Gilead Life Sciences, Inc. is facing charges of negligence in California, not because its HIV/AIDS drug was defective, but because the company delayed the release of an allegedly safer drug.
A California Court of Appeals affirmed a new, extraordinary negligence liability theory on January 9, 2024, holding Gilead could be liable for negligence, not because it marketed tenofovir disoproxil fumarate (TDF), but because it delayed commercializing tenofovir alafenamide fumarate (TAF), an HIV drug that allegedly has fewer side-effects.
TDF was approved for HIV treatment by the Food and Drug Administration (FDA) in 2001. Gilead and the FDA knew the drug had potential side effects, including skeletal and kidney damage. Gilead began developing TAF in 2002, stopped, and then resumed its work on the drug until the FDA approved it in 2015.
TDF- and TAF-containing drugs are FDA-approved as “safe and effective” and are still marketed to treat and prevent HIV.
Summary Judgment Denied
In the case, around 24,000 AIDS patients claimed Gilead’s TDF drug caused their injuries.
Plaintiffs did not contend the TDF drug was defective or lacked adequate warnings. Instead, they argued Gilead could owe damages to patients who took TDF for not marketing a different, allegedly safer drug.
Plaintiffs made two other claims, including that Gilead fraudulently concealed its development of TAF from TDF users.
The Superior Court that tried the case denied Gilead’s motion for summary judgment and said plaintiffs could seek a negligence claim based on Gilead’s delay in developing TAF. Gilead appealed this decision.
Financial Considerations?
On appeal, plaintiffs claimed TAF is safer than TDF and that Gilead knew this, but unreasonably paused TAF’s development for financial reasons, thus depriving them of a drug that could have prevented their injuries.
Plaintiffs also argued that the patent system incentivizes drug manufacturers “to try to extend their monopolies for as long as possible, with deleterious effects on innovation and competition.”
Gregg Girvan, a health care policy specialist at the Foundation for Research on Equal Opportunity (FREOPP), agreed the regulatory system has problems, telling Health Care News “government policy allows drug companies to manipulate patents and (FDA) exclusivities to have monopolies on branded drugs for long periods.”
Girvan says patent reforms are possible via legislation or regulation, though congressional action “is preferable since regulations can be swept away by a future administration and are more vulnerable to litigation,” particularly now, considering the Supreme Court’s upcoming decision regarding the Chevron doctrine.
No Recognized ‘Duty’
Gilead argued that no court has recognized a duty to develop a product more quickly and product liability law already protects consumers. Additionally, plaintiffs’ negligence claims are preempted by federal law and don’t state a claim under state tort law because there is no proven product defect.
Several groups filed amicus briefs, including the Washington Legal Foundation and the Product Liability Advisory Council. WLF (in conjunction with the U.S. Chamber of Congress , California Chamber of Commerce, and the Alliance for Automotive Innovation) asserted “as a matter of law and policy” the court should reject plaintiffs’ “dangerous” and “unsupported” theory that would authorize negligence liability “whenever a business fails to expeditiously release a new product.”
The Court heard policy arguments from both sides including impacts on public health and health care spending.
Plaintiffs Prevail for Now
The Appeals Court dismissed two of the plaintiffs’ claims, including “fraudulent concealment,” leaving only the negligence claim.
By allowing that claim to proceed, the Court has “upended established California law,” a Gilead spokesperson told Health Care News.
The appeals court’s opinion in Gilead Sciences, Inc. v. Superior Court characterized the plaintiffs’ negligence claim as “Gilead breached its duty of reasonable care by postponing, solely to maximize profit, its effort to commercialize TAF as a treatment for HIV/AIDs while continuing to market a medication with serious side effects that it knew TAF would have enabled patients to avoid.”
Based on analysis of case law, in conjunction with certain assumptions—including that Gilead knew TAF was safer than TDF, knowingly and intentionally withheld TAF, FDA approval of TAF would not be difficult, and physicians would prefer prescribing TAF—the appeals court held “the legal duty of a manufacturer to exercise reasonable care can, in appropriate circumstances, extend beyond the duty not to market a defective product.”
“To be clear, the Court did not decide that Gilead was required to bring TAF to market earlier than it did,” said Gilead’s spokesperson. “Rather, it did not feel the present record was adequate at this stage to dismiss it and left open the possibility for Gilead to establish on a more developed record that there is no merit to Plaintiffs’ claim.”
Widespread Consequences
The appeals court said its opinion does not create a “duty to innovate” or “pursue ever-better new products.”
But, says Girvan, if the decision holds, companies will be in a Catch-22: facing product liability suits arguing alleged defects were caused by rapid development or, where no defect exists, negligence suits for delaying or failing to market an allegedly better product.
“This could actually make the situation for patients worse, in that companies would not introduce a new and improved product at all,” said Girvan.
Gilead’s spokesperson says the company will continue to defend itself and is evaluating its appellate options. But “if the opinion is not overturned, the court’s decision will have widespread, negative consequences across all fields of innovation and manufacturing, undermining the development of new products and discouraging improvement of existing products.”
Dvorah Richman, J.D. (dvorahrichman@gmail.com) writes from Fairfax, Virginia.
