Jury Hits Drugmakers with $9 Billion in Punitive Damages

By Daniel Levine and Edmund Klamann | April 8, 2014

Takeda Pharmaceutical Co. Ltd said it would contest $6 billion in punitive damages imposed by a U.S. federal jury in a case alleging that Japan’s largest drugmaker had concealed cancer risks associated with its Actos diabetes drug.

Eli Lilly and Co., Takeda’s co-defendant in the case, was ordered to pay $3 billion in punitive damages.

“We intend to vigorously challenge this outcome through all available legal means, including possible post-trial motions and an appeal,” Kenneth Greisman, general counsel of Takeda Pharmaceutical USA Inc, said in a statement.

Takeda’s shares fell as much as 8.8 percent to an eight-month low in Tokyo trading on Tuesday after the verdict. The stock ended 5.2 percent lower at 4,572 yen.

The massive award was met with “stunned silence” in the packed Lafayette, Louisiana, courtroom, plaintiffs’ lawyer Mark Lanier said.

Lanier acknowledged it was not certain whether the damages award would be sustained as the legal process continued.

“Nobody has gone out and bought a new home,” he told Reuters.

“This is a conservative judge and a conservative court and she’s very ‘balls and strikes’. We’re not under any grand illusion.”

He added that the judge wanted post-verdict motions filed quickly but had set no precise schedule.

The $9 billion in punitive damages awarded by the jury against Takeda and Eli Lilly exceed the $5 billion penalty that a jury in Alaska imposed on Exxon Mobil Corp. for the Exxon Valdez oil spill in 1989.

The U.S. Supreme Court ruled in 2008 that the previous Exxon Valdez award had been “excessive”. The company was ultimately ordered to pay $500 million. That and other rulings have been read as limiting punitive damages in federal cases.

Punitive damages are meant to discourage other companies from bad conduct. Compensatory damages are meant to pay victims for their actual losses.

In the latest Actos case, the jury also ordered the payment of $1.475 million in compensatory damages in the suit.

Lanier said the jury deliberated for only an hour and 10 minutes to deliver its verdict finding liability on all 14 questions, and another 45 minutes to come out with the multibillion dollar punitive damages.

Takeda said judgements were entered in Takeda’s favor in all three previous Actos trials, while this was the first federal case to be tried as well as the first of a consolidated multidistrict litigation.

Last May, a U.S. judge had nullified a separate jury verdict for $6.5 million against Takeda after ruling that the plaintiffs failed to offer any reliable evidence that Actos had caused cancer.

Germany and France suspended use of the drug, a multibillion dollar seller, in 2011 due to worries about a possible link to cancer.

The case before the U.S. District Court, Western District Louisiana, is In Re: Actos Products Liability Litigation Case No. 6:11-md-2299.

(Additional reporting by Ritsuko Shimizu in Tokyo; Editing by Kevin Krolicki, Stephen Coates and Ryan Woo)

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