

maceuticals. Even in the absence of liability judg-

ments, the mere fear of astronomical liability may

render a drug uninsurable and consequently unmar-

ketable. In the event that a beneficial drug does reach

64a

the market, but becomes the target of tort suits, lit-

igation costs alone may force the manufacturer to

withdraw its product. Moreover, actual or potential

tort liability, even if it does not force the removal of

a medication from the market can have marked ef-

fects on pricing and production.

(Note, Pharmaceutical Regulation, supra, 103 Harv.

L. Rev. at 774-75.]

Awarding compensatory damages certainly does have a

regulatory effect. See Shackil, supra, 116 N.J. at 190-91;

see also Ackerman, supra, at 93 (if manufacturers surpass

“the optimal agency standard” of care because of fear of

damage awards, “marginal costs” of production will “‘ex-

ceed marginal benefits,’ producing “regulatory effect’

from “purely compensatory damages’’).

Congress empowered the FDA alone to set that “‘op-

timal’’ level—i.e., to make the necessary risk/benefit anal-

ysis involved in the marketing of prescription drugs.

Congress understood that “there is no such thing as ab-

solute safety in drugs.’ Hearings on Drug Safety Before

the Subcomm. on Intergovernmental Relations of the House

Comm. on Government Operations, 88th Cong., 2d Sess.

147 (1964) quoted in Note, Pharmaceutical Regulation, su-

pra, 103 Harv. L. Rev. at 773. Yet, Congress created and

continued to support thé’ FDA’s regulatory approach. That

approach calls for extensive pre-marketing testing and risk/

benefit evaluation. It also demands that post-marketing

information be gathered. That post-marketing information,

however, will warrant a withdrawal or a conditioning of

a drug’s continued approval only if there is substantial

evidence demonstrating the necessity of such action. That

is an administrative decision based on a desire to increase

the aggregate health benefits, and on a legitimate ad hoc

risk assessment that holds that once an already-approved

drug has proven sufficiently safe and efficacious in pre-

market studies, the interest in health demands that it not

iia ia

65a

be withdrawn or encumbered until a certain amount of

evidence exists.

A system in which we shun expertise, experience, and

institutional purpose and instead allow a court to change

drug labels after it ‘‘arrogates to a single jury the regu-

latory power explicitly denied to all the fifty states’ leg-

islative bodies” seems strange. Fitzgerald v. Mallinckrodt,

Inc., 681 F. Supp. 404, 407 (E.D. Mich. 1987). Moreover,

jury verdicts discourage the use of important drugs.

Through the media, the public becomes aware of jury ver-

dicts that frighten, and focuses its attention on the side-

effects of the drug without any appreciation of its bene-

ficial results.

IV

Lederle proposed a change in the labeling of Declomycin

to warn of possible tooth staining in November 1962, but

the FDA did not believe that the evidence warranted such

a change and refused to authorize it. In Feldman I, we

wondered if ‘it would [not] seem anomalous for the FDA

to have prevented a drug manufacturer from advising the

public immediately of a newly discovered danger while

waiting for FDA approval.” 97 N.J. at 459. However, the

more substantial record provided by this case demonstrates

that there is nothing at all anomalous about the FDA’s

position—there was no “newly discovered danger”; there

was only a newly-suspected one.

In reviewing Lederle’s November 1962 request to change

the labeling of its tetracycline drugs to warn of possible

tooth discoloration, the FDA balanced the substantial ther-

apeutic benefits that those drugs had in the treatment of

a wide range of bacterial infections against the scientifi-

cally-knowable risks of tooth staining in normal, healthy

children. The FDA also considered the impact that that

warning—if the suspicions about Declomycin proved to be

unfounded—would have on rational prescribing and on the

66a

credibility of side-effect warnings generally. As stated by

Dr. Barzilai of the FDA in his December 3, 1962, letter

acknowledging Lederle’s desire to change its Declomycin

label, the issue had to be reviewed from a ‘“‘medical, sci-

entific [and] regulatory’ point of view before the FDA

could reach “‘any form of final opinion’”’ on the matter.

What has happened in this case is that a lay jury was

instructed by the trial court to second-guess freely those

delicate scientific and policy judgments of the FDA from

a vantage point twenty-five years later. The logic of giving

judicial deference given to the medical judgments of the

FDA and the agency’s own view of its statutory role in

the drug-labeling process is even more compelling when

the issue is the liability of an FDA licensee who has strictly

complied with the agency’s dictates, as occurred here.

