T.H., a Minor, etc., et al., Plaintiffs and Appellants, v. NOVARTIS PHARMACEUTICALS CORPORATION, Defendant and Respondent., 226 Cal. Rptr. 3d 336

Cuéllar, J. Under California law, a brand-name drug manufacturer has a duty to warn of known or reasonably knowable adverse effects arising from an individual's use of its drug. (See Stevens v. Parke, Davis & Co. (1973) 9 Cal.3d 51, 65, 107 Cal.Rptr. 45, 507 P.2d 653.) In this case, we examine whether-and if so, under what circumstances-a brand-name drug manufacturer may be sued under a theory of "warning label" liability when the warning label for its drug was alleged to be deficient, but the plaintiffs were injured by exposure to a generic bioequivalent drug bearing the brand-name drug's warning label.

Plaintiffs' mother, J.H., was prescribed terbutaline, a generic form of the brand-name drug Brethine, to suppress premature labor during her pregnancy. Plaintiffs T.H. and C.H. were born full term, but were diagnosed with developmental delays at three years of age and autism by the time they turned five. Through their father as guardian ad litem, the minors allege that those responsible for the terbutaline label knew or should have known-based on studies of the drug's effects in rats and in humans-that the drug posed a serious risk to fetal brain development.

They further allege that the drug's label unreasonably failed to include a warning about this risk. Federal law explicitly conveys to the brand-name manufacturer-and only that manufacturer-the responsibility to provide an adequate warning label for both generic terbutaline and its brand-name equivalent, Brethine. As explained in more detail below, only the brand-name drug manufacturer has unilateral authority to modify the drug's label by adding to or strengthening a warning. Generic drug manufacturers are required to follow the brand-name manufacturer's label to the letter.

Accordingly, the manufacturer of Brethine controlled both the form and content of the terbutaline warning label. Plaintiffs brought suit against defendant Novartis Pharmaceuticals Corporation (Novartis), which manufactured Brethine until December 2001, and aaiPharma Inc. (aaiPharma), which purchased the rights to and manufactured Brethine thereafter-using the same label Novartis had used-when plaintiffs' mother was prescribed the generic bioequivalent in 2007.

Plaintiffs claim that Novartis knew or should have known that its warning label failed to alert pregnant women or their physicians to the risk Brethine posed to fetal brain development; that manufacturers of terbutaline were compelled by federal law to include Brethine's deficient label on their own products; that it was foreseeable Novartis's successor (aaiPharma) would not change or update Brethine's deficient label; and that in reliance on the deficient warning label, plaintiffs' mother was prescribed terbutaline, which adversely affected plaintiffs' developing brains in utero.

What Novartis asserts in response is that its duty to provide a safe and adequate warning label for Brethine did not encompass those who were prescribed terbutaline in reliance on the Brethine label. Novartis further contends that any such duty should not extend to those who were exposed to terbutaline after Novartis ceased manufacturing Brethine and sold its rights in the drug to aaiPharma. Such contentions, and the case in which they arise, reach us at a very early stage in the litigation.

In reviewing a demurrer, we ask only whether the plaintiff has alleged-or could allege-sufficient facts to state a cause of action against the defendant. ( Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081, 6 Cal.Rptr.3d 457, 79 P.3d 569.) In our view, plaintiffs have indeed shown that they could allege a cause of action against Novartis for warning label liability.

Because the same warning label must appear on the brand-name drug as well as its generic bioequivalent, a brand-name drug manufacturer owes a duty of reasonable care in ensuring that the label includes appropriate warnings, regardless of whether the end user has been dispensed the brand-name drug or its generic bioequivalent.

If the person exposed to the generic drug can reasonably allege that the brand-name drug manufacturer's failure to update its warning label foreseeably and proximately caused physical injury, then the brand-name manufacturer's liability for its own negligence does not automatically terminate merely because the brand-name manufacturer transferred its rights in the brand-name drug to a successor manufacturer.

We therefore affirm the Court of Appeal, which had directed the trial court to enter an order sustaining Novartis's demurrer with leave to amend plaintiffs' negligence and negligent misrepresentation causes of action. I. BACKGROUND From a certain perspective, the claim underlying this lawsuit is quite straightforward. Plaintiffs T.H. and C.H., who are fraternal twins, sued defendant Novartis for negligence and negligent misrepresentation arising from Novartis's failure to warn of the risks of Brethine, an asthma drug sometimes prescribed "off label" to stop or slow preterm labor.

Plaintiffs allege that Novartis knew or should have known that Brethine carried a substantial risk of causing developmental and neurological damage to the fetus, yet failed to warn of this risk. What removes this case from the realm of the ordinary is that plaintiffs' mother was never prescribed Brethine. Rather, she-like many pregnant women experiencing premature labor -was prescribed terbutaline sulfate (terbutaline ), the generic bioequivalent drug. Moreover, Novartis stopped manufacturing Brethine and sold all rights to the drug in 2001, six years before plaintiffs' injury.

During the period it was the brand-name manufacturer, however, Novartis had the legal duty to disclose Brethine's known and reasonably knowable risks in the drug's warning label. All generic manufacturers, in turn, had a specific legal responsibility regarding the label: to ensure the terbutaline label was identical to the Brethine label. We therefore examine plaintiffs' allegations against the backdrop of the distinctive legal framework governing labeling for brand-name and generic pharmaceuticals. On review of a demurrer, we accept as true all properly pleaded facts. ( Shirk v.

Vista Unified School Dist. (2007) 42 Cal.4th 201, 205, 64 Cal.Rptr.3d 210, 164 P.3d 630.) Where particular facts are set out below, they are those alleged in plaintiffs' first amended complaint. A.

Federal Regulation of Drug Labeling The Food, Drug, and Cosmetic Act (FDCA; 21 U.S.C. § 301 et seq. ) prohibits the marketing of a new brand-name drug unless the manufacturer has submitted a new drug application (NDA) and the Food and Drug Administration (FDA) has approved the drug as safe and effective for its intended use. ( 21 U.S.C. § 355(a).) The NDA must include an exemplar of the drug's proposed label ( 21 U.S.C. § 355(b)(1)(F) ) describing the drug's indications and usage, contraindications, warnings and precautions, and adverse reactions. ( 21 C.F.R. § 201.56(e)(1).) In 1984, Congress enacted the Hatch-Waxman Act. (98 Stat. 1585, 1585-1597, codified as amended at 21 U.S.C. § 355.) This statute allows a prospective generic drug manufacturer to file an abbreviated new drug application (ANDA) asserting the generic drug's bioequivalence to an existing listed drug that has already been approved by the FDA. ( PLIVA, Inc. v.

Mensing (2011) 564 U.S. 604, 612, 131 S.Ct. 2567, 180 L.Ed.2d 580 ( PLIVA ), citing 21 U.S.C. § 355(j).) Such an application is typically filed as the brand-name drug's patent is about to expire.

The streamlined application relieves the generic manufacturer of the need to duplicate the clinical trials previously submitted for the equivalent brand-name drug. ( Ibid . ) The generic manufacturer must nonetheless "show that the labeling proposed for the new drug is the same as the labeling approved for the listed drug." ( 21 U.S.C. § 355(j)(2)(A)(v).) So under the federal scheme, "brand-name and generic drug manufacturers have different federal drug labeling duties." ( PLIVA , supra , 564 U.S. at p. 613, 131 S.Ct. 2567.) It is the brand-name manufacturer that bears responsibility for the accuracy and adequacy of its label "as long as the drug is on the market." ( Wyeth v.

Levine (2009) 555 U.S. 555, 570-571, 129 S.Ct. 1187, 173 L.Ed.2d 51 ( Wyeth ).) The generic manufacturer, on the other hand, is responsible only for "an ongoing federal duty of 'sameness' "-that is, ensuring that its warning label is the same as the brand-name manufacturer's. ( PLIVA , at p. 613, 131 S.Ct. 2567.) FDA regulations require the brand-name drug manufacturer to update the warning label "as soon as there is reasonable evidence of an association of a serious hazard with a drug; a causal relationship need not have been proved." ( 21 C.F.R. § 201.80(e) ; cf. id ., § 314.80(b) [NDA holder "must promptly review all adverse drug experience information obtained or otherwise received by the applicant from any source"].) A specific warning is required if the drug is commonly prescribed for a disease or condition, even when the drug has not yet been approved for that use, where "such usage is associated with serious risk or hazard." ( Id ., § 201.80(e).) Any manufacturer of the drug at issue may request a change in the label by submitting a "prior approval supplement" to the FDA, which decides whether to approve the requested change in the warning label. ( 21 C.F.R. § 314.70(b)(2)(v) ; FDA, Abbreviated New Drug Application Regulations, 57 Fed.Reg. 17950, 17961 (Apr. 28, 1992).) But a brand-name drug manufacturer, unlike a generic manufacturer, may unilaterally update a label, without waiting for FDA preapproval, "[t]o add or strengthen a contraindication, warning, precaution, or adverse reaction" under the "changes being effected" (CBE-0) regulation. ( 21 C.F.R. § 314.70(c)(6)(iii)(A) ; see Wyeth , supra , 555 U.S. at p. 568, 129 S.Ct. 1187.) By contrast, a generic manufacturer may use the CBE-0 regulation only to conform its label to an updated brand-name label. ( PLIVA , supra , 564 U.S. at p. 614, 131 S.Ct. 2567.) Because federal regulations preclude generic manufacturers from unilaterally altering the warning labels on their drugs ( PLIVA , supra , 564 U.S. at p. 617, 131 S.Ct. 2567 ), federal law preempts state tort claims against generic manufacturers for failure to provide adequate warnings. ( Id . at p. 609, 131 S.Ct. 2567.) State tort claims against a brand-name manufacturer based on a failure to warn, however, are not preempted. ( Id . at p. 625, 131 S.Ct. 2567.) B.

