Cases to Watch: Gilead Life Sciences v. Superior Court (October)

The Supreme Court of California is gearing up to decide an important question for the future of product liability law: Do drug manufacturers have a duty to innovate? In other words, does a manufacturer of a non-defective drug have a duty to develop and commercialize an alternative drug that is allegedly safer for some consumers?

As expected, the parties’ merits briefs in the Gilead Tenofovir Cases give different answers to those questions. Gilead’s opening brief urges the Supreme Court of California to reverse the Court of Appeal’s decision which, if adopted, would represent a significant expansion of existing negligence liability in California. In response, plaintiffs’ answering brief argues that the Court of Appeal had it right.

As we previously reported in our June 13, 2024 alert about the Gilead Tenofovir Cases, the California Court of Appeal held that plaintiffs could pursue a negligence cause of action against a prescription drug manufacturer for failure to bring an alternative, allegedly safer, drug to market sooner, even if the plaintiffs did not assert that the original drug they actually used was defective. The Supreme Court of California is now reviewing the lower court’s decision.

In its opening brief, Gilead argues that the Court of Appeal’s holding should be overturned because it:

[O]verrode a century of common law to impose on manufacturers a duty that no court anywhere in the country has ever suggested. Whereas the common law requires manufacturers to produce non-defective, reasonably safe products, the Court of Appeal has added a duty to develop and commercialize, without delay, a different product that is safer for some consumers. This duty weaponizes innovation across industries, undermining public welfare by inhibiting research and development of lifesaving and lifechanging products.

Petitioner’s Opening Brief on the Merits at 8, Gilead Tenofovir Cases, No. S283862 (filed July 15, 2024).

Plaintiffs, on the other hand, argue that the Court of Appeal correctly found that “a drug manufacturer owes a duty of care to users of a drug it is currently selling, which is not alleged to be defective, when making decisions about commercializing an allegedly safer and equally effective drug.” Plaintiffs’ Answering Brief on the Merits at 8, Gilead Tenofovir Cases, No. S283862 (filed Aug. 14, 2024).

Gilead warns that adopting this new duty would allow plaintiffs to second-guess complex business decisions and “doom manufacturers to a no-win cycle of liability, transforming every product-development decision into a potential lawsuit over the path not taken—or taken, but allegedly not quickly enough.” Petitioner’s Opening Brief at 10.

Gilead’s Key Legal Arguments and Plaintiffs’ Rebuttal

Gilead argues that the Court of Appeal erred for two independent reasons: (1) The court unilaterally abolished well-established precedent requiring a consumer who claims injury from a manufacturer’s product to prove that the product is defective; and (2) the court went further to create an unprecedented duty to develop and commercialize alternative products on an expedited timeline when they may provide additional benefits for at least some consumers.

Plaintiffs disagree that the court created a new duty. Rather, it is well established that “[m]anufacturers owe users of their products a duty of reasonable care and California law does not categorically limit this duty to simply producing a non-defective product.” Plaintiffs’ Answering Brief at 17.

1. The Court of Appeal Deviated from Established Product Liability Law

Gilead asserts that it rigorously adhered to the traditional requirements of product liability law, which mandate that a product must not have defects in design, manufacture, or labeling at the time of sale. Without this limitation on a manufacturer’s liability, plaintiffs can challenge virtually any complex business decision: “[U]nder the Court of Appeal’s logic, once the duty of reasonable care moves beyond the product the consumer used to other business decisions, the duty becomes endless, with different classes of plaintiffs created by each corporate decision.” Petitioner’s Opening Brief at 28. Plaintiffs disagree that they would expand product liability law, asserting that Gilead conflates ordinary negligence and strict product liability and claiming that “California has never conditioned a manufacturer’s liability in negligence for harm caused by its product on proof that the product was defective.” Plaintiffs’ Answering Brief at 20.

2. An Affirmative Duty to Innovate Is Unprecedented and Unwarranted

According to Gilead, the Court of Appeal created an unprecedented duty for manufacturers to develop and market alternative products that might be safer for some group of consumers. Gilead relies on four key points to outline the Court of Appeal’s errors and show the negative implications of this new duty. Unsurprisingly, plaintiffs defend the Court of Appeal’s decision and attempt to refute each point.

• First, Gilead warns that this novel “duty will so frequently provide a separate—and less demanding—means of imposing liability on manufacturers that it will displace the previous standard of care and replace it with an unbounded standard where reasonably safe is no longer safe enough.” Petitioner’s Opening Brief at 33-34. Plaintiffs maintain that this duty is not novel; rather, it is “rooted in Civil Code section 1714 and anchored in California precedent as aptly held by the Court of Appeal.” Plaintiffs’ Answering Brief at 8.
• Second, Gilead asserts that the Court of Appeal applied the wrong legal framework by assuming that Civil Code section 1714 supplements product liability law. The “ordinary care” required by section 1714 is consistent with the traditional duties imposed on manufacturers but has never included a duty governing undeveloped and unmarketed products. Plaintiffs, ignoring the distinction, contend more generally that “[t]here is no question that the duty to take ordinary care in one’s activities under section 1714 applies to a manufacturer of prescription drugs and is owed to the users of such drugs.” Plaintiffs’ Answering Brief at 19.
• Third, Gilead argues that regardless of whether this is framed as a new duty or an exception to an existing duty, “policy considerations fall far short of justifying a duty that breaks so starkly from the common law.” Petitioner’s Opening Brief at 44. As Gilead eloquently puts it: “Discarding a century of precedents condemns courts to spend the next century figuring all this out.” Id. at 46. Plaintiffs contend that “public policy in no way supports shielding drug manufacturers from liability for their unreasonable conduct in delaying commercialization of a less toxic and equally effective drug that prevents harm to the manufacturer’s patients suffering known and avoidable side effects.” Plaintiffs’ Answering Brief at 34.
• Finally, Gilead argues that even if pharmaceutical manufacturers have a duty to continue developing a purportedly safer alternative to an existing, FDA-approved, non-defective drug, such a duty should not arise this early in the drug development cycle. A manufacturer’s knowledge regarding the safety and effectiveness of a drug before Phase III studies and head-to-head clinical comparisons is uncertain at best. Plaintiffs argue that “[s]uch an exception would render tort liability toothless because a drug manufacturer could immunize itself from negligence suits by simply delaying its Phase III trial, an event solely within its control, until it achieved its financial windfall[.]” Plaintiffs’ Answering Brief at 11.

Ultimately, the Supreme Court of California’s decision could have profound implications for manufacturers, particularly in the medical device and pharmaceutical industries. As Gilead frames it, expanding liability to include the duty to develop alternatives and bring them to market quickly could lead to a cautious approach towards innovation, potentially slowing down the introduction of new and improved products. We will continue to closely monitor this case to provide any key updates, and we are available to assist you in understanding its potential impact on your operations and legal strategies.