Keith Jensen obtained the largest verdict in NH history and that case is before the U.S. Supreme Court

(Reuters) - The Supreme Court will hear arguments on Tuesday in a case that could decide whether generic drugmakers can be held liable for alleged flaws in the designs of their medications, even though federal law requires generic manufacturers to copy the brand drugmaker's design.

The case, closely watched by pharmaceutical companies, regulators and lawyers, could determine the extent to which individuals can hold generic drug manufacturers liable for injuries allegedly caused by their copycat products.

Mutual Pharmaceutical Co has asked the high court to overturn a jury award to Karen Bartlett, a New Hampshire woman who took Mutual's generic non-steroidal anti-inflammatory drug, sulindac, in 2004 after her doctor prescribed it for shoulder pain.

Mutual, based in Philadelphia, is a unit of URL Pharma, owned by Sun Pharmaceutical Industries, and manufactures dozens of generic drugs ranging from antibiotic doxycycline to the antifungal nystatin.

The trial judge upheld the jury's award, and a federal appeals court agreed, describing Bartlett's experience as "disastrous."

Doctors diagnosed a rare hypersensitivity reaction associated with the drug that developed three weeks after Bartlett started taking it. Her skin began to peel off, leaving her with burn-like lesions over two-thirds of her body. She spent close to two months in a hospital burn unit, some of that time in a medically induced coma, and has since undergone 13 eye surgeries.

The reaction, a severe form of Stevens-Johnson Syndrome, left Bartlett with permanent near-blindness, scarred lungs and a constricted esophagus that makes it difficult to swallow. She sued Mutual in 2008 for alleged design defects under New Hampshire law.

After a 14-day trial, a jury awarded Bartlett for her injuries.

Asking the Supreme Court to overturn the award, Mutual argues that federal law bars such claims because its drug had already been approved by the U.S. Food and Drug Administration and federal law requires generic drugs to have the same design as their brand-name equivalents.

The company cites a 2011 Supreme Court ruling, PLIVA v. Mensing, which dramatically constrained consumers' ability to sue generic manufacturers over alleged injuries. In that case, the court found that generic drugmakers could not be sued for failing to warn about certain health risks because federal law requires brand-name and generic drugs to carry the same label. That ruling has wiped out the bulk of personal injury cases against generic manufacturers.

PHARMACIST'S CHOICE

Bartlett's case skirted the Mensing ruling by claiming that the generic drug was inherently dangerous, based on the number of incident reports of the skin reaction submitted to the FDA. From that data, Bartlett concluded that sulindac's design was unreasonably dangerous and defective.

Mutual argues that the logic of Mensing should also apply to design defect claims because, as with their labels, generic drug companies have no control over their product's design, which has to mimic the brand-name counterpart.

But in May a unanimous three-judge panel of the 1st Circuit Court of Appeals in Boston refused to extend the ruling to design defect claims. The court ruled that Mutual could simply have decided to stop making sulindac, based on the brand name Clinoril, and take it off the shelves.

If the Supreme Court finds that the product defect claims under state law are barred by federal law, it would become virtually impossible to hold a generic drugmaker accountable for injuries caused by their products.

About 80 percent of all U.S. prescriptions are filled with generics, according to healthcare information provider IMS Health. When a doctor prescribes a brand-name drug, state laws allow pharmacists to automatically substitute the cheaper generic version in filling the prescription. Bartlett's doctor prescribed the brand-name Clinoril, and her pharmacist filled it with the generic sulindac.