The FDA, not courts, must determine the proper bal-

ance of risk and benefit and the necessary extent of any

warnings. To make such broad judgments is peculiarly be-

yond the competence of courts. The FDA, not the courts,

has the assets and abilities both to protect and to promote

health. Indeed,

[since 1938, Americans have looked to the FDA for

assurance of quality in the medicines they take. Pur-

suant to this task, the FDA has developed the highest

level of competence in pharmaceutical investigation in

the, world. Nevertheless, technically incompetent state

court juries are continuing to usurp federal authority

by rejecting FDA standards in product liability cases.

(Comment, Federal Preemption, supra, 22 J. Marshall

L. Rev. at 656.]

Many battles remain to be fought—for example, the fight

against AIDS. See McKenna, The Impact of Product Li-

ability Law on the Development of a Vaccine Against the

AIDS Virus, 55 U. Chi. L. Rev. 943 (1988). “Drug avail-

ability and pricing policies may depend on the ability of

_ ee

67a

manufacturers to limit their own liability. The conse-

quences of these issues extend beyond the AIDS epidemic

and influence the extent to which the drug development

process will be able to respond to disease victims in the

future.”” Comment, Legal Concerns for Manufacturers, su-

pra, 189 U. Pa. L. Rev. at 1078. Those problems convince

me we would be better to trust the decisions made by

experts at the FDA rather than by health novices, such

as jurors or judges.

‘“{I]mplicit in any decision to broaden liability in order

to provide compensation is a judgment that the goals of

public policy will likewise be served.” Shackil, supra, 116

N.J. at 177. By holding Lederle liable despite its strict

adherence to federal law, as understood and applied by

the FDA at the time and despite Lederle’s efforts quickly

to bring to the attention of the FDA, all the information

it had, and despite its cooperation in providing the public

with all relevant, pharmacologically-significant, and veri-

fied information at the earliest possible date, the majority

thwarts the important “societal goals [of] encouraging the

use and development of needed drugs * ** in order to

provide compensation to those injured by [Lederle’s] prod-

ucts.”’ Id. at 178.

Conveying useful, important information on drug label-

ing promotes a vital societal need: the safe and efficacious

use of drugs. However, ‘“[t]o permit or require statements

of conflicting opinion on all these matters would destroy

the present usefulness of prescription drug labeling.’ 39

Fed. Reg. 33,232 (1974). That statement shows that the

FDA does not establish minimum standards—it establishes

uniform ones. Today’s decision requires a warning that the

FDA would not permit. In early to mid-1963, available

scientific knowledge had not reached a level that allowed

Lederle or the FDA to present anything other than a

“conflicting opinion” regarding the potential effect of

Declomycin on developing teeth. Because requiring or

68a

permitting such deviation ‘‘would destroy the present use-

fulness of prescription drug labeling,” ibid., I cannot join

my colleagues.

Vv

Based on my analysis, a discussion of N.J. S.A. 2A:58C-

4 is not necessary. Nonetheless, I add a few comments to

indicate my disagreement with the majority’s analysis of

that statute.

The Legislature enacted N.J.S.A. 2A:58C-4 in a regu-

latory system that allows manufacturers to make condi-

tional label alterations and additions. The effort to create

a pro-manufacturer presumption evinces legislative rec-

ognition of precisely the concerns I have discussed

throughout this opinion. Indeed, the primary motivating

force behind N.J.S.A. 2A:58C-4 was an effort to restore

some protection to a manufacturer’s decision to conform

to FDA labeling decisions, a protection stripped by overly-

enthusiastic judicial expansions of the reasonable implica-

tion of the FDA’s 1965 regulatory amendments. To carry

out the goals of N.J.S.A. 2A:58C-4, the Legislature ‘‘es-

tablish[ed] clear rules,”’ Senate Judiciary Committee State-

ment, L.1987, ¢.197, 202nd New Jersey Legislature, 2d.

Sess., reprinted in 1987 New Jersey Session Law Service

(No. 6) 193, 194, created a strong presumption in favor

of FDA decisions, N.J.S.A. 2A:58C-4, and limited the costs

of litigation, see N.J.S.A. 58C-5(c) (exempting FDA-ap-

proved drugs from punitive damages). All those goals un-

dercut and contradict the majority’s decision.

