A pharmaceutical manufacturer is sounding the alarm about a recent California appeals court ruling they say would allow businesses to be sued, not only when products are defective, but also when they allegedly fail to bring an improved replacement product quickly enough to the marketplace.
Gilead Life Sciences has the California Supreme Court to review the First Appellate District Court of Appeal's decision, which concluded that manufacturers have a duty in liability law that extends beyond not marketing defective products.
Under the appeals court's ruling in January, a company could be held liable for a non-defective product if it fails to produce a different product that is alleged to be safer for a portion of consumers or patients.
The appeals court dismissed two of three claims brought by 24,000 plaintiffs in a coordinated proceeding alleging they suffered adverse effects from one of Gilead’s HIV/AIDS drugs, called tenofovir disoproxil fumarate (TDF). The plaintiffs also allege that an alternative HIV/AIDS drug being developed by Gilead, called tenofovir alafenamide fumarate (TAF), would have offered patients effective care with a lower risk of adverse effects..
“By allowing that one claim to proceed, the court has upended established California law,” a Gilead spokesperson told the Southern California Record. “It is the first time the state’s appellate courts have ever held that a manufacturer can be liable for a non-defective product.”
The company emphasized that the court did not conclude Gilead was required to bring TAF to the pharmaceuticals market earlier than it did. Instead, the appeals court found the current factual record inadequate, leaving open the potential for Gilead to show there is no merit to the plaintiffs’ claim in future court proceedings, according to Gilead.
But the company argues that the impact of the appeals court ruling could be devastating if allowed to stand.
“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,” the Gilead spokesperson said. “Gilead remains committed to driving innovation to meet patient needs and ultimately end the HIV epidemic for everyone, everywhere.”
Under current law, manufacturers understand that they can design and market goods when the products are reasonably safe, according to the petition Gilead filed with the state Supreme Court on Feb. 20. In other words, a product’s benefits must exceed its risks.
“The Court of Appeal has thrust courts into the business of regulating products not on the market – and telling companies when, and in what order, to release them,” Gilead’s petition states. “That means that once a manufacturer discovers or learns of a potentially safer product, it has a legal duty to rush that product onto the market, or risk liability for the injuries caused by its perfectly reasonable, non-defective existing product.”
Law professor Gary Myers of the University of Missouri School of law said the appellate court ruling, which was authored by Justice Jeremy Goldman, could have a negative effect on product innovation.
“If a manufacturer has developed an innovative product, it is likely to continue to work to improve its product,” Myers said in a recent opinion column. “This process of innovation occurs in industries as diverse as software, vehicle safety, pharmaceuticals and medical devices. The California court's ruling, however, imposes potential liability on innovators.”
Critics have suggested that if the opinion were allowed to stand, manufacturers might reduce spending on their research for alternative or improved products to avoid potential expanded liability concerns – or have to rush alternative products to the market. Opponents also see a likelihood of opening up an avenue for increased product-liability lawsuits in the future.
Among the groups urging the state Supreme Court to review the opinion is the Pharmaceutical Research and Manufacturers of America (PhRMA).
“PhRMA urges the Supreme Court of California to review and reverse an appeals court ruling that imposes a novel and unworkable theory of liability on biopharmaceutical manufacturers of non-defective prescription medicines,” PhRMA’s executive vice president and general counsel, Jim Stansel, said in a statement emailed to the Record. “... The appeals court’s theory of liability will stifle innovation and undermine the scientific judgments of (the Food and Drug Administration) in ensuring access to life-saving medicines in the United States.”
Though the current case is limited to California, an expansion of product-liability litigation could spread to other states if it is upheld in California, opponents of the appellate ruling say. The state Supreme Court is expected to make a decision on whether to take up the case by April 22.