Gilead Life Sciences, Inc. v. Super. Ct. of S.F.

• Docket Number: A165558
• Decision Date: 09 January 2024
• Citation: Gilead Life Sciences, Inc. v. Super. Ct. of S.F., 317 Cal.Rptr.3d 133 (Cal. App. 2024)
• Parties: GILEAD TENOFOVIR CASES. Gilead Life Sciences, Inc., Petitioner, v. The Superior Court of the City and County of San Francisco, Respondent; Plaintiffs in JCCP No. 5043, Real Parties in Interest.
• Court: California Court of Appeals

317 Cal.Rptr.3d 133

GILEAD TENOFOVIR CASES.

Gilead Life Sciences, Inc., Petitioner, v.The Superior Court of the City and County of San Francisco, Respondent;

Plaintiffs in JCCP No. 5043, Real Parties in Interest.

A165558

Court of Appeal, First District, Division 4.

Filed January 9, 2024

As Modified on Denial of Rehearing

February 1, 2024

Trial Court: City and County of San Francisco Superior Court, Trial Judge: Honorable Andrew Y.S. Cheng (San Francisco City & County Super. Ct.No. CJC-19-005043, JCCPNo. 5043)

SIDLEY AUSTIN, Debra Pole, Joshua Anderson, Sean Commons, David Carpenter, Collin Wedel, Los Angeles, ORRICK, HERRINGTON & SUTCLIFFE, Andrew Silverman, Siobhan Atkins, Cesar Lopez-Morales, E. Joshua Rosenkranz for Defendant and Petitioner

No attorneys listed for Respondent .

GRANT & EISENHOFFER, M. Elizabeth Graham, San Francisco, JENNER LAW, Robert K. Jenner, MOSKOVITZ APPELLATE TEAM, Myron Moskovitz, KERSHAW, COOK & TALLEY, William A. Kershaw, Sacramento, SCHNEIDER

WALLACE COTTRELL KONECKY, Amy Eskin, ESNER, CHANG & BOYER, Andrew N. Chang, Oakland, Holly N. Boyer, Pasadena, for Plaintiffs in JCCPNo. 5043 Gilead Tenofovir Cases, Real Parties in Interest

DLA PIPER, Justin R. Sarno, Los Angeles, Adam Pierson, Ilana H. Eisenstein, Ben C. Fabens-Lassen for The California Chamber of Commerce, The Chamber of Commerce of the U.S.A., The Alliance for Automotive Innovation, The Washington Legal Foundation, Amici

WASHINGTON LEGAL, FOUNDATION, Cory L. Andrews for Washington Legal Foundation, Amicus

COVINGTON & BURLING, Ashley M. Simonsen, Los Angeles, Alice L. Phillips, Michael X. Imbroscio, Emily Ullman, Gregory L. Halperin for Pharmaceutical Research and Manufacturers of America ("PHRMA"), Amicus

THE ARKIN LAW FIRM, Sharon J. Arkin, AMERICAN ASSOCIATION FOR JUSTICE, Jeffrey R. White for American Association for Justice and Consumer Attorneys of California, Amici

BUGHALTER, Mary-Christine Sungaila, Paul-A.Alarcon for Product Liability Advisory Council, Inc., Amicus

PUBLIC JUSTICE, Karla Gilbride for Public Justice, Amicus

GOLDMAN, J.

DefendantGilead Life Sciences, Inc.(Gilead), a pharmaceutical manufacturer, developed and sold one of the first medications to treat HIV/AIDS.That drug, tenofovir disoproxil fumarate (TDF), was approved for sale by the Food and Drug Administration (FDA) in 2001.Although TDF was effective in suppressing the effects of HIV, its use carried a risk of skeletal and kidney damage.The 24,000 plaintiffs in this coordinated proceeding allege that they suffered these or other adverse effects from' their use of TDF.

While Gilead was developing TDF, it discovered a similar, but chemically distinct, potential drug, tenofovir alafenamide fumarate (TAF).Plaintiffs allege that Gilead’s early testing indicated TAF could be as effective as TDF at treating HIV/AIDS, while carrying a lower risk of adverse effects.According to plaintiffs, however, Gilead elected to defer development of TAF because it was concerned that the immediate development of TAF would reduce its financial return from TDF.Years later, Gilead resumed the development of TAF and obtained FDA approval for its sale in 2015.

Although plaintiffs are seeking compensation for injuries caused by their use of TDF, they do not assert any claim seeking to prove that TDF is defective.Instead, they characterize their claim as one for ordinary negligence, contending that Gilead’s decision to defer development of TAF to maximize its profits breached its duty of reasonable care to users of TDF.They also assert a claim for fraudulent concealment, reasoning that Gilead had a : duty to disclose information about TAF to users of TDF.