Moreover, the majority’s analysis of the specific facts

of this case is flawed. Preemption in this case presupposes

the pre-1965 world in which Lederle could not have

changed its Declomycin label in any way without prior

FDA approval, whereas the statutory presumption pre-

supposes the post-1965 world in which Lederle has a lim-

ited freedom to make conditional alterations or additions

—

69a

pending a dispositive FDA ruling. The majority draws from

that distinction the conclusion that

under the unique circumstances of this case, compli-

ance with the ‘‘determination” of the FDA not to

require a warning for Declymycin due to the lack of

“unequivocal factual evidence of adverse reaction in

man,” although evidence of the adequacy of the la-

beling, should not be accorded the same presumptive

weight now given to warnings approved or prescribed

by that agency, and certainly does not create a con-

clusive presumption that the labeling contained an ad-

equate warning.

[Ante at ___(slip op. at 52.]

I agree—it should be given more.

Today’s manufacturers have the limited freedom to en-

hance the warning they give. Concomitantly, they can be

held accountable for failure to exercise that freedom when

it would have been reasonable to do so. Seeking “‘to es-

tablish clear rules with respect to specific matters as to

which decisions of the courts in New Jersey have created

uncertainty,” Senate Judiciary Committee Statement, Sen-

ate No. 2805 - L.1987. c.197, supra, reprinted in 1987 New

Jersey Session Law Service (No. 6) at 194, the Legislature

made it presumptively reasonable not to exercise that free-

dom to enhance a label already approved by the FDA. A

pre-1965 manufacturer had no similar freedom. Conse-

quently, it could not be held liable for failure to exercise

a then-non-existent freedom. In that context, the pre-

sumption is so strong we call it preemption.

70a

SUPREME COURT OF NEW JERSEY

No. A-93 September Term 1990

On appeal from

On certification to Appellate Division, Superior Court

CAROL ANN FELDMAN,

Plaintiff-Appellant,

v.

LEDERELE LABORATORIES, a Division of American

Cyanamid Company, a Maine corporation doing business

in the State of New Jersey,

Defendant-Respondent.

Decided July 24, 1991

Chief Justice Wilentz Presiding

Opinion by Justice Clifford

Dissenting opinion by Justice Garibaldi

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NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE COMMITTEE ON OPINIONS

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

A-270-86T7

CAROL ANN FELDMAN,

Plaintiff-Respondent

and Cross-Appellant,

v.

LEDERLE LABORATORIES, a Division of American

Cyanamid Company, a Maine corporation doing business

in the State of New Jersey,

Defendant-Appellant and

Cross-Respondent.

Argued January 31, 1989 - Decided July 13, 1989

Before Judges Michels, Muir, Jr. and Keefe.

On appeal from the Superior Court, Law Division,

Essex County.

William C. Slattery argued the case for the appellant

and cross-respondent Lederle Laboratories, a Division

of American Cyanamid Company (Morgan, Melhuish,

Monaghan, Arvidson, Abrutyn & Lisowski, attorneys;

and Norris, McLaughlin & Marcus, of counsel; James

L. Melhuish and William C. Slattery, of counsel and

on the brief; Scott Friedman, Michael K. Tuzzio, Kevin

E. Wolff, Robert S. Corcoran, on the brief).

James I. Peck, IV, argued the case for the respondent,

cross-appellant.

Marc S. Klein argued the case for the amici curiae,

Pharmaceutical Manufacturers Association and E.R.

Squibb & Sons, Inc. (Sills, Beck, Cummis, Zuckerman,

Radin, Tischman & Epstein, attorneys; Charles J.

Walsh, Marc S. Klein, Bruce J. Brennan, Geoffrey R.

73a

W. Smith, Howard L. Dorfman, of counsel and on

the brief).

The opinion of the court was delivered by KEEFE,

J.S.C. tla

In this failure to warn product liability case, defendant

Lederle Laboratories (Lederle), a division of American Cy-

anamid Company, appeals from an adverse jury verdict in

favor of plaintiff, Carol Ann Feldman.' The general theory

of liability presented by plaintiff at trial was that Lederle’s

product, Declomycin, was defective in the years 1960

through 1963 because it lacked a warning that its ingestion

by young children might result in tooth staining. Lederle

argues on appeal that plaintiff’s failure to warn claim is

preempted by federal law. Alternatively, Lederle argues

that certain trial errors regarding evidence matters and

jury instructions require a new trial.? By leave of court,

Pharmaceutical Manufacturer’s Association and E.R.

