How legal adventurism stifles medical innovation

The recent decision of the California Appellate Court in Gilead Life Sciences v. Superior Court, should send tremors though both producers and consumers of drugs alike. At issue was a claim by a class action group of some 24,000 plaintiffs that Gilead be held responsible for the indefinite harms arising because, starting in 2004, the defendants did not move with sufficient dispatch to replace its pioneering medication tenofovir disoproxilfumarate (TDF) with its newer but chemically distinct, drug, tenofovir alafenamide fumarate (TAF), which in early testing was thought to have fewer renal and skeletal side-effects. The plaintiffs’ only claim was that Gilead delayed the developing the new TAF “ solely  to maximize profit” from a deft sales program for both drugs. The claims here are factually and legal preposterous. On the fact side, getting FDA approval for any new drug is always an iffy, arduous and expensive process that routinely runs many years and typically costs somewhere between $1.3 and $4.00 billion. Conflicts between the developing and marketing new and improved drugs are commonplaces occurrence, yet the Court in Gilead does not mention even one similar case brought by anyone, anywhere at any time . But the plaintiffs and the court never bothered to ask why. Gilead gained an exclusive license to market TDF in 1991, yet it took over ten years to get that drug to market. The multiple pitfalls in gaining approval to market a new product relate first to the speed that the drug developer can run the FDA gauntlet and second to securing sufficient sales once the approvals are obtained. On the first the FDA may be tardy in evaluating the data or may find a dozen reasons to order further data analysis or additional clinical trials, shrinking the useful patent life after gaining approval. Yet without being able to estimate the launch date and the amount of market promotion, no one can tell which class members are in fact eligible for recovery. Class certification does not resolve these individual issues. The waters are further muddied given the complicated incentive effects of this new supposed duty to pull safe and effective products from the market. The court is eerily silent on the effect of its decision these effects.  If Gilead knew in advance that its early development of a new drug would expose it to some indeterminate liability for the continued sale of its current offerings, the downward drag might induce it to shelve the new drug to avoid crushing liability for keeping the old drug on the market.  Yet to take the drug off could create a different risk if in the interim  another  pharmaceutical firms places on the market a superior, if more expensive drug, than TDF. The  Gilead  opinion offers no instructions on whether Gilead is now required to withdraw its current product because of the new availability of the “superior” product.  Price-quality tradeoffs are always critical in these cases, because different consumers (by age, sex, race, medical conditions) often respond differently to a given drug of the same class.  If Gilead did develop and market TAF, if two years later it, or another company comes up with a third improved alternative must that drug also be pulled, given the last developer a strong market position. Keeping multiple drugs in the same class but with varying characteristics expands consumer choice.  Thus  Gilead  will on net reduce medical innovation, yet another instance of the iron law of unintended consequences.  In this complex seting no one feature can be the “sole” cause of the time any drug hits the market.  This case should be DOA. So on what  legal theory does this new tort rest?  The court quotes at length a passage from the earlier case of  Rowland v. Christian  (1968), which offers a ragtag list of supposedly relevant factors for determining liability: foreseeability of harm; the certainty of its occurrence; the closeness of the causal connection; any moral blame; prevention of future harm; and the availability of insurance. And for what?  In  Rowland  a house guest was injured using a defective faucet in the normal way when his host failed to warn him of the latent defect.  It is a classic case of misrepresentation standard even in product liability cases decided under a theory of strict liability.  As such its broad formula proved irrelevant, and the narrow rule in  Rowland  dovetails perfectly with Gilead’s view that no overarching theory of negligence allows judges to manufacture legal duties at total variance with common expectations and uniform historical practice, without any grand theorizing. Keep it simple, keep it smart. Make sure this dubious theory never takes root in California or anywhere else. Richard A. Epstein is the Inaugural Laurence A Tisch Professor of Law and the New York University School, the Peter and Kirsten Bedford Senior Fellow, The Hoover Institution, and the James Parker Hall Distinguished Professor of Law Emeritus and Senior Lecturer at the University of Chicago.