Terbutaline, Brethine, and Novartis Terbutaline is a beta-adrenergic agonist, acting upon the beta2 receptors in smooth muscle tissue and causing muscles to relax. The drug was originally developed by Draco, a Swedish company, and released for use as a bronchodilator to treat asthma. In 1974, the FDA approved terbutaline as a treatment for asthma in the United States. Astra AB (and later, AstraZeneca LP) licensed the right to manufacture and market terbutaline in its oral form to Ciba-Geigy (a predecessor to Novartis) under the brand name Brethine. Novartis owned the NDA for Brethine until 2001.

In 1976, a Swedish physician with ties to Draco published the results of a small study indicating that terbutaline was safe and effective as a tocolytic-a drug to suppress premature labor in pregnant women-on the theory that the drug could relax uterine smooth muscle tissue. Terbutaline subsequently gained wide acceptance as a tocolytic, but neither Novartis nor any other manufacturer sought FDA approval for this off-label use. Later studies cast doubt on the safety and efficacy of terbutaline as a tocolytic.

In 1978, a study published in the British Journal of Obstetrics and Gynaecology questioned the validity and conclusions of the original Swedish report.

According to plaintiffs' complaint, the British study warned that the benefits of this class of drugs on preterm labor was " 'not yet established,' " that the evidence was " 'too scanty to make conclusions about side effects possible,' " and that other data suggested " 'that labor inhibitors are potentially dangerous.' " A year later, a study published in the American Journal of Obstetrics and Gynecology reported adverse effects in both the pregnant mother and in the fetus following terbutaline exposure. A team of American clinical investigators in 1982 sought to replicate the results of the 1976 Swedish study.

They could not. In fact, the investigators were unable to find any benefit among the pregnant mothers who had been prescribed terbutaline as compared to those who received a placebo. A 1984 study published in the Journal of Reproductive Medicine similarly failed to confirm any benefits. In 1985, Dr. Theodore Slotkin and a team of Duke University Medical Center researchers found that a single dose of terbutaline given to pregnant rats interfered with an enzyme necessary for neuronal development in the fetal brain. Dr.

Slotkin's study showed that terbutaline can cross the placenta and fetal brain barrier in sufficient quantities to affect brain development. Other studies in the 1980s revealed that children born to mothers who had received a different beta-adrenergic agonist had poorer academic achievement and were more likely to have impairments in vision and language development than children born to mothers who did not receive such treatment. In 1989 and 1990, Dr.

Slotkin published studies showing that terbutaline may interfere with the fetus's neurobehavioral development, presumably through its effects on receptors in the fetal cerebellum. Shortly thereafter, in 1992, scientists from the University of Texas undertook a comprehensive and critical evaluation of the literature relating to terbutaline and concluded, in a study published in the American Journal of Obstetrics and Gynecology, that the drug had not been shown to arrest preterm labor and that chronic exposure may adversely affect the fetus.

A 1995 meta-analysis by researchers from the University of Pennsylvania likewise concluded that the relevant literature did not support the claimed benefit from maintenance tocolytic therapy. The American College of Obstetricians and Gynecologists (ACOG) subsequently issued a "Technical Bulletin on Preterm Labor" to its more than 40,000 members, which noted the asserted benefit from maintenance tocolytic therapy lacked any evidentiary basis and warned that the potential risks of such therapy, to both the mother and the fetus, were well documented.

ACOG's bulletin stated that the risk associated with beta-mimetic agents (such as terbutaline ) appeared greater than that associated with other tocolytic agents. In 1997, the FDA's Associate Commissioner for Health Affairs issued a "Dear Colleague" letter, which endorsed ACOG's assessment of the benefits and dangers of long-term tocolytic therapy.

In 2001, the German Central Institute of Mental Health issued a report concluding that children whose mothers had received beta-agonist tocolysis had a significantly higher rate of psychiatric disorders and psychopathology, and that such children scored lower on psychometric tests of cognitive development. Dr. Slotkin's Duke team released another study in October 2001, which revealed that beta2 receptors in the fetal brain, unlike those in mature brains, do not desensitize when exposed to continuous doses of terbutaline.

Instead, the fetal receptors intensify their sensitivity to terbutaline and thus increase their response to the drug as the dosage increases (and the brain develops). Over the years, researchers developed-and companies brought to market-newer and more effective bronchodilators and other asthma treatments. Novartis continued to manufacture and distribute Brethine with the intention that it be used as a tocolytic. By 2001, nearly half of all prescriptions for terbutaline were for tocolysis, even though the drug was never approved by the FDA for that purpose.

In December 2001, Novartis transferred the NDA for Brethine to NeoSan Pharmaceuticals Inc., a wholly owned subsidiary of aaiPharma. C. The Facts Underlying This Lawsuit On September 5, 2007, plaintiffs' mother, J.H., was hospitalized because of concerns about premature labor. She was prescribed terbutaline, to be administered every six hours, and was discharged on September 25, 2007. While in the hospital, J.H. received a generic version that was manufactured by Lehigh Valley Technologies, Inc.; after discharge, she received a generic version that was manufactured by Global Pharmaceuticals.

J.H. continued taking terbutaline as directed until plaintiffs were born on October 9, 2007. Plaintiffs appeared to be normal until their pediatrician, during a routine checkup in December 2010, reported that the twins may have developmental delays. Despite specialized treatment for both children, a pediatric neurologist diagnosed them with autism in August 2012. Plaintiffs' first amended complaint alleges that terbutaline passed through the placenta and the blood-brain barrier.

As a result, plaintiffs contend, terbutaline caused them to suffer severe and permanent neurologic injuries, including an inability to speak and significant limitations and abnormalities in their motor skills.

Plaintiffs further allege that Novartis knew or should have known that terbutaline was of questionable efficacy as a tocolytic agent, that terbutaline carried serious risks of side effects for newborns whose mothers received the drug during pregnancy, and that federal law required Novartis to report this information to the FDA and to update the warning label-something Novartis could have done unilaterally. (See 21 C.F.R. § 314.70(c)(6)(iii)(A).) Instead, Novartis falsely represented that terbutaline was safe and effective and would not cause serious side effects in newborns, and it intended for pregnant mothers and their physicians to rely on these representations.

The complaint asserted causes of action for negligence and negligent misrepresentation, as well as strict liability, intentional misrepresentation, concealment, and medical negligence. To support and place in factual context their negligence cause of action, plaintiffs made a variety of specific allegations regarding Novartis.

They alleged that Novartis had a duty to update the label to warn of the drug's effects on fetal development, that Novartis knew or should have known of these effects, that J.H.'s physicians prescribed her terbutaline because of their erroneous belief that terbutaline was safe to use as a tocolytic, that plaintiffs suffered neurological damage as a result of their exposure to terbutaline in utero, and that plaintiffs' injuries were foreseeable.

Meanwhile, plaintiffs' negligent misrepresentation cause of action alleged that Novartis falsely represented that terbutaline was safe to use as a tocolytic, that Novartis had no reasonable basis for believing terbutaline was safe to use as a tocolytic, that Novartis intended for pregnant mothers and their physicians to rely on their false representations concerning the drug's safety as a tocolytic agent, that J.H. and her physicians relied on Novartis's representations, that plaintiffs suffered neurological damage as a result of their exposure to terbutaline in utero, and that plaintiffs' injuries were foreseeable.

Novartis's core assertion in its demurrer was that it had no duty to plaintiffs. To justify its position, the company offered two overarching rationales: It did not manufacture the terbutaline ingested by their mother; and it had transferred the Brethine NDA to another company in December 2001, nearly six years before plaintiffs' mother was prescribed terbutaline. In addition, Novartis argued that plaintiffs had failed to identify with specificity any misrepresentation by Novartis or allege that plaintiffs had relied on any such misrepresentation.