Squibb & Sons, Inc. filed a brief as amici curiae, joining

in Lederle’s preemption argument. Amici also argue that

imposing liability on Lederle under the facts of this case

‘This case has had a lengthy and arduous legal history. At the first

trial of this case in 1980, the jury returned a verdict in favor of Lederle.

The plaintiff's motion for a new trial was denied and she appealed.

The Appellate Division affirmed per curiam in an unreported opinion.

Plaintiff's petition for certification was granted and the Supreme Court

remanded the matter to the Appellate Division for reconsideration in

light of Beshada v. Johns-Manville Products Corp., 90 N.J. 191 (1982).

Feldman v. Lederle Laboratories, 91 N.J. 266 (1982). The Appellate

Division affirmed again, this time in a reported decision. Feldman v.

Lederle Laboratories, 189 N.J.Super. 424 (App.Div. 1983). A second

petition for certification was granted. Feldman v. Lederle Laboratories,

94 N.J. 594 (1983). The Court reversed and remanded the matter to

the Law Division for a new trial. Feldman v. Lederle Laboratories, 97

N.J. 429 (1984). It is this second trial that is now before us for con-

sideration.

* Although plaintiff filed a notice of cross-appeal her brief did not

address any issues raised in the notice. We were advised at oral ar-

gument that she has abandoned those claims.

Te

74a

conflicts with the public policy considerations underlying

New Jersey’s product liability law.

We conclude that the Food and Drug Administration’s

(FDA) regulation of the drug industry does not warrant

a finding of implied federal preemption of all State tort

claims grounded in strict liability failure to warn. However,

under certain circumstances, such as presented here, fed-

eral law may preempt a discrete issue upon which liability

is predicated because compliance with State decisional law

would require federal law to be violated. Thus, plaintiff's

entire cause of action was not preempted. However, the

theory of liability not preempted was decided adversely to

plaintiff by the jury and is not challenged on appeal, while

the theory of liability which undergirded the jury verdict

against Lederle was preempted by federal law. Thus, Led-

erle’s motion for judgment notwithstanding the verdict

should have been granted. Because the preemption issue

resolves this appeal we do not address the other issues

raised by Lederle.’

Plaintiff was born in February, 1960 and alleges that

she was treated with Declomycin produced by Lederle dur-

ing the period from her infancy into her fourth year. De-

clomycin is one of a group of tetracycline containing drugs

which are broad spectrum antibiotic analogues used to

combat bacterial infections.‘ Plaintiff’s father, Dr. Harold

Feldman, prescribed the medication for plaintiff in order

to treat various illnesses. He was introduced to Declomycin

by a Lederle medical representative in approximately 1959

when it was first marketed. Lederle had recommended the

drug for pediatric use in its product labeling during the

years 1960 through 1963 inclusive.

* Our failure to address the alternative issues should not be under-

stood to mean that they have no merit. Indeed, we perceive several

errors in the jury instructions and evidentiary rulings which, but for

our ruling on preemption, would require a reversal and new trial.

‘The generic name for Declomycin is demethylchloretetracycline.

75a

No medical records were kept by Dr. Feldman of

plaintiff's treatment. However, he testified that he first

gave the drug to his daughter approximately two to three

months after her birth and continued to administer it until

1963, or possibly 1965.° Regardless of the time period, the

doctor stated that he administered Declomycin only a total

of eight to ten times over this period because the plaintiff

was generally healthy. In 1965, Dr. Feldman noticed that

his daughter’s teeth were stained a shade of grey. He took

her to Dr. Sachs, the family dentist, to learn the cause

and was then informed of the correlation between tetra-

cycline and tooth staining.

Dr. Milton Houpt testified as an expert in pediatric den-

tistry for the plaintiff. He examined her in January, 1985

and concluded that her teeth had been stained by tetra-

cycline. The doctor testified that the staining on plaintiff's

teeth was possibly consistent with tetracycline administra-

tion until the age of six or seven.

Dr. Feldman testified that in the 1960’s, in addition to

relying on the Lederle detailmen and package inserts, he

relied on the Physician’s Desk Reference (PDR) for infor-

mation about Declomycin. The PDR did not contain a

warning concerning tooth staining until 1965, although

package inserts and other literature were changed in De-

cember, 1963.

