"Warner-Lambert marketed a defective product. It withheld information about the injury the product could cause," Allison Zieve, the attorney for the Michigan citizens said.
But Pfizer attorney Carter Phillips said the FDA has found no fraud in its dealings with Warner Lambert and the Rezulin withdrawal.
Justices Samuel Alito and Stephen Breyer appeared to sympathize with the Pfizer's case and questioned whether a jury should be second-guessing the FDA.
"What worries me is what happens when the jury is wrong," Breyer said.
"It's a terrible thing if the drug hurts people," Breyer continued, adding it was also terrible when seriously ill people die because they don't get a drug that could help them.
Pfizer and the government also argued that complying with the Michigan law burdens the FDA, and distracts it from its core mission of reviewing new drugs and monitoring drug safety.
But Justice John Paul Stevens said there was no excessive burden proven, after Pfizer and the government acknowledged there have not been many lawsuits under the Michigan law.
"It seems to me we've got a lot of theoretical litigation," Stevens said.
Justice Ruth Bader Ginsburg called the Michigan statute "a deliberately pro-manufacturer measure," and the immunity provision can not be separated from the exception.
The case could impact other lawsuits pending in states with similar statutes, particularly Texas, according to an American Bar Association brief. Five other states have statutes but differ in that they limit fraud exceptions to claims for punitive damages.
Chief Justice John Roberts did not take part in the proceedings because he owns stock in Pfizer. A ruling is expected by the end of June.
