Gilead Sciences Secures Landmark California Supreme Court Victory, Eliminating Nearly 23,000 'Duty to Innovate' Cases

On August 3^rd, the California Supreme Court ruled in favor of Gilead Sciences, Inc. in a historic product liability decision that held that a drug manufacturer does not owe a duty of care to users of a nondefective drug when making decisions about whether and when to develop and commercialize an alternative drug.

The ruling eliminates nearly 23,000 consolidated cases against Gilead and rejects plaintiffs' first-of-its-kind "duty to innovate" theory of liability.

The Wall Street Journal Editorial Board wrote about this case three times, arguing in 2024 that the California Court of Appeal's decision approving of plaintiffs' theory would have created "a disincentive to innovate".

THE CASE

• Plaintiffs - roughly 23,000 in consolidated cases in California state court - alleged that Gilead was negligent not because its HIV drug tenofovir disoproxil fumarate (TDF) was defective, but because Gilead unreasonably delayed bringing to market another HIV drug it had invented with the active ingredient tenofovir alafenamide fumarate (TAF), which presented fewer side effects to the kidneys and bones.
• Plaintiffs did not contend that TDF was defective or that Gilead should have withdrawn it from the market, and conceded that the side effects were adequately disclosed.
• The case had been litigated since 2018, through summary judgment and the intermediate appellate court, before Gilead sought review from the California Supreme Court.

THE DECISION

• The California Supreme Court rejected plaintiffs' "duty to innovate" theory, holding that a drug manufacturer has no duty of care when deciding whether and when to develop and commercialize an allegedly safer alternative to a nondefective drug.
• The court warned that plaintiffs' theory "lacks a clear limiting principle" and risks "inviting fact finders to second-guess complex resource-allocation decisions."
• The court concluded: "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. Imposing such liability would create substantial burdens and would risk adverse consequences for pharmaceutical innovation, public health, and patient safety."

THE IMPACT

• Had the "duty to innovate" theory been adopted, instead of having to prove that a product was defective, plaintiffs would need only to convince a fact finder that the manufacturer acted unreasonably in its development and commercialization decisions - opening the door to liability even for products that are useful and reasonably safe.
• Manufacturers across every industry could have faced exposure for the "path not taken."
• More than 70 amici filed briefs, including not just companies in pharma, life sciences and medical device sectors, but also market leaders in the auto, consumer device, manufacturing, tech and retail industries - from Pfizer and Lilly, Biogen and Genentech, to General Motors, Toyota, J&J, Dow Chemical and DuPont - as well as the U.S. and California Chambers of Commerce, National Association of Manufacturers, civics organizations, public health organizations, HIV scholars and patient advocates, and legal scholars.

THE TEAM

The Orrick team is led by Josh Rosenkranz and Andrew Silverman with support from Naomi Scotten, Emily Villano, Lisa Bixby, and Anne Savin.

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