In 1975, Dr. Feldman wrote a letter of inquiry to Led-

erle Laboratories concerning the staining problem. He re-

ceived a reply from Lloyd S. Carr, Lederle’s product’s

service manager. The letter, dated November 6, 1975,

stated that, after ‘“‘the causal relationship between tooth

staining and tetracycline became unquestionably demon-

* Plaintiff's amended complaint, filed after the remand for a new

trial, alleged that she was administered the medication during 1960-

1963. She has limited her claim that the product was defective to those

years.

lia iciamrearinintaentadieinninten tases niiaiitilaneeiiaiiaiill

76a

strated,’ Lederle notified the FDA in November, 1962

requesting permission to place a warning on the drug. The

letter noted that Declomycin was specifically excluded by

the FDA in April, 1963 from the requirement imposed on

other tetracyclines to contain a warning concerning tooth

staining. It further stated that in or about May, 1963,

Lederle informed the FDA that Declomycin was also im-

plicated in reports of tooth staining. Lastly, it said that

a warning for Declomycin was approved by the FDA in

December, 1963 and appeared in the PDR in 1966.

Plaintiff's theory was that Lederle knew or should have

known of the side effects before 1962. Her proofs on that

issue were substantially based on two articles co-authored

by Dr. Harry Shwachman. The articles were entitled “‘The

Tetracyclines, Applied Pharmacology” and ‘‘The Effect of

Long Term Antibiotic Therapy in Patients With Cystic

Fibrosis of the Pancreas.” Dr. Shwachman, a specialist in

cystic fibrosis, testified on behalf of plaintiff by way of a

de bene esse deposition. He related conversations he had

with Dr. Carey, the deceased former medical director of

Lederle, in which Dr. Shwachman told Dr. Carey about

the “problem of staining of the teeth” he had encountered

in using tetracyclines to treat children with cystic fibrosis.

However, Dr. Shwachman admitted that both articles, pub-

lished in 1956 and 1958, were inconclusive as to the cause

of the observed tooth staining and were based solely on

work with cystic fibrosis patients who were treated with

the tetracycline drugs on a daily basis over a long period

of time. Further, none of this work involved Declomycin,

which was introduced in 1959.

In a letter dated January 10, 1963, addressed to Roy

Schaefer at Lederle, Dr. Shwachman detailed his findings,

at Schaefer’s request, concerning tooth staining in cystic

fibrosis patients up to that point in terms of age versus

dosage. The letter revealed an apparent correlation be-

tween tetracyclines and tooth staining without drawing

any real conclusion. As stated in the letter by Dr. Shwach-

77a

man, “(t]he study is still being continued and I think that

the specific answer to your questions will become obvious

in due course of time.”

Dr. Swanzey, who had been employed by Lederle in the

1960’s, was called as plaintiff’s witness and examined con-

cerning the Shwachman articles. He testified that both of

the articles were in the possession of the defendant in

1960. Each article contained a notation to the effect that

tooth staining had been observed in cystic fibrosis patients

who were treated with tetracyclines. He noted that both

articles had been written in the 1950’s, before Declomycin

was marketed. Thus, Declomycin was not the tetracycline

containing product referred to in either article. Dr. Swan-

zey stated that, even after the publication of the second

study, it was not clear whether the tooth staining was due

to the drug or the disease of cystic fibrosis. To Dr. Swan-

zey’s knowledge, no comparative study was done on the

teeth of cystic fibrosis patients who had received tetra-

cycline versus those who had not to determine if the dis-

coloration was due to the antibiotics or the disease itself.

Defendant presented Doctors Guggenheimer, Sweeney,

and Wasserman to testify concerning the state of scientific

knowledge in the relevant time period. Dr. Guggenheimer,

a dentist and professor of dentistry, opined that there was

no information available suggesting a relationship between

the administration of tetracyclines and tooth discoloration

in 1960 and 1961. He testified that reports began to appear

in 1962 which raised questions as to whether there was

a relationship between tooth discoloration, cystic fibrosis

and the tetracyclines, but the medical investigators ‘“‘could

not come to any conclusion as to what exactly was going

on.”’ The doctor cited an editorial in The New England

Journal of Medicine in 1963 which “indicated that more

evidence was needed as to what exactly the mechanism

[for discoloration] was and why this was occurring.” The

apparent reason for the confusion was that all children

with stained teeth were also cystic fibrosis patients. Dr.