In opposition to the demurrer, plaintiffs responded that Novartis had a duty to warn about the drug's effects on fetal development during the period it owned the NDA and manufactured Brethine ; that the six-year gap between Novartis's divestiture of the NDA and plaintiffs' in utero exposure is relevant to causation (and not the existence of the duty); and that the first amended complaint adequately pleaded the misrepresentations with specificity, given that the specific misrepresentations are more likely to be within Novartis's knowledge, and adequately pleaded reliance on those misrepresentations.

The trial court sustained the demurrer without leave to amend. It concluded that Novartis owed plaintiffs no duty as a matter of law relating to claims arising from terbutaline exposure in 2007. Agreeing with Novartis, the court also found that the fraud-based claims suffered from a lack of specificity and that this defect could not be remedied by allegations about Novartis's conduct prior to the 2001 NDA divestiture. The Court of Appeal reversed and directed that the order sustaining the demurrer be modified to grant plaintiffs leave to amend their causes of action for negligence and negligent misrepresentation.

The appellate court reasoned that if plaintiffs could allege that Novartis failed to warn about fetal risks it knew or should have known were associated with terbutaline when used as a maintenance tocolytic prior to its divestiture of the brand-name drug in 2001, that the warning would have remained on the label in 2007 had Novartis added a suitable warning to the label before divestiture in 2001, and that their mother's physician would not have prescribed terbutaline as a maintenance tocolytic had the drug been properly labeled, then their claims for negligence and negligent misrepresentation can survive demurrer.

We granted Novartis's petition for review to decide the existence and scope of warning label liability for brand-name drug manufacturers under California law. II. DISCUSSION The sole issue before us is whether the demurrer should have been sustained with respect to the negligence and negligent misrepresentation claims on the ground that Novartis owed no duty of care to plaintiffs. In reviewing an order sustaining a demurrer, we examine the operative complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory. ( Lee v.

Hanley (2015) 61 Cal.4th 1225, 1230, 191 Cal.Rptr.3d 536, 354 P.3d 334.) Where the demurrer was sustained without leave to amend, we consider whether the plaintiff could cure the defect by an amendment. The plaintiff bears the burden of proving an amendment could cure the defect. ( Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) The gist of plaintiffs' warning label liability claim is that Novartis negligently failed to warn about the drug's risk to fetal brain development.

They contend that the deficient label foreseeably and proximately caused harm not only to the children of women who were prescribed Brethine, but also to the children of women who were prescribed its generic bioequivalent, which was legally required to-and did-bear the same deficient label. Among other things, plaintiffs rely on

section 311 of the Restatement Second of Torts (section 311), which addresses negligent misrepresentation involving physical harm. Under section 311(1), "[o]ne who negligently gives false information to another is subject to liability for physical harm caused by action taken by the other in reasonable reliance upon such information, where such harm results [¶] ... [¶] to such third persons as the actor should expect to be put in peril by the action taken."

Section 311's theory of liability is intended to be "somewhat broader" than that for mere pecuniary loss. ( Rest.2d Torts, § 311, com. a.) It "finds particular application where it is a part of the actor's business or profession to give information upon which the safety of the recipient or a third person depends." (Id ., § 311, com. b; see also Prosser, Misrepresentation and Third Persons (1966) 19 Vand.

L.Rev. 231, 254 [explaining that one has a duty not to make a false representation to "[t]hose to whom a public duty is found to have been created by statute, or pursuant to a statute ... [and to] [t]hose members of a group or class whom he has special reason to expect to be influenced by the representation"].) This court applied and followed

section 311 in Randi W. v. Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066, 60 Cal.Rptr.2d 263, 929 P.2d 582 ( Randi W. ).

There, we concluded that a school district's negligent misrepresentations about a former employee in a letter of recommendation could render the school district liable for the employee's molestation of a third person-a student at the employee's new school-even though the student had no special relationship with the former school district and never received the misleading information. ( Id . at p. 1081, 60 Cal.Rptr.2d 263, 929 P.2d 582.) In accordance with the Restatement, we held "that the writer of a letter of recommendation owes to third persons a duty not to misrepresent the facts in describing the qualifications and character of a former employee, if making these misrepresentations would present a substantial, foreseeable risk of physical injury to the third persons." ( Ibid . ) Plaintiffs urge us to hold, in similar fashion, that a brand-name drug manufacturer owes a duty to third persons not to misrepresent the safety of its drug, if making those misrepresentations would present a substantial, foreseeable risk of physical injury to those third persons.

Duty is indeed the cornerstone of every negligence claim. In California, the general rule governing duty is codified in Civil Code

section 1714, subdivision (a) : "Everyone is responsible ... for an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property or person ...." Thus, "each person has a duty to use ordinary care and 'is liable for injuries caused by his failure to exercise reasonable care in the circumstances ....' " ( Parsons v. Crown Disposal Co. (1997) 15 Cal.4th 456, 472, 63 Cal.Rptr.2d 291, 936 P.2d 70.) Whether a party has a duty of care in a particular case is a question of law for the court, which we review independently on appeal. ( Kesner v.

Superior Court (2016) 1 Cal.5th 1132, 1142, 210 Cal.Rptr.3d 283, 384 P.3d 283 ( Kesner ).) The conclusion that a duty exists in a particular case " 'is not sacrosanct in itself, but only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection.' " ( Dillon v.

Legg (1968) 68 Cal.2d 728, 734, 69 Cal.Rptr. 72, 441 P.2d 912, quoting Prosser, Law of Torts (3d ed. 1964) pp. 332-333.) We invoke the concept of duty to limit " ' " 'the otherwise potentially infinite liability which would follow from every negligent act,' " ' " yet we do so only where public policy clearly supports (or a statutory provision establishes) an exception to the general rule of Civil Code

section 1714. ( Kesner , supra , 1 Cal.5th at p. 1143.) When considering whether to depart from the general rule, we balance a number of considerations, including "the foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost, and prevalence of insurance for the risk involved." ( Rowland v.

Christian (1968) 69 Cal.2d 108, 113, 70 Cal.Rptr. 97, 443 P.2d 561 ( Rowland ).) In the context of prescription drugs, a manufacturer's duty is to warn physicians about the risks known or reasonably known to the manufacturer. ( Carlin v. Superior Court (1996) 13 Cal.4th 1104, 1112, 56 Cal.Rptr.2d 162, 920 P.2d 1347 ( Carlin ); see generally Finn v. G.D.

Searle & Co. (1984) 35 Cal.3d 691, 699-700, 200 Cal.Rptr. 870, 677 P.2d 1147.) The manufacturer has no duty to warn of risks that are "merely speculative or conjectural, or so remote and insignificant as to be negligible." ( Carlin , at p. 1116, 56 Cal.Rptr.2d 162, 920 P.2d 1347.) If the manufacturer provides an adequate warning to the prescribing physician, the manufacturer need not communicate a warning directly to the patient who uses the drug. ( Ibid . ) In this case, plaintiffs allege that the terbutaline label failed to warn about the risks to fetal brain development and falsely represented that the drug was safe for use by pregnant women.

They further claim that Novartis's control over the Brethine label rendered it responsible for any deficiencies in the terbutaline label, given that generic drug manufacturers are legally obligated to use the label crafted by the brand-name drug manufacturer. Novartis contends that it owed no duty to plaintiffs to update or maintain an accurate label because (1) it did not manufacture the terbutaline that caused plaintiffs' injuries; and (2) it had divested ownership of Brethine, the name-brand drug, several years before plaintiffs' mother was prescribed terbutaline.

To determine whether to create an exception to a brand-name drug manufacturer's duty to warn, we balance the constellation of factors set out in Rowland , supra , 69 Cal.2d at page 113, 70 Cal.Rptr. 97, 443 P.2d 561.

Three of those factors-foreseeability, the certainty of the injury, and the closeness of the connection between the plaintiff and the defendant-address the foreseeability of the relevant injury. ( Kesner , supra , 1 Cal.5th at p. 1145, 210 Cal.Rptr.3d 283, 384 P.3d 283.) The remaining four-moral blame, the policy of preventing future harm, the burden on the defendant and the general public, and the availability of insurance-focus on the public policy justifications for or against carving out an exception to the general duty in this category of cases. ( Ibid . ) Our task is to determine whether a brand-name manufacturer owes a duty of ordinary care to those who may be injured by deficiencies in its warning label, not whether Novartis acted reasonably under the particular circumstances here. (See Cabral v.

Ralphs Grocery Co. (2011) 51 Cal.4th 764, 772-774, 122 Cal.Rptr.3d 313, 248 P.3d 1170 ( Cabral ).) A. Whether Plaintiffs Exposed to the Generic Bioequivalent Drug Can Assert Warning Label Liability Against Novartis, the Brand-name Drug Manufacturer The first case to recognize warning label liability was Conte v. Wyeth, Inc. (2008) 168 Cal.App.4th 89, 85 Cal.Rptr.3d 299 ( Conte ).

