Verus, a litigation support services firm, has announced that the Court of Appeals in California has ruled that biopharmaceutical company Gilead Sciences could be held liable for the delayed development and launch of a new HIV drug. Critics have expressed concerns that this ruling may discourage innovation and lead to an increase in litigation payouts, subsequently resulting in higher costs for consumers.
In a post on its website, Verus revealed that the Court of Appeals issued its partial ruling on Jan. 9, allowing plaintiffs' claims for negligence against California-based Gilead to proceed. This ruling forms part of ongoing litigation against Gilead concerning its HIV drug tenofovir disoproxil fumarate (TDF), which was launched by the manufacturer in 2001. Although TDF has been effective in treating symptoms of HIV, patients have reported adverse effects such as bone and kidney damage. During TDF's development, Gilead reportedly discovered tenofovir alafenamide fumarate (TAF), which could serve as a safer alternative to TDF. The plaintiffs in the case allege that Gilead intentionally delayed the development of TAF to maximize its profits from TDF.
The Wall Street Journal editorial board stated in an opinion piece that the 24,000 plaintiffs are not arguing that Gilead's TDF is defective; rather they contend that the company should have launched an alternative, safer HIV treatment sooner. The board argued: "slow-walking the development of a product isn’t a tort because it doesn’t directly harm someone." However, in 2022, a California superior court judge determined that Gilead could be found negligent for failing to develop better drugs. Consequently, once a company begins developing a product potentially serving as a better alternative to its previous one, it could be legally obligated to bring this product to market regardless of technological or economic barriers.
The editorial board further expressed concerns that this ruling "will create a disincentive to innovate." The board also warned of a potential "Catch-22" situation for businesses: if they launch new products quickly, they could be held liable for defects, but they could also face liability for taking too long to release new products. According to the opinion piece, this decision could impact industries beyond pharmaceuticals, including software development and car manufacturing. The board pointed out that the decision could generate more revenue for plaintiffs' law firms, which "can find a product that improves on a previous version, then sue the company for not introducing it sooner." They noted that the decision might lead to an increase in "social inflation," a term coined by insurance providers to describe the rising costs of litigation payouts, "which consumers ultimately bear."
According to its website, Gilead was founded in 1987 and has developed drugs to treat and manage hepatitis C, HIV, and Covid-19. The company's goals include eliminating hepatitis C as a public health problem and delivering new oncological treatments.