78a

Guggenheimer said it was impossible to separate the two

phenomena. The doctor had participated in animal studies

at Columbia University in the early 1960’s to attempt to

answer this question but could not do so because no sig-

nificant effect could be found at that time on the teeth

of animals. When asked his opinion regarding Declomycin,

Dr. Guggenheimer said:

Since that particular antibiotic was, I believe, in-

troduced in 1959, by 1963 there would—it would

not be possible to identify it as a cause of tooth

discoloration because any person receiving the

antibiotic in 1959, their permanent teeth would

not have yet appeared in 1963. The earliest that

would be come evident would be approximately

1965.

He concluded that, with regard to Declomycin, Lederle

could not have known of the correlation until after 1963.

Dr. Sweeney, a dentist educator, testified that prior to

1962 Lederle could not have known “in any way, shape

or form’ that the use of tetracyclines resulted in stained

teeth. The doctor noted that only three or four papers

had been written on the subject in that time frame and

they were inconclusive. In his opinion, 1962 was a critical

year because evidence began to indicate that the teeth of

children other than cystic fibrosis patients might be af-

fected by tetracyclines. Dr. Sweeney felt that Lederle

should have known there was a problem with Auromoycin

and Acromycin in 1963, but not Declomycin, because there

were no reports in 1963, or earlier, pertaining to Declo-

mycin. Dr. Wasserman, a pediatrician and professor of

medicine, also testified that there was insufficient infor-

* The generic name for Acromycin is tetracycline. The generic name

for Auromycin is chlortetracycline. However, there was a tendency to

refer to all of these antibiotic analogues, including Declomycin, as te-

tracycline drugs.

79a

mation about the possibility of tooth discoloration from the

use of tetracylcines through 1963.

Plaintiff offered a three page Lederle Laboratories Dis-

trict Manager Weekly Report, dated August 18, 1962, as

further proof of Lederle’s knowledge. The report read in

part:

We are beginning to hear comments about the

yellowing discoloration of teeth in children fol-

lowing tetracycline therapy. One physician, al-

ready reported to Pearl River, [Lederle’s home

base] also states his own children’s second teeth

are soft following tetracycline therapy. This phy-

sician states he will discontinue using tetracy-

clines until this phenomenon is proved ~or

disproven.

In October, 1962, Dr. Swanzey and his associates began

to compose a warning concerning tooth staining caused by

tetracycline drugs for submission to the FDA. On Novem-

ber 16, 1962, Dr. Swanzey wrote a letter to the FDA

concerning the possibility of a correlation between tooth

discoloration and Lederle’s tetracycline drugs. In the let-

ter, Lederle proposed to warn of the phenomenon in terms

of all its tetracycline products. Lederle submitted its pro-

posed warning language and asked for the FDA’s “‘opinion

and consideration’’ so that this statement could “‘be added

at the earliest possible time.”” On December 3, 1962, Dr.

Barzilai, medical officer, Division of Antibiotic Drugs, Bu-

reau of Medicine of the FDA, replied to Dr. Swanzey’s

letter. Dr. Barzilai stated that the FDA had “not yet

reached any form of final opinion (= medical, scientific,

regulatory, etc.),...” He concluded by informing Dr.

Swanzey that the FDA was currently ‘‘devoting a great

deal of active attention to the matter and [would]. . -notify

aS soon as any conclusion is reached.”’

In February, 1963, Dr. Barzilai wrote to Dr. Swanzey

advising him that the FDA had approved the warning to

80a

be asserted in the printed material of ‘‘all [Lederle’s] te-

tracycline products... .’’ On February 14, 1963, Dr. Swan-

zey, in acknowledging receipt of the FDA’s letter with the

approved warning language for all tetracycline drugs,

wrote to the FDA, stating ‘I assume that this statement

is being proposed for chlortetracycline, oxytetracycline’ and

demethylchlortetracycline [Declomycin] as well.’’

On February 18, 1963, Dr. Barzilai replied to Dr. Swan-

zey’s inquiry and stated that the warning had to appear

in the labeling of only tetracylcine, chlortetracycline, and

oxytetracycline. Dr. Barzilai further stated, ‘‘[t]here is

practically no specific clinical evidence to substantiate such

a labeling requirement for demethylchlortetracycline [De-

clomycin] at present, but we intend to remain alert for

such a future possibility.”’