In Conte the court concluded that a brand-name drug manufacturer's common law duty of care when warning of the dangers of its drug extended not only to consumers of the brand-name drug, "but also to those whose doctors foreseeably rely on the name-brand manufacturer's product information when prescribing a medication, even if the prescription is filled with the generic version of the prescribed drug." ( Id . at p. 94, 85 Cal.Rptr.3d 299.) The Court of Appeal's holding predated by more than two years the United States Supreme Court's ruling that federal law requires generic drug manufacturers to conform their warning label to the label used by the brand-name manufacturer ( PLIVA , supra , 564 U.S. at p. 613, 131 S.Ct. 2567 ), and its analysis referenced some-but not all-of the Rowland factors. ( Conte , at pp. 105-107, 85 Cal.Rptr.3d 299.) Only a handful of courts have followed Conte . (See, e.g., Dolin v.

SmithKline Beecham Corp. (N.D.Ill. 2014) 62 F.Supp.3d 705 ; Chatman v. Pfizer, Inc. (S.D.Miss. 2013) 960 F.Supp.2d 641, 654 ; Kellogg v. Wyeth, Inc. (D.Vt. 2010) 762 F.Supp.2d 694, 704 ; Wyeth, Inc. v.

Weeks (Ala. 2014) 159 So.3d 649 ( Weeks ).) But our careful review of the federal regulatory scheme and analysis of all the Rowland factors persuades us that a brand-name drug manufacturer has the duty under California law to warn of the risks about which it knew or reasonably should have known, regardless of whether the consumer is prescribed the brand-name drug or its generic "bioequivalent." (See 21 U.S.C. § 355(j)(2)(A)(iv).) 1.

Foreseeability and related factors In determining whether to create an exception to the general statutory duty of care, the "major" ( Cabral , supra , 51 Cal.4th at p. 771, fn. 2, 122 Cal.Rptr.3d 313, 248 P.3d 1170 ), and ultimately "most important" ( Kesner , supra , 1 Cal.5th at p. 1145, 210 Cal.Rptr.3d 283, 384 P.3d 283 ), consideration under California law is the foreseeability of physical harm.

Novartis could reasonably have foreseen that deficiencies in its Brethine label could mislead physicians about the safety of terbutaline, Brethine's generic bioequivalent, which was legally required to bear an identical label.

A brand-name pharmaceutical manufacturer has a duty under federal law to draft, update, and maintain the warning label so that it provides adequate warning of the drug's potentially dangerous effects. ( 21 U.S.C. § 352(f)(2).) The FDA, as part of its premarket review process, must approve the text of the proposed label. ( 21 U.S.C. § 355 ; Wyeth , supra , 555 U.S. at p. 568, 129 S.Ct. 1187.) Although the brand-name manufacturer generally must obtain FDA approval before making any change to the label, this category of manufacturers may use the "changes being effected" (CBE-0) regulation ( 21 C.F.R. § 314.70(c)(3) ) to "add or strengthen a contraindication, warning, precaution, or adverse reaction" immediately upon filing a supplemental application, without waiting for FDA approval. ( Id ., § 314.70(c)(6)(iii)(A).) The duty for a manufacturer of generic drugs, on the other hand, is to ensure that its warning label is identical to the label of the brand-name drug. ( PLIVA , supra , 564 U.S. at p. 613, 131 S.Ct. 2567.) In other words, generic manufacturers "have an ongoing federal duty of 'sameness.' " ( Ibid . ) A generic manufacturer may use the CBE-0 regulation to change its label only to match a revised brand-name label or otherwise comply with FDA instructions. ( Id . at p. 614, 131 S.Ct. 2567.) What a brand-name manufacturer thus knows to a legal certainty is that any deficiencies in the label for its drug will be perpetuated in the label for its generic bioequivalent.

A brand-name manufacturer will also be aware that although the warnings communicated in its drug label are designed for physicians-and are intended to influence a physician's decision whether to prescribe the drug (see Stevens v. Parke, Davis & Co. , supra , 9 Cal.3d at pp. 64-65, 107 Cal.Rptr. 45, 507 P.2d 653 )-it is often the pharmacist who actually decides whether the patient receives the brand-name drug or its generic bioequivalent. ( Bus. & Prof.

Code, § 4073.) Moreover, many insurance companies require the substitution of a generic drug for the brand-name drug as a matter of course, unless the physician justifies use of the branded drug. ( PLIVA , supra , 564 U.S. at p. 628, fn. 2, 131 S.Ct. 2567 (dis. opn. of Sotomayor, J.).) Accordingly, it is entirely foreseeable that the warnings included (or not included) on the brand-name drug label would influence the dispensing of the generic drug, either because the generic is substituted by the pharmacist or the insurance company after the physician has prescribed the brand-name drug, or because the warning label on the generic drug is legally required to be identical to the label on the brand-name drug. ( Conte , supra , 168 Cal.App.4th at p. 105, 85 Cal.Rptr.3d 299 ; accord, Weeks , supra , 159 So.3d at p. 670.) Under the second Rowland factor, we assess the degree of certainty that the plaintiff suffered injury.

This factor, too, strengthens the case for finding a duty of care in these circumstances. Plaintiffs allege that they suffer from global neurological impairment, including autism and pervasive developmental delays. These are indisputably injuries and are compensable under the law. (See Kesner , supra , 1 Cal.5th at p. 1148, 384 P.3d 283.) The third Rowland factor implicates the closeness of the connection between the defendant's conduct and the plaintiff's injury.

The label for a generic drug is (and must be) the same as the label for the brand-name drug, so any deficiency in the brand-name label will be reflected in the generic label. Plaintiffs allege that the deficient Brethine label led their mother's physician to prescribe terbutaline, which caused their neurological injuries. This scenario describes a close connection between Novartis's allegedly negligent conduct and plaintiffs' injuries. Novartis, meanwhile, relies on O'Neil v. Crane Co. (2012) 53 Cal.4th 335, 135 Cal.Rptr.3d 288, 266 P.3d 987 ( O'Neil ). This is a case we can distinguish.

There, a naval seaman developed mesothelioma caused by asbestos exposure. Following his death, his family filed a wrongful death action asserting strict liability and negligence claims against several defendants, including the manufacturers of valves and pumps that were used in warships. ( Id . at p. 346, 135 Cal.Rptr.3d 288, 266 P.3d 987.) At the close of evidence, the defendant manufacturers moved for nonsuit, pointing out the plaintiffs' failure to show that the decedent had been exposed to asbestos from any of their products.

Plaintiffs responded that even if the decedent was never exposed to asbestos from the defendants' products themselves, it was foreseeable that the defendants' valves and pumps would need to be replaced with new asbestos-containing components, and that asbestos could be released into the air during the repair and replacement process. ( Ibid . ) In reinstating the trial court's judgment of nonsuit, we invoked the Rowland factors and noted, in particular, that the connection between the defendant manufacturers' conduct and the decedent's injury was "extremely remote" ( id . at p. 365, 135 Cal.Rptr.3d 288, 266 P.3d 987 ): Although component parts of the defendants' valves and pumps had been replaced "during routine maintenance" ( id . at p. 344, 135 Cal.Rptr.3d 288, 266 P.3d 987 ), the decedent did not begin to work in the vicinity of these valves and pumps until more than 20 years after they were installed-and did not suffer an injury for another 40 years.

In addition, the defendant manufacturers did not produce, sell, or supply any of the asbestos-containing products that could have caused his mesothelioma.

Because the defendants' asserted misconduct, according to the plaintiffs, was simply that they failed to warn about the potential dangers in replacement parts sold by other manufacturers-and there was "no reason to think a product manufacturer [would] be able to exert any control over the safety of replacement parts or companion products made by other companies"-we found that the connection between the alleged misconduct and the injury was too "attenuate[d]" to warrant imposition of a duty of care. ( Id . at p. 365, 135 Cal.Rptr.3d 288, 266 P.3d 987.) Here, by contrast, federal regulations granted the brand-name drug manufacturer-and no other manufacturer-control over the active ingredients in the generic drug and the content of the warnings included in the generic's label.

In addition, the temporal connection between Novartis's allegedly negligent conduct, on the one hand, and plaintiffs' exposure to harm and subsequent injury, on the other, is much closer than was the case in O'Neil . 2. Considerations of public policy Foreseeability alone, however, is not sufficient to justify a duty of care in every instance. ( Erlich v.

Menezes (1999) 21 Cal.4th 543, 552, 87 Cal.Rptr.2d 886, 981 P.2d 978.) We will not recognize a duty of care even as to foreseeable injuries "where the social utility of the activity concerned is so great, and avoidance of the injuries so burdensome to society, as to outweigh the compensatory and cost-internalization values of negligence liability." ( Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 502, 110 Cal.Rptr.2d 370, 28 P.3d 116.) Novartis contends that the circumstances here present such an exceptional case. We disagree.

