News Release 
March 4, 2024
ALF Urges California Supreme Court To Review & Reject Expansive Product Liability Theory

Question Presented:

Whether a pharmaceutical manufacturer that developed and commercialized a drug not alleged to be defective breaches a duty of care to consumers by halting development and commercialization of an allegedly safer, alternate drug.
"A common-law jury should not be allowed to impose liability for corporate decisions on whether or when to innovate or commercialize new products."

— Atlantic Legal Foundation
In the consolidated Gilead Tenofovir Cases, the California Court of Appeal held that “the legal duty of a manufacturer to exercise reasonable care can, in appropriate circumstances, extend beyond the duty not to market a defective product” (emphasis added). More specifically, the court held that “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.”

Gilead Sciences, Inc., the defendant in mass product liability litigation involving one of its prescription tenofovir HIV/AIDS drugs, has appealed this unprecedented ruling to the California Supreme Court.

ALF, which long has been one of the nation’s foremost advocates for sound science in the courtroom, has submitted an amicus curiae letter urging the California Supreme Court to review and reverse the Court of Appeal’s holding.

Case Background

The Court of Appeal indicated that Gilead “developed and sold one of the first medications to treat HIV/AIDS”—TDF, which the Food and Drug Administration (FDA) approved in 2001, even though “its use carried a risk of skeletal and kidney damage” for some patients. 

Although “[t]he 24,000 plaintiffs in this coordinated proceeding allege that they suffered these and other adverse effects . . . they do not assert any claim seeking to prove that TDF is defective.” Instead, the plaintiffs allege that “[w]hile Gilead was developing TDF, it discovered a similar, but chemically distinct, potential drug," TAF; that “Gilead’s early testing indicated TAF could be as effective as TDF at treating HIV/AIDS, while carrying a lower risk of adverse effects”; that “Gilead elected to defer development of TAF because it was concerned that the immediate development of TAF would reduce its financial return from TDF”; and that “[y]ears later, Gilead resumed the development of TAF and obtained FDA approval for its sale in 2015.”

The plaintiffs “characterize their claim as one for ordinary negligence, contending that Gilead’s decision to defer development of TAF to maximize its profits breached its duty of reasonable care to users of TDF.”  

ALF's Amicus Brief

ALF’s amicus curiae letter to the California Supreme Court argues that the unprecedented tort duty created by the Court of Appeal not only destroys the traditional, well-defined boundaries of product liability, but also clashes with sound science and free enterprise. The letter urges the California Supreme Court to grant review and hold that a pharmaceutical company cannot be held liable for postponing, or even terminating, development and/or commercialization of a prescription drug that a subset of consumers (here in hindsight) allege is safer than the non-defective, efficacious, FDA-approved drug that they have been using.

The Court of Appeal essentially held that an innovative pharmaceutical company like Gilead can be penalized in the form of massive tort liability to tens of thousands (and potentially millions) of consumers for making strategic business decisions about the direction and timing of its new drug R&D. Unless reversed by the California Supreme Court, the threat of such liability in California (and potentially additional States) will be a significant disincentive for engaging in innovative activity, which is how major pharmaceutical companies compete with each other while serving the public.

A common-law jury should not be permitted to second-guess sophisticated corporate decisions on whether, or when, to invest astronomical amounts of money in attempting to develop a new drug (through the well-established, scientifically exhaustive, multi-stage, self-selecting process of new drug R&D), and/or to commercialize a product. Imposing liability for such decisions, which typically are both scientifically and commercially based, would discourage innovative activity. Chilling innovation not only would deprive the public of beneficial new products that a company chooses to research and develop, but also could destabilize the economy, weaken national security, and result in other detrimental effects.
Media Contact: Larry Ebner | Tel: 202-349-1421
About the Atlantic Legal Foundation

For more than 47 years, the Atlantic Legal Foundation, a national, nonprofit, nonpartisan, public interest law firm, has advocated in the Supreme Court, federal courts of appeals, and state appellate courts for individual liberty, free enterprise, property rights, limited & responsible government, sound science in judicial & regulatory proceedings, and effective education, including parental rights and school choice.
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