On April 18, 1963, the FDA issued a press release to

all medical and dental journals, and to the general media,

with respect to tooth discoloration and tetracyclines. The

release stated in pertinent part:

Children’s teeth can be seriously discolored by

three types of tetracycline antibiotics, the Food

and Drug Administration said in a message to

physicians and dentists.

The three drugs are: tetracycline, chlortetracyc-

line and oxytetracycline. There is no evidence to

date that a fourth drug, [declomycin], causes the

discoloration, FDA said.

On April 23, 1963, Lederle issued an ‘“‘Action’”’ memo-

randum to all Lederle sales personnel. The purpose of the

’The brand name for oxytetracycline was Terramycin.

*It would appear that Dr. Swanzey’s inquiry was necessary because

Dr. Barzilai used only the word tetracycline in his correspondence rather

than the generic names of Lederle’s other products that were analogues

of tetracycline.

8la

memo was to advise the sales people of the latest infor-

mation concerning FDA requirements for antibiotic liter-

ature, and its specific subject was tooth staining. The memo

told the salesmen that inserts would be sent to them

shortly for inclusion with all of the tetracycline based drugs

except Declomycin. Further, the memo told the salesmen

not to capitalize on the fact that Declomycin had been

excluded from FDA warnings because Declomycin would

probably soon be implicated in staining and require warn-

ings as well.

On May 8, 1963, Dr. Swanzey wrote to Dr. Barzilai to

bring the FDA up to date on additional information con-

cerning the subject of tooth discoloration that had come

into Lederle’s possession since Swanzey’s last correspond-

ence. Enclosed with that letter was an article printed in

the June, 1962 issue of the Canadian Medical Association

Journal, together with another document which quoted

from the first, suggesting that Declomycin was associated

with tooth discoloration and looseness of finger nails.

On May 31, 1963, Commissioner Larrick of the FDA

wrote to Dr. Swanzey and explained why the warning

approved by the FDA for tetracycline products specifically

exclude Declomycin. He said:

Actually, the original statement was revised to

require the inclusion of the name of the drug in

lieu of the word ‘‘tetracyclines’’ because to date

we have no evidence that your drug [Declomycin]

will stain teeth. If the warning statement as orig-

inally proposed is used, it automatically incrimi-

nates [Declomycin].

On July 1, 1963, Dr. Barzilai replied to the May 8, 1963

letter from Dr. Swanzey and said that the FDA had re-

viewed all of the Declomycin adverse incident reports and

other information supplied by Lederle but that it could not

“‘as yet justify any change in our current formal position

on this matter.”’

82a

On November 8, 1963, in a telephone conversation be-

tween Kevin Rooney of Lederle and Dr. Barzilai that was

later confirmed in a letter from Rooney to Barzilai on

November 11, 1963, it was finally decided that Lederle

would incorporate the tooth staining statement in all of

the labeling for Declomycin products. Submission of the

final form of the Declomycin tooth staining warning was

made by letter to the FDA dated December 12, 1963.

The plaintiffs position, as stated earlier, is that Declo-

mycin was defective in the years 1960 through 1963 be-

cause it lacked a warning concerning tooth staining during

those years. It was in the context of the foregoing facts

and plaintiff's theory of liability that the trial judge asked

the jury to answer the following special interrogatory.

Was there a defect in defendant Lederle’s prod-

uct, Declomycin, because it failed to warn of tooth

discoloration?

A. In 1960

B. In 1961

C. In 1962

D. In 1963

The jury, in response to the above interrogatory, replied

that Declomycin was not defective in either 1960 or 1961.

In doing so it rejected plaintiff's argument that the articles

authored by Dr. Shwachman and Lederle’s own research

should have put Lederle on notice of the dangers of tooth

staining with respect to Declomycin before the time when

Lederle itself became concerned about that side effect.

However, the jury found that the product was defective

in 1962 and 1963. Specifically, with respect to Lederle’s

defense that it gathered sufficient information upon which

to warn by the fall of 1962 but that FDA regulations

required prior approval before a warning could be given

and that FDA approval was not forthcoming, plaintiff's

counsel argued in summation:

83a

Lederle Laboratories could have warned of tooth

staining resulting from Declomycin administra-

tion in November of 1962. In fact, it could have

warned in October of 1962 because you heard

Dr. Swanzey say ‘‘Well, look, here is a paper

dated October of 1962 which has a warning that

I divvied up for proposal to the F.D.A.” So for

13 months they waited for no reason while kids

were getting Declomycin, along with this kid. In

those 13 months Dear Doctor letters could have

been sent out. In those 13 months some ads could

have been placed in the Journal of the American

Medical Association or any like professional jour-

nal. During those 13 months the detailmen could

have been sent out with specific instructions to

tell doctors not to prescribe Declomycin for pe-

diatric use.