Time and again we have recognized how " '[t]he overall policy of preventing future harm is ordinarily served, in tort law, by imposing the costs of negligent conduct upon those responsible.' " ( Kesner , supra , 1 Cal.5th at p. 1150, 384 P.3d 283, quoting Cabral , supra , 51 Cal.4th at p. 781, 122 Cal.Rptr.3d 313, 248 P.3d 1170.) A brand-name drug manufacturer is not only in the best position to warn of a drug's harmful effects ( Sindell v.

Abbott Laboratories (1980) 26 Cal.3d 588, 611, 163 Cal.Rptr. 132, 607 P.2d 924 ): It is also the only manufacturer with the unilateral authority under federal law to issue such a warning for the brand-name drug or its generic bioequivalent.

Although federal regulations impose a continuing duty on the brand-name manufacturer to update and maintain an adequate warning label (see 21 C.F.R. § 201.80(e) ), a brand-name manufacturer's incentive to comply with that duty declines once the patent expires and generic manufacturers enter the market, since the market share for the brand-name drug at that point "may drop substantially." (78 Fed.Reg., supra , at p. 67988 ["Among drugs for which a generic version is available, approximately 94 percent are dispensed as a generic"].) The possibility that any consumer injured by a deficient drug label, including those who were dispensed the generic bioequivalent drug, could assert a claim of warning label liability restores the brand-name manufacturer's incentive to update the warning label with the latest safety information, even as the brand-name drug's market share declines.

If the policy of preventing harm has special relevance to any particular endeavor, surely prescription drug labeling is one. ( Sindell v. Abbott Laboratories , supra , 26 Cal.3d at p. 611, 163 Cal.Rptr. 132, 607 P.2d 924.) A substantial body of state law serves to protect California consumers from the dangers posed by false, misleading, and inadequate labeling of prescription medications. (See, e.g., Bus. & Prof.

Code, §§ 4070 - 4078.) The United States Supreme Court, too, has recognized the pivotal role of state tort actions "as a complementary form of drug regulation" with respect to drug labeling. ( Wyeth , supra , 555 U.S. at p. 578, 129 S.Ct. 1187 ; see id . at p. 579, 129 S.Ct. 1187 ["State tort suits uncover unknown drug hazards and provide incentives for drug manufacturers to disclose safety risks promptly. They also serve a distinct compensatory function that may motivate injured persons to come forward with information.

Failure-to-warn actions, in particular, lend force to the FDCA's premise that manufacturers, not the FDA, bear primary responsibility for their drug labeling at all times"]; accord, Stevens v. Parke, Davis & Co. , supra , 9 Cal.3d at p. 65, 107 Cal.Rptr. 45, 507 P.2d 653 [recognizing that federal warning-label regulations alone may be insufficient to protect patient safety].) The brand-name drug manufacturer is the only entity with the unilateral ability to strengthen the warning label.

So a duty of care on behalf of all those who consume the brand-name drug or its bioequivalent ensures that the brand-name manufacturer has sufficient incentive to prevent a known or reasonably knowable harm.

In O'Neil , by contrast, we found "no reason" to believe that the defendant valve and pump manufacturers would have any control over the safety of other companies' replacement parts or companion products (or even the Navy's purchasing choices or specifications). ( O'Neil , supra , 53 Cal.4th at p. 365, 135 Cal.Rptr.3d 288, 266 P.3d 987.) Our no-duty conclusion also rested explicitly on the fact that the replacement parts' "dangerous feature"-i.e., the asbestos-"was not integral to the product's design." ( Id . at p. 343, 135 Cal.Rptr.3d 288, 266 P.3d 987.) Here, on the other hand, the brand-name drug manufacturer exercised complete control over the contents of the generic drug label at the time of its alleged negligence, and the generic drug was legally required to be the brand-name drug's bioequivalent.

We therefore conclude that warning label liability is likely to be effective in reducing the risk of harm to those who are prescribed (or are exposed to) the brand-name drug or its generic bioequivalent. Against the public interest in preventing harm, we must balance the defendant's burden and the consequences to the community of imposing a duty of care. The burden that matters, though, is not the cost of compensating individuals for injuries that the defendant has actually and foreseeably caused.

As we recently explained in Kesner , "shielding tortfeasors from the full magnitude of their liability for past wrongs is not a proper consideration in determining the existence of a duty. Rather, our duty analysis is forward-looking, and the most relevant burden is the cost to the defendants of upholding, not violating, the duty of ordinary care." ( Kesner , supra , 1 Cal.5th at p. 1152, 384 P.3d 283.) Strictly speaking, then, the burden on brand-name drug manufacturers of satisfying a common law duty of care to those who are prescribed the generic version of the drug is zero.

Brand-name manufacturers already have a continuing duty to warn of potential risks "as soon as there is reasonable evidence of an association of a serious hazard with a drug; a causal relationship need not have been proved." ( 21 C.F.R. § 201.80(e).) A brand-name manufacturer's burden to maintain an adequate warning label persists without regard to the happenstance that a given prescription for a brand-name drug may-because of insurance company cost-savings rules ( Meijer, Inc. v. Warner Chilcott Holdings Co. III Ltd. (D.D.C. 2007) 246 F.R.D. 293, 297 ), or a pharmacist's discretion ( Bus. & Prof.

Code, § 4073, subd. (c) )-be filled with a generic bioequivalent. And where the brand-name manufacturer provides an adequate label, then it necessarily has also fulfilled its duty with respect to the generic bioequivalent. Novartis complains that unless the ordinary duty of care is narrowed, the brand-name drug manufacturer would end up an insurer for the entire market. This would occur, Novartis contends, even though the brand-name manufacturer may hold only a small fraction of the combined sales of the brand-name drug and its generic bioequivalent. We disagree.

A brand-name drug manufacturer would not be liable where, for example, the injury arose from a defect in the manufacturing process of the generic drug (see, e.g., Fisher v. Pelstring (D.S.C. 2012) 817 F.Supp.2d 791, 818 ), the generic manufacturer failed to conform its label to the brand-name drug's label ( Fulgenzi v. PLIVA, Inc. (6th Cir. 2013) 711 F.3d 578, 582, 584 ; Huck v. Wyeth, Inc. (Iowa 2014) 850 N.W.2d 353, 356 (plur. opn. of Waterman, J.)), or the generic manufacturer was promoting a use that was inconsistent with the FDA-approved label ( Arters v. Sandoz, Inc. (S.D.

Ohio 2013) 921 F.Supp.2d 813, 819-820 ). Under warning label liability, the brand-name drug manufacturer is liable only in a narrow circumstance-when deficiencies in its own label foreseeably and proximately caused injury.

If instead tort law simply carved out those who were given the generic bioequivalent from obtaining otherwise available compensation for injuries attributable to the brand-name drug manufacturer's defective warning label, then consumers would insist on the brand-name drug over the cheaper bioequivalent, inflating health costs with no corresponding increase in safety and in contradiction to the stated federal policy of making low-cost generic drugs more available. (See H.R.Rep. No. 98-857, 2d Sess., p. 14 (1984), reprinted in 1984 U.S. Code Cong. & Admin.

News, p. 2647.) Novartis nonetheless predicts that unless we carve out an exception for those taking generic drugs, warning label liability will lead to overwarning-i.e., inclusion of a slew of speculative risks in the warning label-which would dilute the effectiveness of any individual warning. But why this would occur is far from clear. To recognize that the duty of care includes all those who would foreseeably be affected by a deficient brand-name drug label merely preserves the brand-name manufacturer's duty as it existed when its patent excluded all competitors from the market.

Nor has Novartis identified any surge in overwarning since 2008, when Conte recognized warning label liability. (Cf.

Carlin , supra , 13 Cal.4th at p. 1116, fn. 6, 56 Cal.Rptr.2d 162, 920 P.2d 1347 ["[T]here is no evidence that any such [overwarning] problem has emerged or that patients have suffered any detriment, despite the fact that strict liability has long been the rule in California"].) Plaintiffs further suggest that the consequences of overwarning on physicians' prescription decisions is uncertain (Steven Garber, RAND Institute for Civil Justice, Economic Effects of Product Liability and Other Litigation Involving the Safety and Effectiveness of Pharmaceuticals (2013) p. xiv ["That claim is controversial within the medical community, and there is no direct empirical evidence about it"] ) and, in any event, can be solved through the FDA's power to reject a labeling change it deems unnecessary or counterproductive. (See Wyeth , supra , 555 U.S. at p. 571, 129 S.Ct. 1187.) Novartis cautions that warning label liability could perversely incentivize a brand-name manufacturer to withdraw its drug from the market, rather than expose itself to the risk of suit by those who-in reliance on the brand-name manufacturer's label-were prescribed the generic bioequivalent and suffered injury.

