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We reported a few months ago on oral argument in the California Court of Appeal in Gilead Life Sciences v. Superior Court, where the parties argued about whether California law recognizes a broad “duty to innovate.”  At issue was whether a product manufacturer could be liable to patients taking one drug for failing to bring a different, but allegedly safer drug to market sooner than it actually did. 

The Court has now filed its opinion, and it’s not good.  The Court has ruled that a prescription drug manufacturer can owe such a duty, even when the plaintiffs have not alleged any defect in the drug that they actually used.  As the Court put it, “we conclude that the legal duty of a manufacturer to exercise reasonable care can, in the appropriate circumstances, extend beyond the duty not to market a defective product.”  Gilead Life Sciences, Inc. v. Superior Court, No. A165558, 2024 Cal. App. LEXIS 14 (Cal. Ct. App. Jan. 9, 2024) (to be published). 

To be sure, this is an expansion of California product liability law, which currently focuses on proof of a defect in the product.  But how did we get here?  The drugs at issue are life-saving antiretroviral drugs used to treat patients with HIV.  The defendant in Gilead has developed multiple drugs used to treat or prevent infection with the AIDS virus, including several containing tenofovir disoproxil fumarate (“TDF”).  That is the group of drugs that the plaintiffs allegedly used and that allegedly caused harmful side effects. 

By the time, however, the cases progressed to summary judgment, the plaintiffs were not claiming any defect in TDF.  Instead, the plaintiffs claimed that the defendant should have developed and marketed a different drug sooner.  The FDA approved the defendant’s first TDF drug in 2001, and the company started its first clinical trial on a different compound—tenofovir alafenamide (“TAF”)—about a year later.  Plaintiffs now claim that TAF has a better safety profile compared to TDF and that the defendant unreasonably paused TAF’s development, thus depriving them of a drug that they say might have avoided their injuries.    

In other words, the plaintiffs were claiming that the defendant breached a duty to market TAF sooner, which we have been calling an unprecedented “duty to innovate.”  The Court of Appeal stated it somewhat more narrowly:

In context, then, the duty question we must address is whether a drug manufacturer, having invented what it knows is a safer, and at least equally effective, alternative to a prescription drug that it is currently selling and that is not shown to be defective, has a duty of reasonable care to users of the current drug when making decisions about the commercialization of the alternative drug.

Id. at *14.  The court ruled that a drug manufacturer owes this duty, but the purported “narrowness” of the duty is a recurring theme in the court’s opinion.  We will come back to that.

The court first addressed whether a product user can pursue a negligence claim for product liability without alleging a defect in the product.  This is a major issue.  Ever since Judge Cardozo found potential liability more than 100 years ago for that broken wooden wheel in MacPherson v. Buick, product liability has focused on a problem with the product.  The same has been true under California law since Justice Traynor took the baton in the 1940s, first in Escola v. Coca-Cola and later in Greenman v. Yuba Power Products.  These cases are not just relics from our first year of law school.  They form the foundation for product liability law as it stands today.

The Court of Appeal in Gilead took a different path and ruled that the plaintiffs could bring a garden-variety negligence claim without pleading and proving a defect in the TDF drugs that allegedly caused them harm.  According to the court, “a variety of cases demonstrate . . . that a manufacturer’s duty of reasonable care can extend more broadly than the duty to make a nondefective product, thereby permitting recovery even when there is no showing that the injury resulted from a product defect.”  Gilead, 2024 Cal. App. LEXIS at *19.  The “most prominent” example was Mexicali Rose v. Superior Court, 1 Cal. 4th 617 (1992), where the California Supreme Court held that a restaurant could be held negligent for harm caused by a chicken bone found in an enchilada, even though strict liability would not apply.  Gilead, at *19-*20.  The Court of Appeal took from Mexicali Rose that a plaintiff could recover under negligence “notwithstanding the plaintiff’s inability to prove a product defect.”  Id. at *21.    

Thus, in the court’s view, the plaintiffs’ negligence claim stood separate and apart from any problem with the TDF drugs that they used: 

Plaintiffs do not contend that [Defendant] was negligent because it made TDF available for sale, or because the risks of TDF outweighed its benefits.  Rather, they contend that [Defendant] breached its duty of reasonable care by postponing, solely to maximize profits, its effort to commercialize TAF . . . while continuing to market a medication with serious side effects that it knew TAF would have enabled patient to avoid.

Id. at *31-*32.  There are so many assumptions built into that gloss on the plaintiffs’ case, but the long and short is that the court viewed negligence and strict product liability as separate things, with a product defect being necessary for one (strict liability), but not the other (negligence).  In other words, “we conclude that plaintiffs’ negligence claim is not foreclosed by their decision to forgo any attempt to prove that TDF is defective.”  Id. at *38. 

Having concluded that the plaintiffs’ negligence claim was not foreclosed, the Court of Appeal applied the “foreseeability” and “public policy” factors that determine whether California law should impose a particular duty—known as the Rowland factors.  The parties disputed whether the Rowland factors applied at all (the defendant said they did not), and they further disputed whether the Rowland factors should determine when a “new duty” existed (the defendant’s argument) or when an “exception” existed to the general duty to avoid causing harm to another (the plaintiffs’ argument).  The court resolved these disputes in favor of the plaintiffs, thus flipping the burden and requiring the defendants to prove an “exception.”    

