An economic consulting group recently published findings that a Food and Drug Administration (FDA) proposed rule will increase annual healthcare costs by $4 billion. The FDA's proposal, announced in November 2013, would allow generic drug manufacturers to update product labeling with new safety information even if the revised labeling differs from that of the reference listed drug (RLD). The FDA's proposed change was a direct response to the Supreme Court's call for action in PLIVA, Inc. v. Mensing. In the rule, the FDA estimated net annual costs would range between $44,000 and $385,000, which many critics have suggested is too low. Those critics have also voiced concerns that the proposed rule would only serve to fund the plaintiffs' bar at the expense of public safety. The alarming cost increases announced by this recent study provide further support for those who believe that the FDA simply got it wrong this time.

I. BACKGROUND ON THE PROPOSED RULE -

In PLIVA, Inc. v. Mensing, 564 U.S. __, 131 S. Ct. 2567 (2011), the Supreme Court held that federal law preempted state law failure-to-warn claims against generic drug manufacturers because the Hatch-Waxman Amendments ("Hatch-Waxman") require generics to use warnings that are identical to the brand-name's. Recognizing generic preemption could leave some plaintiffs without a failure-to-warn claim, the Supreme Court nevertheless declared it "will not distort the Supremacy Clause in order to create similar pre-emption across a dissimilar statutory scheme. As always, Congress and the FDA retain the authority to change the law and regulations if they so desire." Id. at 2852. In response, the FDA issued the rule currently under debate.