Yet Novartis fails to explain why brand-name manufacturers would find it economically advantageous to withdraw drugs from the market rather than simply modify the warning labels to include the newly discovered risks. Nor does it offer any evidence that brand-name manufacturers have accelerated their withdrawal from the market in the nine years since Conte was decided. Moreover, a brand-name drug manufacturer cannot avoid its duty to update and maintain its warning label simply by unilaterally exiting the market.

Under FDA regulations, a brand-name drug manufacturer's duty to update and maintain the warning label continues, even if the brand-name drug has been withdrawn from the market, until the FDA (having assured itself that the drug is safe, effective, and correctly labeled) withdraws approval of the NDA. ( 21 C.F.R. § 314.150(a)(2), (b)(3) & (c) ; FDA, supra , 78 Fed.Reg. at p. 67993.) A brand-name manufacturer that sought to exit the market but was unsure whether the FDA would determine that the drug was withdrawn "for reasons other than effectiveness or safety" thus would presumably go ahead and update the label. (Lasker et al., Taking the "Product" Out of Product Liability: Litigation Risks and Business Implications of Innovator and Co-promoter Liability (July 2015) 82 Def.

Counsel J. 295, 306.) Novartis complains next that it is unfair to subject a brand-name drug manufacturer to liability for harm caused by a competitor's product-a product from which the brand-name manufacturer derives no revenues or profit. But the plaintiffs' claim here is not that terbutaline is defectively designed or inherently dangerous. It is that terbutaline's warning label failed to mention the risk to fetal brain development, and that Novartis was responsible for the deficient label. So the alleged fault here lies with Novartis, not with its generic competitors.

The brand-name drug manufacturer's burden to adequately label its drug as a means of ensuring adequate warnings for the generic bioequivalent is more than offset by the substantial benefits federal law confers on the brand-name manufacturer: a monopoly over the market for the life of the patent, which can be extended for the time consumed by FDA review of the NDA (see 35 U.S.C. §§ 154, 156(a), (c) ); an additional five-year exclusivity period if the brand-name drug contains a new chemical entity or an additional three years for a new use of a previously approved drug (see 21 U.S.C. § 355(c)(3)(E) ; 21 C.F.R. § 314.108(b)(2), (4), (5) ); and the higher prices the brand-name drug can continue to command even after the exclusivity period expires. (See Conte , supra , 168 Cal.App.4th at p. 110, 85 Cal.Rptr.3d 299.) Because federal law bundles-and indeed, only makes available-those benefits along with the responsibility to maintain an adequate warning label, it is as logical as it is reasonable for state common law to ensure the brand-name manufacturer holds up its end of the deal. (See Wyeth , supra , 555 U.S. at pp. 578-579, 129 S.Ct. 1187 ; see generally Struve, The FDA and the Tort System: Postmarketing Surveillance, Compensation, and the Role of Litigation (2005) 5 Yale J.

Health Pol'y L. & Ethics 587, 605-606 ["The problem of insufficient resources persists, as does the [structural] concern that the FDA may be loath to move swiftly to address emerging safety issues"].) The public interest in adequate drug warnings, in short, is just as acute when the brand-name drug manufacturer has an effective monopoly over the warning label as it was when the brand-name manufacturer had a monopoly over the entire market for the drug. (See Wyeth , supra , 555 U.S. at p. 571, 129 S.Ct. 1187 [noting that federal regulations "plac[e] responsibility for postmarketing surveillance on the manufacturer"].) We are equally unpersuaded by Novartis's contention that warning label liability would stifle innovation by substantially raising drug costs and chilling the development and marketing of new drugs.

The logic buttressing this argument is far from self-evident. Warnings about a product's efficacy or danger may indeed risk diminishing its value to the manufacturer. Less obvious is the manufacturer's response to this predicament.

One might just as easily assert that a drug company, after adding a new warning, will be incentivized to develop new and safer alternatives to the drug so that it can recapture the market for treatment of that disease. (See Carlin , supra , 13 Cal.4th at p. 1117, 56 Cal.Rptr.2d 162, 920 P.2d 1347.) Indeed, the pharmaceutical industry raised a similar objection in Carlin to the imposition of strict liability for the failure to warn about the known or reasonably scientifically knowable dangers of a drug.

We found "no clear or sufficient basis for concluding that research and development will inevitably decrease" as a consequence of imposing liability for failure to warn of known or knowable risks ( Carlin , supra , 13 Cal.4th at p. 1117, 56 Cal.Rptr.2d 162, 920 P.2d 1347 )-nor has Novartis offered any evidence that drug innovation has declined in the 21 years since Carlin was decided.

Carlin therefore saw "no reason to depart from our conclusion ... that the manufacturer should bear the costs, in terms of preventable injury or death, of its own failure to provide adequate warnings of known or reasonably scientifically knowable risks." ( Ibid . ) The same is true here. When it comes to choosing whether the cost of an injury involving prescription medication should be borne by an innocent plaintiff or a negligent defendant, our case law has routinely held that the latter should bear the cost. ( Sindell v.

Abbott Laboratories , supra , 26 Cal.3d at pp. 610-611, 163 Cal.Rptr. 132, 607 P.2d 924.) A brand-name drug manufacturer is in the best position to discover and cure deficiencies in its warning label, to bear the cost of injury resulting from its failure to update and maintain the warning label, to insure against the risk of liability, and to spread any increased cost widely among the public. ( Id . at p. 611, 163 Cal.Rptr. 132, 607 P.2d 924.) After all, the fault (if any) for a deficient label lies with the brand-name manufacturer alone. (Cf. Groll v.

Shell Oil Co. (1983) 148 Cal.App.3d 444, 449, 196 Cal.Rptr. 52 [manufacturer of bulk fuel owed no duty to the ultimate consumer where the manufacturer provided adequate warnings to the distributor, "who subsequently packages, labels and markets the product," and the manufacturer thus "did not have the ability to prepare the warning"].) The balance of preventing harm and avoiding an undue burden on drug manufacturers and the public generally thus tips in favor of warning label liability. Neither of the two remaining Rowland factors weighs in favor of an exception to the general duty of care.

To wit: Significant moral blame attaches where a brand-name drug manufacturer fails to warn about the unsafe effects of its drug, when those effects are known or reasonably should have been known to the manufacturer. (See Peterson v. San Francisco Community College Dist. (1984) 36 Cal.3d 799, 814, 205 Cal.Rptr. 842, 685 P.2d 1193.) Blameworthiness would not depend on whether the pregnant woman, in reliance on the brand-name drug manufacturer's label, was dispensed the brand-name drug or its generic bioequivalent.

Even those women who were prescribed the brand-name drug may nonetheless have received the generic version, either because the insurance company required it or because the pharmacist chose it. Moreover, both the pregnant woman and her physician would have relied on the brand-name drug manufacturer to warn of any serious hazards that were "associated" with the drug. ( 21 C.F.R. § 201.80(e).) Indeed, under federal law, no other manufacturer could have advised them of the drug's risks.

In these circumstances, potential plaintiffs-the unborn-would be "particularly powerless," while the defendant brand-name drug manufacturer would have the best information about the drug's risks. ( Kesner , supra , 1 Cal.5th at p. 1151, 210 Cal.Rptr.3d 283, 384 P.3d 283.) Although we declared in O'Neil that "little moral blame can attach to a failure to warn about dangerous aspects of other manufacturers' products and replacement parts" ( O'Neil , supra , 53 Cal.4th at p. 365, 135 Cal.Rptr.3d 288, 266 P.3d 987 ), the context of that statement was a situation in which the valve and pump manufacturers had no control or influence over the design, manufacturing, or safety of those parts; the warning attached to them; or the consumer's decision whether to purchase such products. ( Ibid . ) Here, by contrast, the brand-name manufacturer legally controlled the label on the generic bioequivalent drug, and thus had significant influence on the decision whether to prescribe it.

Finally, Novartis offers no reason why a brand-name drug manufacturer would be unable to insure against the risk of warning label liability. Presumably, a brand-name manufacturer already insures against the risk of liability arising from a deficient warning label when a drug is introduced and the manufacturer has a monopoly over that market. It is far from clear why the brand-name drug manufacturer's exposure would become fatally uncertain merely because the brand-name manufacturer is sharing the market with generic manufacturers. (Cf.

O'Neil , supra , 53 Cal.4th at p. 365, 135 Cal.Rptr.3d 288, 266 P.3d 987 ["it is doubtful that manufacturers could insure against the 'unknowable risks and hazards' lurking in every product that could possibly be used with or in the manufacturer's product"].) 3. Out-of-state authorities Novartis (and its amici curiae) rely in substantial part on what they call the "overwhelming" majority of courts that have declined to recognize warning label liability owed to those who were prescribed a generic version of the drug in reliance on the brand-name drug label.

