* Generic drugs total 70 percent of all prescriptions
* Obama administration said the companies can be sued
* Follow-up to related Supreme Court ruling in 2009 (Adds reaction by generic drug industry including lawyer and executives)
By James Vicini
WASHINGTON, June 23 (Reuters) - The U.S. Supreme Court ruled on Thursday that generic drug companies cannot be sued under state law over allegations that they failed to provide adequate label warnings about potential side effects.
By a 5-4 vote, the justices gave a victory to Israel's Teva Pharmaceutical Industries Ltd (TEVA.TA), Mylan Inc's (MYL.O) UDL Laboratories and Iceland-based Actavis Inc by overturning U.S. appeals court rulings that allowed such lawsuits.
The companies argued that federal law barred such lawsuits because the drug had been approved by the U.S. Food and Drug Administration (FDA). Federal law requires generic drugs to have the same labels as their brand name equivalents.
Justice Clarence Thomas in the court's majority opinion agreed. He said federal drug regulations applicable to generic drug manufacturers directly conflicted with and thus pre-empted state lawsuits.
The Supreme Court decided a related issue in 2009 when it ruled FDA drug regulations do not protect pharmaceutical companies from being sued under state law over drug labeling, a case involving Pfizer Inc's (PFE.N) Wyeth unit and its antinausea drug Phenergan.
But in the generic drug cases, the justices reversed separate U.S. appeals court rulings that the lawsuits against the companies could go forward.
The high court agreed with the arguments of the generic drug makers that they had no choice but to use the same drug labels as the brand manufacturer.
Teva, Actavis and the Generic Pharmaceutical Association hailed the ruling.
Attorney Jay Lefkowitz, who represented Teva, said, "The Supreme Court hit the nail on the head today by making clear that federal law does not permit states to hold generic drug manufacturers liable for using the very warnings federal law required them to use."
Actavis CEO Doug Boothe called the ruling "an important and necessary step by the Supreme Court to clarify the proper interpretation of regulations governing pharmaceutical labeling."
Bob Billings, the trade group's executive director, said assessing liability would have placed "the generic manufacturer in the impossible position of defending the content of a label that they are required by law to use but prevented by law from changing."
One case involved Julie Demahy, who sued Actavis and said it should have warned her of the risks of developing a neurological movement disorder from metoclopramide, a generic drug for heartburn, nausea and vomiting.
The drug's brand name equivalent is Reglan.
In another case, Gladys Mensing sued the three generic drug makers in federal court in Minnesota after allegedly developing the same disorder after taking generic versions of Reglan.
When the women first took the drug, the approved labeling said that "therapy longer than 12 weeks has not been evaluated and cannot be recommended."
That warning was changed in 2004 to say simply that therapy should not exceed 12 weeks and in 2009 the FDA ordered that specific warnings about the movement disorder be added to Reglan and metoclopramide.
The Obama administration supported the two women. It said the companies could have sought changes to the drug's label.
Generic drugs account for more than 70 percent of all prescriptions filled in the United States.
Liberal Justices Sonia Sotomayor, Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan dissented.
The Supreme Court cases are Pliva v. Mensing, No. 09-993, Actavis v. Mensing, No. 09-1039 and Actavis v. Demahy, No. 09-1501. (Reporting by James Vicini, Editing by Gerald E. McCormick, Dave Zimmerman and Matthew Lewis)