Why Lederle waited 13 months to warn on Declo

is for you to surmise, it is not for me to suggest.

There is no evidence one way or the other as to

why they waited, ladies and gentlemen, aside

from the alleged trade practice of getting F.D.A.

approval first on warnings. Trade practice; what

other drug manufacturers do. If you find that a

compelling reason for them to wait 13 months,

then you can find against the plaintiff, you can

find no cause for action; but if you find that there

was no good reason for waiting those thirteen

months, then I suggest you return a verdict for

the plaintiff.®

* This argument was undoubtedly based, in part, on testimony given

by Dr. Swanzey at the current trial and the first trial. In essence, Dr.

Swanzey said that he was unaware of any specific statute or regulation

that required the FDA to give prior approval to label changes in the

84a

In view of plaintiffs theory of liability pertaining to the

years 1962 and 1963 as set forth in the closing argument

and the trial judge’s instructions to the jury that prior

approval from the FDA was not required, we can only

conclude that the jury determined liability against Lederle

based on its failure to warn during the 13 month period

that elapsed between November of 1962, when it first

wrote to the FDA for permission to change its labeling,

and December of 1963, when the FDA approved the label

change and Lederle complied.

Plaintiff contends that the Supreme Court’s decision in

Feldman v. Lederle Laboratories, 97 N.J. 429 (1984) (Feld-

man I) precludes a discussion of preemption. We disagree.

In Feldman I, the Court observed that Lederle raised the

preemption defense for the first time before the Appellate

Division. Jd. at 458. However, we decided the appeal on

other grounds and did not address preemption. Feldman

v. Lederle Laboratories, 189 N.J. Super. 424 (App. Div.

1983), reversed 97 N..J. 429 (1984). Because the defense

had not been raised at the trial level and had not been

relied upon by us in deciding the case, the Supreme Court

could have refused to entertain the issue. Nieder v. Royal

Indemnity Ins. Co., 62 N.J. 229, 234 (1973). When an

appellate court recognizes that a case will be remanded

for a new trial, it ordinarily “‘defer(s) discussion of the

issue”’ not fully litigated in the first trial until a complete

record is made. Feldman, 97 N.J. at 458. However, the

Supreme Court, in this instance, elected to give the trial

relevant time period but that it was the drug manufacturers’ practice

to do so. Dr. Swanzey hastened to add, however, that he was not an

attorney, indicating his lack of expertise in statutory and regulatory

interpretations. Whether prior approval by the FDA was required or

simply trade practice was a matter of law, not a matter of lay opinion.

However, in view of the trial judge’s ruling that FDA approval was

not required before changing the warnings, Dr. Swanzey’s testimony

to the effect that it was a trade practice was relevant on the issue ci

Lederle’s reasonableness.

85a

court guidance by making “‘comments’”’ on the issue based

on the information before it at the time. Jbid. Those com-

ments constituted dicta because they were not necessary

to the decision then being made. As such they are entitled

to “due consideration but [do] not invoke the principle of

stare decisis.” Jamouneau v. Division of Tax Appeals, 2

N.J. 325, 332 (1949). Prior decisions of this court have

also concluded that Feldman I did not preclude a consid-

eration of preemption in the context of FDA regulation

of the drug industry. Shackil v. Lederle Laboratories, 219

N.J. Super. 601, 616, 634 (App. Div.1987), certif. granted

109 N.J. 519-520 (1987). See also, McQuaid v. Burlington

County Memorial Hosp., 212 N.J. Super. 472, 476 (n.1),

(App.Div. 1986).

Plaintiff argues that, at the second trial of this matter,

Lederle’s proofs were ‘‘no more compelling, and scarcely

more numerous, than what it introduced in 1980 or what

it submitted by way of argument on first appeal.’’ Lederle

disagrees and lists the items placed in evidence at the

second trial which were not in evidence at the first trial.

They are: 1) the information relating to the possible side

effects of Declomycin submitted by Lederle to the FDA

subsequent to November, 1962 contained in its letters dated

January 15

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