Although the decisions of our sister states and the lower federal courts may be instructive to the extent we find their analysis persuasive, they are neither binding nor controlling on matters of state law. ( People v. Gonzales and Soliz (2011) 52 Cal.4th 254, 296, 128 Cal.Rptr.3d 417, 256 P.3d 543.) We have respectfully considered the authorities cited by Novartis. We do not find them persuasive in analyzing California law. The " 'leading case' " ( Strayhorn v.

Wyeth Pharms., Inc. (6th Cir. 2013) 737 F.3d 378, 401 ) for the proposition that a brand-name drug manufacturer owes no duty to warn patients who were dispensed the generic bioequivalent is Foster v. American Home Products Corp. (4th Cir. 1994) 29 F.3d 165 ( Foster )-so we examine that case in some detail. In Foster , the decedent's pediatrician prescribed Phenergan, a brand-name antihistamine manufactured by the defendant which was sometimes used to treat colic. The pharmacist substituted promethazine, a generic bioequivalent.

After being given promethazine several times over the next few days, six-week-old Brandy was found dead in her crib. A pediatrician specializing in sudden infant death syndrome at the University of Maryland opined that Brandy's death was caused by promethazine. ( Id . at pp. 167-168.) The district court found the plaintiffs (Brandy's parents) had stated a claim for negligent misrepresentation, despite the fact that the defendant had not manufactured the drug ingested by Brandy, but subsequently granted

summary judgment because of the plaintiffs' failure to demonstrate that their pediatrician had relied on the defendant's representations. When the plaintiffs appealed the grant of

summary judgment and the defendant cross-appealed the district court's initial determination that a negligent misrepresentation claim could lie against the brand-name manufacturer for harm arising from the generic drug, the Fourth Circuit sustained the cross-appeal. ( Ibid . ) Foster reasoned first that the negligent misrepresentation cause of action was in essence a claim of product liability, but "without meeting the requirements [Maryland] law imposes in products liability actions"-i.e., "that the defendant manufactured the product at issue." ( Foster , supra , 29 F.3d at p. 168.) The court next addressed the peculiarities of the regulated pharmaceutical market, under which "any representations [the defendant] makes when advertising Phenergan also apply to generic promethazine"; a warning "will simply not be made" if the brand-name manufacturer does not issue one; and a patient who is prescribed Phenergan"may actually receive generic promethazine." ( Id . at p. 169.) In rejecting liability nonetheless, the Foster court assumed that although generic manufacturers "must include the same labeling information as the equivalent name brand drug, they are also permitted to add or strengthen warnings and delete misleading statements on labels, even without prior FDA approval. ...

Manufacturers of generic drugs, like all other manufacturers, are responsible for the representations they make regarding their products." ( Id . at p. 170.) The court also concluded that "to impose a duty in the circumstances of this case would be to stretch the concept of foreseeability too far" under Maryland law, which had recognized the tort of negligent misrepresentation only where " 'one party has the right to rely for information upon the other, and the other giving the information owes a duty to give it with care.' " ( Id . at p. 171.) In the court's view, no such relationship could ever exist because Brandy "was injured by a product that [the defendant] did not manufacture." ( Ibid . ) At the core of the Foster court's analysis is an erroneous assumption: that generic drug manufacturers may "add or strengthen warnings and delete misleading statements on labels, even without prior FDA approval," and that they can be sued for their failure to do so. ( Foster , supra , 29 F.3d at p. 170.) In reality, generic drug manufacturers are legally obligated to conform their drug label to the brand-name manufacturer's label ( PLIVA , supra , 564 U.S. at p. 613, 131 S.Ct. 2567 ) and, so long as they fulfill their "duty of 'sameness' " ( ibid . ), cannot be sued in tort for deficiencies in the label. (See id . at p. 624, 131 S.Ct. 2567.) Fortunately, the Fourth Circuit has since recognized its error.

Despite its categorical rejection of any duty in Foster , the court recently certified to the Supreme Court of Appeals of West Virginia the question "Whether West Virginia law permits a claim of failure to warn and negligent misrepresentation against a branded drug manufacturer when the drug ingested was produced by a generic manufacturer." ( McNair v. Johnson & Johnson Corp., 694 Fed.Appx. 115, 116 (4th Cir. 2017).) Even on its own terms, though, Foster 's reasoning proves unhelpful in construing California law, and finds no support in it.

First, California law does not conflate negligent misrepresentation and strict liability in the manner Foster believed was true of Maryland law. ( Conte , supra , 168 Cal.App.4th at p. 108, 85 Cal.Rptr.3d 299.) Under our state's law, there is no per se requirement in negligent misrepresentation actions that the misrepresentation be made by the product manufacturer. Consider Hanberry v.

Hearst Corp. (1969) 276 Cal.App.2d 680, 81 Cal.Rptr. 519, where the plaintiff alleged that defective shoes caused her injuries. ( Id . at p. 682, 81 Cal.Rptr. 519.) The Court of Appeal allowed the negligent misrepresentation claims to go forward against a nonmanufacturer-the publisher of Good Housekeeping magazine, which had given the shoes its renowned seal of approval. ( Id . at p. 683, 81 Cal.Rptr. 519.) This seal appeared not only in the pages of its own magazine, but was used by the shoe manufacturer in its advertising as well as on the product and its packaging. ( Ibid . ) The court acknowledged that the defendant publisher was neither the seller nor the manufacturer of the shoes, but nonetheless recognized a duty of care because of the allegations that the publisher "held itself out as a disinterested third party which had examined the shoes, found them satisfactory, and gave its endorsement"; and the plaintiff reasonably relied on the endorsement and "purchased the shoes because of [it]." ( Id . at pp. 686, 683, 81 Cal.Rptr. 519.) As to the plaintiff's claim under strict liability, however, the court affirmed the trial court's dismissal-declining to extend strict liability "to a general endorser who makes no representation it has examined or tested each item marketed." ( Id . at p. 688, 81 Cal.Rptr. 519 ; see also Conte , supra , 168 Cal.App.4th at pp. 101-102, 85 Cal.Rptr.3d 299 [similarly distinguishing between strict liability and negligent misrepresentation theories].) Second, California law places greater weight on the element of foreseeability in the duty analysis than does Maryland law.

Indeed, this state treats foreseeability as "[t]he most important factor" ( Kesner , supra , 1 Cal.5th at p. 1145, 210 Cal.Rptr.3d 283, 384 P.3d 283 ), and we do not narrowly circumscribe the kinds of relationships that must exist between the plaintiff and the defendant as a predicate to imposing a duty on the defendant to prevent injuries arising from its own conduct. ( Id . at p. 1163, 210 Cal.Rptr.3d 283, 384 P.3d 283 ; see Randi W. , supra , 14 Cal.4th at p. 1077, 60 Cal.Rptr.2d 263, 929 P.2d 582 [one who negligently provides false information to another can owe a duty of care to a third person "who did not receive the information and who has no special relationship with the provider"].) By contrast, Foster found that a "duty ... arises" under Maryland law only "when there is 'such a relation that one party has the right to rely for information upon the other, and the other giving the information owes a duty to give it with care.' " ( Foster , supra , 29 F.3d at p. 171, quoting Weisman v.

Connors (1988) 312 Md. 428, 540 A.2d 783, 790.) Foster then summarily concluded that "[t]here is no such relationship between the parties to this case, as Brandy Foster was injured by a product that [defendant] did not manufacture." ( Foster , at p. 171.) Even this explanation, though, seems to overlook the fact that there is never a direct relationship between a prescription drug manufacturer and the ultimate consumer.

A consumer may obtain a prescription medication only through the physician as a learned intermediary. (See Carlin , supra , 13 Cal.4th at pp. 1116, 1126, 56 Cal.Rptr.2d 162, 920 P.2d 1347.) A physician, in turn, typically relies on the drug's warning label, the contents of which (regardless of whether the medication ultimately dispensed is the brand-name or generic bioequivalent) are controlled by the brand-name manufacturer.

It is difficult to understand why the relationship between the brand-name manufacturer and the physician must be deemed to evaporate simply because an insurance company or pharmacist subsequently decides to dispense a generic version of the drug that bears the warning label crafted by the brand-name manufacturer. Third, in one crucial respect, Foster is like the vast majority of the out-of-state cases on which Novartis relies: it arose in federal court under diversity jurisdiction. Federal courts sitting in diversity are "extremely cautious" about recognizing innovative theories under state law ( Combs v.

