the contract have obligations and gain rights under
the agreement. The law of contract regulates the
enforceability of such agreements and the steps
that can be taken if the contract is broken. Perhaps
the most fundamental feature of contractual liabi-
lity is that it is strict and not fault based. This
means, broadly speaking, that it does not matter
whether a party to the contract acted reasonably or
not; what matters is whether the contract has been
broken.
The pharmaceutical physician will be very
familiar with certain types of contracts, depending
on his/her role within the company. Examples
include agreements with contract research organi-
sations, contracts for the sale of the finished phar-
maceutical product and licensing or distribution
agreements.
Generally, there is no contract between the phar-
maceutical company and the patient who is pre-
scribed the product by a doctor. In the United
Kingdom, it has been held that where a product is
prescribed under a National Health Service
scheme, it is not prescribed as a result of a contract
between the pharmaceutical company and the
patient because legislation exists that requires a
pharmacist to supply the product on the production
of a valid prescription. For nonprescription, ‘over-
the-counter’ (OTC) products, there is a contract
between the retailer and the consumer who pur-
chases the pharmaceutical product, but there is still
usually no direct link in contractual terms to the
manufacturer of the product. It may be, however,
that the contract between the manufacturer and the
retailer contains an indemnity provision. Then, in
the event of a successful claim for breach of con-
tract made against the retailer by the customer, the
manufacturer would effectively be required to
reimburse the retailer for the amount ordered to
be paid in compensation to the customer.
In the United States, as in the United Kingdom, a
contractual right of action generally exists only
between parties to the contract. This is known as
the rule of privity. Courts in the United States have
recognised that, in a mass-consumption society,
there is little real privity between manufacturers
and consumers: Manufacturers are remote to the
ultimate consumer, sales are accomplished through
intermediaries and products are marketed through
the use of advertising media. Some courts, how-
ever, have carved out an exception to the privity
rule for contract claims, recognising, for example,
that in certain circumstances consumers may bring
breach of express warranty claims against pharma-
ceutical companies, based on statements made in
the package insert as well as promotional literature
and advertisements.
For the individual pharmaceutical physician,
arguably the most important contract will be
his/her own contract of employment with the com-
pany. This is likely to contain terms which, if
broken by the individual, could give rise to a
claim being made against him/her and, of course,
vice versa. The contract of employment may cover
matters such as confidentiality and restrictive cove-
nants, as well as defining the individual’s role and
responsibilities within the company. Distinct from
the law of contract, the law of tort serves to regulate
standards of behavior, operating to deter conduct
that may cause injury or damage and to remedy the
consequences of such actions. This area of law
includes the tort of negligence. An important and
well-known case in the development of the tort of
negligence in the United Kingdom is the case of
Donoghue v Stevenson, which involved a woman,
Mrs. Donoghue, who was unfortunate enough to
drink from a bottle of ginger beer containing the
remains of a snail. There was no contract between
Mrs. Donoghue and the manufacturer of the ginger
beer, so she could not claim a breach of contract.
However, the court held that the company actually
had a ‘duty of care’ to the ultimate consumer of its
product to take reasonable care in the manufacture
of its product.
The main elements of negligence have been
distilled from this statement in various cases over
time. In order for a person (the ‘plaintiff’) to prove
negligence by another (the ‘defendant’), he/she
must show:- that the defendant owes the plaintiff a duty of
care; - the defendant has breached the duty of care; and
- the breach of duty caused damage that the plain-
tiff alleges he/she suffered.
46.5 CIVIL LAW 597