Arizona has joined two other states in applying its consumer fraud law to pharmaceutical manufacturers. The Arizona Court of Appeals decision came in a products liability action against Medicis Corporation, related to a prescription acne medication. The Court said that the term "merchandise" in the consumer fraud act covers "medication" just as it would any other "tangible good available for purchase in the marketplace." The consumer fraud act requires a false promise or representation in the sale or advertisement of merchandise. A private cause of action requires reliance on the misrepresentation. A cause of action by the State does not require reliance.
Previously, pharmaceutical companies were only liable for warning doctors about potential side effects from medications, under the assumption that the doctors would in turn educate patients. In recent years however, there has been an explosive increase in pharmaceutical companies marketing directly to the public via television ads or other means. Patients now regularly go to their doctor asking to be prescribed a specific drug, and Arizona courts have responded by raising the bar on manufacturers' responsibility to disclose side effects directly to patients.
Arizona joins two other states in tightening pharmaceutical manufacturer liability. Illinois and Minnesota appear to permit consumer fraud actions against pharmaceutical companies under certain circumstances. Other states do not permit such actions, but may permit a claim to be brought under a different state statute or common law theory, like product liability.
The danger for pharmaceutical companies lies with enforcement by the State of Arizona, as penalties of up to $10,000 per violation may apply. The State has other remedies as well, including injunctive relief. Arizona's Attorney General's Office has been an aggressive enforcer of consumer fraud violations in the past. Polsinelli's Government Investigations practice will continue to monitor case law in this area and inform you of ongoing developments, as other states may join Arizona, Illinois and Minnesota in modifying their consumer fraud laws.
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