Can pharmaceutical companies be held liable for their products?

US product liability law treats prescription drugs and medical devices as products subject to the same theories of liability that apply to any manufactured good - strict liability for defective products, negligence in design or manufacturing, failure to warn of known risks, and breach of express or implied warranty. State law variations matter; Texas product liability law (Chapter 82 of the Texas Civil Practice & Remedies Code) provides a manufacturer rebuttable presumption defense if FDA-approved warnings were used as labeled.

The "learned intermediary doctrine" - under which a manufacturer's duty to warn runs to the prescribing physician rather than the patient - is a defense in most states for prescription products but is not absolute. Direct-to-consumer advertising, off-label promotion, and inadequate physician warnings can defeat the doctrine.

A pharmaceutical or medical device manufacturer's products liability tower funds the defense costs (which often exceed indemnity, particularly for products with low individual claim severity but high claim volume) and the indemnity payments on settled or adjudicated claims. Tower size is driven by product mix, distribution volume, and sponsor MSA / GPO contract demands rather than statistical loss expectancy.

For mid-market CDMOs and 503B operators, $5M-$10M products liability is the floor; for Class II/III medical device implantables and biologics, $25M+ towers are typical with occurrence-form preferred over claims-made due to 10-20 year tail exposures.