In a split decision for the pharmaceutical industry, the Arizona Supreme Court issued an opinion that has drug makers both encouraged and worried as they track the progress of a case that may have an outsized impact on consumer lawsuits filed in the state.

The case was brought by Amanda Watts, a young woman who claimed she developed lupus and hepatitis after taking an acne treatment made by Medicis Pharmaceutical, which is now owned by Valeant Pharmaceuticals. She contended the company failed to provide proper side effect warnings. A state appeals court sided with Watts, which prompted Medicis to try to have the decision overturned.

Watts has argued over two points that alarm drug makers. And the pharmaceutical industry has been concerned about the direction this case is headed, because it threatens to make it more difficult for companies to defend against lawsuits in which consumers claim they were harmed by a medicine.

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“The loss of uniformity in liability standards for prescription medicines will subject pharmaceutical manufacturers to fundamentally different standards of liability in each state,” the Pharmaceutical Research and Manufacturers of America, the industry trade group, wrote in a so-called friend-of-the-court brief in support of Medicis.

A key argument Watts made is that a long-standing industry defense against consumer lawsuits conflicted with another state law about deciding who may be at fault when there is harm. Known as the learned intermediary, this defense says drug makers cannot be held liable if a consumer suffers harm from a medicine — so long as all risk information was appropriately conveyed to the patient’s physician.

She also insisted that Medicis violated state consumer fraud laws by distributing misleading details about its Solodyn acne drug, according to court documents. Although the full prescribing information indicated the treatment could cause lupus or autoimmune hepatitis if used on a long-term basis, Watts apparently never received this specific information and took the medicine for 20 weeks, according to court documents.

But Watts did receive a Medicis consumer savings card and a product insert from a pharmacy, both of which indicated the safety of using Solodyn longer than 12 weeks had not been studied and was not known. This may seem like a subtle distinction, but she contended the drug maker failed to specifically provide an adequate warning about the danger of using Solodyn for more than 12 weeks (you can watch the arguments made to the court here).

So what did the court decide?

The state Supreme Court gave drug makers a lift by deciding that the learned intermediary is a legitimate defense. In response, PhRMA issued a statement saying it is pleased with the ruling. Nonetheless, Medicis must still prove that Watts’ physician was properly informed of all the side effect risks associated with Solodyn.

Had the court decided otherwise, the issue “might have been raised in many other states,” said Lori Voepel, an attorney representing Medicis. “It was important to make sure that Arizona is in line with the rest of the country.”

Meanwhile, the pharmaceutical industry will be watching whether Watts wins her argument over consumer fraud violations. Although drug makers argue their customers are actually physicians, the state Supreme Court opined that a direct transaction between a drug maker and a patient is not required for a consumer to claim fraud in the event that misrepresentation resulted in injury.

“It could be a game changer,” said Mick Levin, an attorney for Watts. “Depending upon the outcome, people filing mass torts (lawsuits involving numerous plaintiffs against one or more defendants) may look closer at what happens here to see if they can file injury cases on consumer fraud grounds.”

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