A Most Bizarre Legal Theory

Do companies have a legal obligation to accelerate innovation? That’s the argument some plaintiffs are making in a lawsuit against Gilead Sciences for failing to launch an HIV treatment sooner. If the plaintiffs prevail, the result will be less innovation.

A California appellate court on Aug. 30 will consider claims from some 24,000 patients alleging they were injured by Gilead’s life-saving HIV drugs. While the Golden State’s plaintiff-friendly courts often attract meritless lawsuits, this one has sweeping implications for U.S. business and innovation.

The Food and Drug Administration in 2001 approved a Gilead HIV medication based on the compound TDF. Thanks to the drug and others containing TDF, the plaintiffs in the case are still alive. They don’t claim that Gilead’s treatments were defective or lacked adequate warnings, as is typically alleged in product-liability lawsuits.

Instead, they claim Gilead should have rolled out sooner an alternative HIV treatment known as TAF that carried fewer bone and kidney side effects. They say Gilead tried to maximize profits by slow-walking the development and launch of its TAF treatment because it might compete with its TDF medications.

There’s scant evidence to support their claims. The FDA didn’t approve the TAF medication until 2015, about a decade after a small Gilead study showed it could have potential benefits. But it wasn’t clear from that study if it was safer or more effective than TDF medications. As it turned out, the two carry similar risks and benefits for most patients.

While Gilead’s TAF regimen is less likely to cause bone and kidney damage in some patients, it is more likely to cause high cholesterol and weight gain. The plaintiffs don’t dispute these facts, but they claim that their kidney and bone injuries could have been avoided had Gilead introduced its TAF drug sooner.

A California superior court judge last year ruled that Gilead could be sued under this theory. As Gilead argues in its appeal, the ruling threatens to “create virtually limitless and unpredictable liability with no additional incentive for safety” and “weaponize the uncertain and winding path of scientific inquiry.”

Auto makers might be sued for failing to roll out safety features like 360-degree and rear cameras sooner. Smartphone manufacturers could be held liable because their earlier generation handsets are less secure and shatter-resistent than newer models.

Businesses often experiment with new products that they later shelve for one reason or another. Under the plaintiffs’ theory, companies would be discouraged from tinkering since doing so could create future liability if they don’t commercialize their inventions. As a result, drug makers would probably investigate fewer experimental medicines.

One irony is that the Inflation Reduction Act’s price controls encourage drug makers to delay more effective treatments to maximize their profits, as Genentech CEO Alexander Hardy explained last week using the example of an ovarian cancer therapy under development. So drug makers could get dunned no matter what they do.

If the California court rules for the plaintiffs, companies can expect to be sued under the same unmoored theory of product liability in jurisdictions around the country. This is another illustration of how plaintiff lawyers profit by inventing legal theories that do grave harm to consumers, businesses and innovation.