Int'l Ins. Co. (6th Cir. 2004) 354 F.3d 568, 578 ) and are bound to "apply the applicable state law as it now exists." ( Foster , supra , 29 F.3d at p. 171 ; see generally Gluck, Intersystemic Statutory

Interpretation: Methodology as "Law" and the Erie Doctrine (2011) 120 Yale L.J. 1898, 1939 [federal courts "pick the narrowest possible answer, usually the one that does the least to change the status quo, regardless of its predictions of what the state court would do"].) Because only a handful of jurisdictions have adopted the duty recognized in Conte , supra , and followed by the Court of Appeal here, it is not surprising that federal courts have been reluctant to interpret the law of various states to embrace it. But the task of this court is not to " 'opt for the

interpretation that restricts liability, rather than expands it' " until someone else tells us otherwise. ( Travelers Indem. Co. v. Dammann & Co., Inc. (3d Cir. 2010) 594 F.3d 238, 253 ; see also Germain v. Teva Pharmaceuticals, USA, Inc. (In re Darvocet, Darvon, & Propoxyphene Products Litigation) (6th Cir. 2014) 756 F.3d 917, 937 ["federal courts must be cautious"].) It is instead emphatically the province of this court to declare what the law is .

By contrast, Novartis's collection of federal decisions merely attempt to predict the law of other states, while operating under a presumption against expanding liability. (See Schrock v. Wyeth, Inc. , supra , 727 F.3d at p. 1290 ["As a federal court ... we have limited authority to correct this potential injustice. It is for the state courts, rather than this panel, to engage in the delicate policy considerations predicate to the expansion of the scope of state tort law"].) They are of little use in discharging our task.

We likewise discount decisions from those jurisdictions that differ from California by categorically excluding from liability certain defendants (see, e.g., Huck v. Wyeth, Inc. , supra , 850 N.W.2d at p. 371 (plur. opn. of Waterman, J.) ["the tort of negligent misrepresentation does not apply to sellers of products but rather is limited to those in the business or profession of supplying information for the guidance of others"] ) or certain injuries (see, e.g., Flynn v.

American Home Products Corp. (Minn.Ct.App. 2001) 627 N.W.2d 342, 351 ["the Minnesota Supreme Court has recognized negligent misrepresentation involving damages only for pecuniary loss, and has expressly declined to recognize the tort of negligent misrepresentation involving the risk of physical harm"] ) from the tort of negligent misrepresentation.

And we find unhelpful the views of those jurisdictions that (federal courts predict) will recharacterize under their product liability act or similar rule all claims against a product manufacturer, no matter the theory, as product liability actions, which can be asserted only against the manufacturer of the product. (See, e.g., Germain , supra , 756 F.3d at pp. 941-954 [construing the laws of Arkansas, Connecticut, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Mississippi, Nebraska, New York, North Carolina, Ohio, Texas, Washington, and West Virginia]; Phelps v.

Wyeth, Inc. (D.Or. 2012) 857 F.Supp.2d 1114, 1121 [Oregon law] ; Stanley v. Wyeth, Inc. (La.Ct.App. 2008) 991 So.2d 31, 33-34 [noting the "numerous cases where the negligent misrepresentation claims were ... preempted by ... a state's enactment of products liability law"].) At core, what Novartis seems to want is more than just an exception to the general duty of care applicable in California-an exception constructed to avoid liability where a biologically equivalent product is sold and the warning label used is required by federal law to be the label that the brand-name manufacturer controls.

Perhaps because there is no logical basis to justify such an exception, Novartis instead seeks a more categorical result, though one no easier to justify-i.e., an unequivocal declaration that California law relieves a manufacturer of any failure-to-warn liability relating to another manufacturer's products.

True: An exception to California's general duty of care is ordinarily applicable to relieve a manufacturer of the duty to warn consumers about a product's risks where the product is that of another manufacturer. ( O'Neil , supra , 53 Cal.4th at pp. 364-366, 135 Cal.Rptr.3d 288, 266 P.3d 987.) For good reason: A product manufacturer ordinarily will have no control over the design or safety of another manufacturer's product, the other manufacturer's use of dangerous materials, or any warnings the other manufacturer might place on the product. ( Id . at pp. 350, 365, 135 Cal.Rptr.3d 288, 266 P.3d 987.) Nor would there be any reason to think that a manufacturer has the ability to influence a customer's decision to buy another manufacturer's product. ( Id . at p. 365, 135 Cal.Rptr.3d 288, 266 P.3d 987.) Without such predicate connections between one manufacturer and another, it would be difficult, if not impossible, for a manufacturer to foresee the dangers lurking in the seemingly limitless number of other products that might be used with or in its product. ( Ibid . ) But prescription drug markets are different.

They present the unusual situation where one entity's misrepresentations about its own product foreseeably and legally "contributed substantially to the harm" caused by another entity's product (i.e., the generic drug bearing the warning label drafted by the brand-name manufacturer). ( O'Neil , at p. 362, 135 Cal.Rptr.3d 288, 266 P.3d 987.) That key circumstance distinguishes the situation here from those involving the general run of products. The negligence causes of action are potentially viable because of the allegedly deficient representations in Novartis's warning label.

Novartis is not being sued for dangers inherent in the generic terbutaline manufactured by some other entity. Nor do plaintiffs claim that any product manufactured by Novartis caused them harm. They claim instead that allegedly deficient representations and omissions in Novartis's warning label caused them harm.

The fact that Novartis also manufactured a product is extrinsic to the analysis and does not insulate it from liability for its alleged misrepresentations. (See Conte , supra , 168 Cal.App.4th at pp. 109-110, 85 Cal.Rptr.3d 299 ; accord, Weeks , supra , 159 So.3d at p. 672 ["the [tort] claims are not based on the manufacturing of the product but instead allege that the label-drafted by the brand-name manufacturer and required by federal law to be replicated verbatim on the generic version of the medication-failed to warn"].) B.

Whether Warning Label Liability Was Extinguished as a Matter of Law When Novartis Divested Ownership of Brethine We have determined that Novartis owed a duty of care to those who were prescribed Brethine or its generic bioequivalent in reliance on Novartis's warning label. Novartis claims that the demurrer should nonetheless be sustained without leave to amend on the ground that it sold the Brethine NDA to aaiPharma in 2001 and no longer had control over its warning label in 2007, when plaintiffs' mother was prescribed terbutaline.

So we now consider whether Novartis should be relieved of all liability for its allegedly negligent failure to update the label as a matter of law, despite the fact that aaiPharma continued using the label Novartis had crafted. Plaintiffs fault Novartis. But they do not claim the company was responsible for any negligent acts or omissions after the transfer of ownership. After all, under FDA regulations, only the current NDA holder has the authority to unilaterally modify the drug's warning label.

Plaintiffs claim instead that they were harmed by Novartis's failure to update the label prior to transferring the NDA to aaiPharma, in that aaiPharma continued to use the same warning label until at least 2007, when their mother was prescribed terbutaline. In effect, plaintiffs claim that the Brethine warning label was deficient at the time Novartis transferred the NDA-and it was reasonably foreseeable that it would remain deficient, given the incentives facing any successor manufacturer.

To address this aspect of plaintiffs' claim, we must determine whether to recognize an exception to a brand-name manufacturer's duty to warn. Is a brand-name drug manufacturer's duty to warn extinguished simply because the deficiency in the label caused the injured plaintiff to be exposed to the drug after the manufacturer had transferred the NDA to a successor?

Foreseeablity of harm is the touchstone of our duty analysis. ( Kesner , supra , 1 Cal.5th at p. 1148, 210 Cal.Rptr.3d 283, 384 P.3d 283.) Plaintiffs allege (or claim they can allege) that Novartis negligently provided inaccurate and incomplete warnings about the safety of its drug, that it was foreseeable the new NDA holder (aaiPharma) would continue to use Novartis's warning label without modification, that their mother's physician relied on the deficient warning label drafted by Novartis and reiterated by aaiPharma in prescribing terbutaline, and that they were harmed in utero by the terbutaline ingested by their pregnant mother.

Whether aaiPharma would also be liable for any deficiencies in its warning label should not, in plaintiffs' view, automatically negate Novartis's culpability. 1. Foreseeability and related factors We explained above why it was foreseeable that Novartis's failure to update the Brethine warning label could affect fetuses exposed to the generic version of the drug in utero. And there is no dispute that plaintiffs have alleged injury.

Although Novartis was no longer responsible for updating the warning label at the time plaintiffs' mother was prescribed the drug, aaiPharma was using the same label it had inherited from Novartis. According to plaintiffs, neither NDA holder had sufficient financial incentive to update the label: Nearly half of all prescriptions for Brethine or its generic equivalent were to slow preterm labor. Under the circumstances, it was certainly foreseeable that aaiPharma would be no more conscientious about updating the warning label than Novartis allegedly had been.

Novartis contends the connection between its alleged negligence and plaintiffs' injury was extremely remote, as it had ceased producing the drug six years before the injury. But it is not clear why liability should turn on Novartis's role in the manufacturing process. What warning label liability stems from is Novartis's failure to warn about a drug's risks, not its production of a defective drug. The complaint alleges that Novartis and aaiPharma were concurrent tortfeasors whose liability stemmed from failure to warn, because each negligently failed to update the warning label.

We agree that Novartis's failure to update the warning label could foreseeably cause harm to plaintiffs. Under the circumstances aris

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