California's highest court ruled on Monday that manufacturers of drugs that are considered safe do not owe a duty to patients to try developing drugs that could be even safer, ruling in favor of Gilead Sciences (GILD.O) in the closely watched case.
In a 6-1 decision, the California Supreme Court ordered the dismissal of negligence claims against Gilead by an estimated 24,000 patients using an HIV drug it produced, over its decision more than 20 years ago to stop developing an alternative drug that had fewer side effects.
Justice Joshua Groban said imposing a "duty to innovate" and holding drugmakers to a negligence standard would require juries to second-guess complex scientific judgments in hindsight, including when the underlying science is in flux.
"What today's decision declines to do is recognize, for the first time anywhere, sweeping liability for injuries caused by a concededly nondefective drug because the manufacturer allegedly failed to make a different drug available sooner," Groban wrote for the majority. "Imposing such liability would create substantial burdens and would risk adverse consequences for pharmaceutical innovation, public health, and patient safety."
Lawyers for the patients did not immediately respond to requests for comment. The decision reversed a February 2024 ruling by a mid-level state appeals court finding a duty to innovate.
HIV drugs accounted for 70% of Gilead's $29.4 billion in revenue last year.
Gilead, in a statement, called Monday's decision "a victory for all those working to develop improved medical treatments and new medicines." Shares of Gilead were down 0.2% in afternoon trading.
DRUG SOUGHT BY PATIENTS NOT DIFFERENT ENOUGH
The case had the potential to reshape product liability law for the pharmaceutical industry.
Critics said imposing a duty to innovate would make drug development too costly, punish manufacturers by capping profits from successful drugs, and deprive patients of needed treatments that work.
Dozens of trade groups and companies supported Gilead's appeal, including drugmakers Bayer (BAYGn.DE), Bristol Myers Squibb (BMY.N), Eli Lilly (LLY.N), Johnson & Johnson (JNJ.N), Merck (MRK.N) and Pfizer (PFE.N).
The case was brought by HIV patients who took Gilead drugs made with tenofovir disoproxil fumarate, or TDF.
Those drugs won U.S. approval in 2001 despite possible side effects including kidney dysfunction and bone problems.
Gilead soon began testing tenofovir alafenamide fumarate, or TAF, which was similar to TDF but had fewer side effects.
The Foster City, California-based company stopped developing TAF in 2004, however, after concluding its effectiveness and safety were not different enough to justify the expense.
DISSENT CRITICIZES 'MORALLY BLAMEWORTHY' CONDUCT
Patients said TDF's side effects required Gilead to do better.
They also accused Gilead of delaying TAF's commercialization for nearly a decade to maximize profit, and timing it to TDF's patent exclusivity expiring in 2017.
During oral arguments in May, the patients' lawyer, Holly Boyer, said Gilead was "willing to accept the suffering of tens of thousands of patients with HIV forced to endure a drug that was destroying their kidneys and breaking their bones, all so that Gilead could make more money, $27 billion more."
Gilead's lawyer, Joshua Rosenkranz, said the company focused on TDF because it achieved "the holy grail" of being a once-a-day pill that saved millions of lives.
Justice Kelli Evans dissented from Monday's decision, calling Gilead's conduct "morally blameworthy."
She said the drug industry already enjoys "special accommodations" including patent protection and exemptions from strict products liability, and urged California's legislature to consider eliminating immunity from negligence claims.
Groban countered that moral blame wasn't an issue, given the "morally neutral and socially valuable" reasons that may underlie drug development decisions.
