On June 24, 2013, the US Supreme Court issued a decision in Mutual Pharmaceutical Co. v. Bartlett. The Supreme Court held that federal drug laws preempted a New Hampshire common law claim for design defect.

Mutual Pharmaceutical manufactured and marketed a generic version of the drug sulindac, a nonsteroidal anti-inflammatory drug (NSAID). Potential side effects of NSAIDs include hypersensitivity skin reactions characterized by necrosis of the skin and mucous membranes. The respondent was prescribed and used Mutual Pharmaceutical's generic form of sulindac and developed an acute case of toxic epidermal necrolysis. Much of her skin deteriorated, and she was forced to undergo extensive medical treatment.

The respondent filed an action against Mutual Pharmaceutical in New Hampshire state court, and Mutual Pharmaceutical removed the action to federal court. The suit asserted both failure-to-warn and design-defect claims, but the failure-to-warn claim was dismissed by the district court because the respondent's doctor did not read the box label or insert. The respondent was successful on her design-defect claim and was awarded $21 million in damages by a jury. Mutual Pharmaceutical appealed, and the US Court of Appeals for the First Circuit affirmed. The First Circuit held that the design-defect claims were not preempted and that a generic drug manufacturer, such as Mutual Pharmaceutical, could avoid difficulties in complying with multiple sets of laws by choosing not to manufacture the drug at all.

The US Supreme Court first reviewed the federal laws governing the manufacture and distribution of generic drugs. Under the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act), a generic drug may be approved without the same level of testing as a new brand-name drug if it is identical to an already approved brand-name drug in certain ways. The generic must contain the same active ingredients and take the same route of administration, dosage form and strength. The generic must also have the same rate and extent of absorption as the brand-name drug. Finally, the labeling for the generic drug must be the same as the labeling approved for the brand-name drug. Once a drug is approved, the manufacturer may not make any major changes to the formulation of or label for the drug.

The Supreme Court then considered the duties imposed on a drug manufacturer by New Hampshire's common law claim for design defect. New Hampshire law requires manufacturers to ensure that their products are not "unreasonably dangerous." To determine whether a product is "unreasonably dangerous," New Hampshire courts weigh the magnitude of the danger of using the product against its utility. To increase the likelihood that its product will not be considered unreasonably dangerous, a manufacturer can take steps to reduce the danger of the product or increase its utility. When a drug is the product at issue, the drug would have to be redesigned to reduce its danger or increase its utility. New Hampshire courts also consider the presence and efficacy of warnings to avoid an unreasonable risk of harm from hidden dangers or foreseeable uses.

Finally, the Supreme Court compared the duties imposed by federal regulation and state common law. It determined that there was no way that a drug manufacturer could comply with both sets of requirements. Federal law prevented the redesigning of a drug that has already been approved. Federal law also prevented alterations to the labeling of the drug. Because federal law forbade actions that the state law required, the state law was "without effect."

The Supreme Court rejected the First Circuit's suggestion that a manufacturer in the petitioner's position had the option to stop selling the product at issue because it was inconsistent with the court's ruling in previous impossibility preemption cases. In any of those prior disputes, the conflict between duties imposed by state and federal law could have been avoided if the regulated actor simply stopped acting.

Where federal regulations make it impossible for a regulated actor to comply with state laws, the state laws may be "without effect," or preempted on the basis of impossibility.