A new California ruling allows consumers to sue companies for failing to complete products that are in development. Last week, a California appeals court ruled that businesses in the Golden State can be sued for not making things.
A class action suit involving 24,000 AIDS patients was filed against Gilead Sciences in a California court because the biotech giant was unable to unveil a new HIV treatment sooner that was hoped to be a safer alternative to the currently available medications.
Gilead didn't come out with a product that failed to live up to its claims. They didn't bring something to market that resulted in unexpected dangerous side effects. Gilead simply didn't get the new drug researched, tested and approved fast enough.
Gilead has been treating HIV successfully for decades. Their patented drug, tenofovir disoproxil fumarate, or TDF, was one of the first effective HIV medications. Gilead began developing it in 1991 and obtained FDA approval to market it in 2001.
But attorneys for the plaintiffs alleged that Gilead knew that TDF could cause skeletal or kidney damage as a side effect. The 24,000 plaintiffs in the suit said they suffered those or other harms from using the medication.
In 2001, Gilead was also developing another propietary HIV drug, tenofovir alafenamide fumarate, or TAF. The company halted its research on TAF in 2004, citing TAF was essentially the same as TDF. But the lawsuit alleged that Gilead's research team and senior management knew the newer medication allowed for a lower dose with fewer negative side effects, and intentionally withheld it so that they could profit from the existing supply of TDF already on the market.
Gilead resumed development of TAF in 2011 and gained FDA marketing approval in 2015, shortly before its patent on TDF was to expire and allow other companies to market generic versions of the drug. The court said Gilead acknowledged in a legal filing that there was “substantial evidence that TAF had less impact than TDF” on kidneys and bones.
As of this reporter's writing, there have been no leaked internal communications or credible testimonies from former employees substantiating this accusation, merely a timeline that presents coincidence as condemnation. What can be extrapolated without the undue influence of agenda is that Gilead began research on the new drug a full four years before TDF's patent expired.
The suit accused Gilead of negligence for withholding a safer drug, allegedly to increase its profits. The company argued that it could not be held negligent for selling medication that was effective against the disease it was intended to treat. The appeals court disagreed.
“We conclude 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,” Associate Justice Jeremy Goldman wrote for the three-judge panel.
The appellate court said its ruling doesn’t create a “duty to innovate” or “pursue ever-better new products.” But once a business starts researching a better alternative, it could be legally obligated to bring it to market, no matter the expense. Companies doing business in California would have to weigh out which would cost them more, being forced to develop a new product or being sued by their customers.
This is “the first time the state’s appellate courts have ever held that a manufacturer can be liable for a non-defective product,” said Deb Telman, the company’s general counsel.
If the ruling stands, Telman said, it 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 recent ruling paves the way for law firms to explore a new avenue for generating revenue, making them one of the few businesses still profitable in California.
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