Gilead filed a motion for summary judgment or summary adjudication.With respect to plaintiffs’ claim for negligence, Gilead argued that a plaintiff seeking to recover for harm caused by a manufactured product must prove that the product was defective.Given plaintiffs’ decision not to prove a defect, Gilead contended, they cannot recover for harm caused by their use of TDF.With respect to fraudulent concealment, Gilead argued that it had no duty to disclose facts relating to TAF when it had not been approved as an alternative to TDF for the treatment of HIV/AIDS.The trial court denied the motion in its entirety.Gilead then filed a writ petition in this court.Because of the potentially dispositive nature of these issues for this large coordinated proceeding, we issued an order to show cause.After oral argument, we requested supplemental briefing on certain issues raised by plaintiffs’ negligence claim, including whether, if the law does not require proof of a defect, the factors set forth in Rowland v. Christian(1968)69 Cal.2d 108, 70 Cal. Rptr. 97, 443 P.2d 561(Rowland) nonetheless warrant an exception to the duty of care in this context.

We now grant the petition for writ of mandate in part and deny it in part.We affirm the trial court’s denial of Gilead’s motion insofar as it sought summary adjudication of plaintiffs’ negligence claim.First, we conclude that the legal duty of a manufacturer to exercise reasonable care can, in appropriate circumstances, extend beyond the duty not to market a defective product.Second, in light of that conclusion, we then explain why Rowland supplies the appropriate framework for evaluating plaintiffs’ negligence claim.Third, applying Rowland,we consider two proposed exceptions to the duty of care.The first exception mirrors Gilead’s original argument by precluding negligence liability for prescription drugs without proof of a defect.The second exception is narrower in that it would allow plaintiffs to assert a claim for negligence without proof of a defect, but only as to decisions the drug manufacturer made after obtaining the results of Phase III clinical trials of the alternative drug.We find that the broader proposed exception is unwarranted, and that the narrower exception is unsupported on the present record, although we do not preclude the possibility that Gilead could establish it on a more developed record.

Finally, we reverse the trial court’s decision insofar as it denied Gilead’s motion for summary adjudication of plaintiffs’ claim for fraudulent concealment.We conclude that Gilead’s duty to plaintiffs did not extend to the disclosure of information about TAF.

BACKGROUND

I.Plaintiffs’ Allegations

Plaintiffs allege that in 1991 Gilead obtained an exclusive license to develop tenofovir, a substance known to be "an incredibly, potent antiretroviral," as a treatment for HIV/AIDS.Tenofovir could not be used as a medication in its pure form, however, because it is not effective When administered orally and produces "rapid and severe decline in kidney function" when injected directly into the body.To create a usable medication from tenofovir, Gilead was required to develop an alternative form of the chemical, known generally as a "prodrug," that would be safe and effective when administered orally.

Gilead eventually created TDF, a prodrug form of tenofovir, and focused its development efforts on that compound.TDF was approved by the FDA for, sale as a treatment for HIV/AIDS in 2001.It was recognized at the time, however, that use of TDF carried the potential for harmful side effects.

At some point during its work, Gilead developed a second prodrug form of tenofovir, TAF, that also showed promise in the treatment of HIV/AIDS.Plaintiffs allege that TAF is more stable in the body than TDF, a property that permits TAF to be administered at a lower dose than TDF.The use of a smaller dose allegedly makes TAF more effective as a treatment while reducing adverse side effects.

Plaintiffs allege that even before Gilead obtained regulatory approval to market TDF in 2001, the company "knew [TAF] to be more efficacious and less toxic to kid- neys and bones than TDF."In 2002, Gilead undertook Phase I/II testing of TAF.According to the complaint, apparently quoting a Gilead document, this testing was done with the "explicit goal of ‘… deliver[ing] a more potent version of tenofovir that can be taken in lower doses, resulting in better antiviral activity and fewer side effects.’ "In 2004, however, Gilead discontinued development of TAF.At the time, Gilead allegedly explained its decision by stating publicly that the differences between TDF and TAF were insufficient to justify further investment in TAF’s development.

Plaintiffs allege, on the contrary, that Gilead’s decision to discontinue work on TAF was actually driven by a conscious business strategy to maximize the financial value of TDF.If TAF were developed immediately as a treatment, plaintiffs allege, its superiority to TDF would have resulted in its replacement of TDF as an HIV/AIDS treatment.By deferring development of TAF, in contrast, Gilead was able to maximize its sales of TDF, while using the later release of TAF to extend the patent coverage of tenofovir-related medications.As plaintiffs allege, this strategy "would effectively monetize both drugs."

Following its pause in the development of TAF in 2004, and continuing through 2011, Gilead obtained FDA approval to sell a series of HIV/AIDS medications that featured TDF in combination with antiviral drugs produced by other manufacturers.Gilead eventually resumed work on TAF and received FDA approval to sell TAF as a treatment for HIV/AIDS in 2015.In 2011, Gilead’s President allegedly told investors that TAF would be a "kinder, gentler" version of TDF.¹

The complaint asserted- claims for negligence, strict products liability, breach of express and implied warranties, and fraudulent concealment.Over the course of the litigation, however, plaintiffs significantly narrowed the scope of their claims.In two separate stipulations, plaintiffs dismissed with prejudice their causes of action for strict liability and breach of warranty, as well as any claims "that solely provide support for failure to warn liability."By the time of the summary judgment...