The court found that no exception to the general duty of care was warranted, and in this regard, the court’s factual assumptions are critical.  The plaintiff had to have alleged harm by a product currently on the market, and it was necessary to the court’s analysis that the same manufacturer developed both the current drugs and the alleged alternativeId. at *44.  In addition, the drug manufacturer had to have known that the alternative drug “was safer (and at least as effective) as the current drug.”  Id.  In ruling that injury was “foreseeable,” the court assumed “the existing drug creates identifiable and characteristic physical injury.”  Id at *48.  In discussing whether there was a “close connection” between the defendant’s alleged delay in developing TAF and the plaintiffs’ alleged injuries, the court accepted the plaintiff’s contention that the defendant knew that FDA approval of TAF would not be difficult. 

The court also assumed that physicians naturally would prescribe the “newer” TAF once the FDA approved it.  Id. at *48-*50.  Throughout the opinion, the court credited the plaintiff’s contentions that the defendant was “financially motivated” and conducted itself “solely to maximize profits.”  E.g., id. at *31, *32.  These issues will be contested if the case is allowed to proceed to trial (TDF remains FDA approved, on the market, and widely used), but at this point, the court’s many assumptions define the factual context in which this purported duty arises.  That is important. 

The Court of Appeal also ruled that public policy factors weighed in favor of imposing a duty.  The defendant bore some “moral blame,” even though it developed drugs that saved or extended the lives of hundreds of thousands of patients.  As the court saw it, “[m]oral blame is typically found when the defendant benefits financially from its conduct.” Id. at *52.  That mindset makes corporations (which exist to make a profit) always morally blameworthy.  In this case it meant that the defendant could be blamed for delay in marketing an allegedly better drug purportedly motivated by profit.  Id. at *51-*53.  The court also rejected the idea that this new duty would chill drug development by imposing a duty under which drug development decisions will be second guessed by juries 20 years in the future.  In this regard, the court paid short shrift to the California Supreme Court’s landmark opinion in Brown v. Superior Court, which rejected strict liability for alleged design defects in prescription drugs partly on the basis that public policy favored the development of new and beneficial drugs.  That same public policy weighs against the hindsight duty that the Court of Appeal created, but the court found it “unsupported.” 

So now we have this purported duty, and we have several additional observations about this opinion.  First, the court affirmed the denial of summary judgment on negligence, but ruled that the trial court should have granted summary judgment on fraudulent concealment.  Gilead, at *67-*71.  Whatever duties exist, they do not extend to the disclosure of facts related to TAF, which was not available as an alternative to TDF when these plaintiffs were treated. 

Second, the Court of Appeal allowed room for further development of the scope of the applicable duty on remand.  The defendant argued that if there were a duty to bring TAF to market sooner, the duty at least should not arise until after Phase III clinical trial data showed that TAF was safe and effective.  The court found this qualification to be unwarranted on the current record, but held that the defendant could renew the argument “based on a record developed later in the trial court, both before that court and, if necessary, on appeal from an adverse judgment.”  Id. at *61-*67. 

Third, the court was painstakingly clear that it was recognizing a narrow duty.  The court noted at the outset that it is “generally more appropriate to consider the claimed duty in its factual context,” and it followed by repeatedly emphasizing the facts and assumptions giving rise to the duty.  The court also stressed that the duty does not apply generally to “improved” products and that it does not require manufacturers to perfect their drugs, but “simply to act with reasonable care.”  We will see if this duty actually turns out to be “narrow,” as the Court of Appeal asserted.  We have serious doubts.  Under the negligence “duty” as construed by the court, any defendant who “knows” of an allegedly safer and equally effective design for a product it currently makes will be compelled to replace its existing product with the alternative design, or else face a risk of liability.  This novel duty has implications far beyond FDA-regulated products.

Fourth, we still have difficulty reconciling this duty with existing product liability law, even as “narrowly” construed.  For one thing, if the standard is actual knowledge, is this even a negligence claim anymore?  We’re not sure what the claim would be.  Warranty?  An intentional tort?  But to return to our major theme, the Court of Appeal has departed from the core concept that product liability, whether sounding in negligence or in strict liability, depends on a problem with the product—a defect.  Heck, even in Mexicali Rose, the alleged negligence—failure to remove a chicken bone—was in connection with preparation of the enchilada that harmed the plaintiff.  Here, the plaintiffs allege that TDF harmed them, but they disavow any defect in the product itself and they allege negligence in connection with a different product.  (And can we say finally that prescription drugs are not the least bit comparable to chicken enchiladas.) 

Fifth, if these plaintiffs have a claim, we still see problems with causation.  The Court of Appeal minimized the causation hurdles of FDA approval and the need for physicians to prescribe the newer TAF drugs instead of TDF, but again we are not so sure.  It will be a tough row to hoe for any plaintiff to prove that the FDA would have approved TAF drugs in time to make a difference; that his or her doctor would have prescribed TAF instead of TDF, especially if the patient was doing just fine with the earlier product; and that switching from TDF to TAF would actually have prevented his or her alleged injuries.  The plaintiffs should not be allowed to get that far with these claims, but if they do, they have an uphill climb. 

In the end, the Court of Appeal invoked the plaintiffs’ use of TDF to find a duty in connection with the defendant’s development of a different drug.  That is unprecedented, and we will repeat our admonition that it is unnecessary.  These plaintiffs have product liability claims against this defendant, provided they can plead and prove the essential elements.  The mere fact that they could not do it does not warrant creating a whole new claim.  We presume a petition for review to the California Supreme Court is forthcoming.