Takeda Pharmaceutical Co. and Eli Lilly & Co. won a more than a 99 percent cut in a $9 billion punitive damages award over claims the drugmakers hid the cancer risks of their Actos diabetes medicine.
Jurors properly found officials of Osaka, Japan-based Takeda and Indianapolis-based Lilly intentionally hid the health risks of the drug and should pay punitive damages, U.S. District Judge Rebecca Doherty in Lafayette, Louisiana, ruled. Still, the panel’s decision to order Takeda to pay $6 billion and Lilly $3 billion was excessive and should be reduced to a total of $36.8 million, she said.
The reduction brings the award “to the maximum amount a jury could have properly awarded” under current U.S. law, Doherty said. The judge denied Takeda’s and Lilly’s request for a new trial.
Takeda shares rose 2.1 percent to 4,674 yen in Tokyo trading as of 9:11 a.m. local time today. Lilly shares rose 0.2 percent to $66.20 in New York Stock Exchange composite trading on Oct. 27.
Takeda faces more than 8,000 U.S. suits accusing it mishandling Actos.
Takeda officials said the more than 99 percent cut in the damages wasn’t enough and they plan to appeal.
“We view the substantially reduced punitive damage award as a step in the right direction, but we believe a damage award of any amount is not justified based on the evidence presented in this trial,” Kenneth Greisman, a U.S.-based spokesman for Takeda, said in an e-mailed statement.
“While we have empathy for the plaintiff, we believe the evidence did not support his claims,” Mike Harrington, Lilly’s general counsel, added in an e-mailed statement. “We will continue working vigorously to overturn the verdict.”
Actos sales peaked in the year ended March 2011 at $4.5 billion and accounted for 27 percent of Takeda’s revenue at the time, according to data compiled by Bloomberg. Actos has generated more than $16 billion in sales since its 1999 release, according to court filings. Takeda now faces generic competition from Ranbaxy Laboratories Ltd.
Lilly was Takeda’s U.S. partner in selling and marketing the drug over seven years starting in 1999. That partnership ended in 2006, with Lilly retaining rights to sell Actos in parts of Asia and Europe as well as in Canada and Mexico.
Richard Arsenault, one of the lawyers for plaintiff Terrence Allen in the Louisiana case, said he was pleased the judge rebuffed Takeda’s and Lilly’s new-trial bid and endorsed the jury’s finding that the companies deserved to pay some punitive award.
“The jury found, on clear and convincing evidence, that Takeda and Lilly engaged in seriously reprehensible behavior,” Arsenault said in an e-mailed statement. Arsenault is lead counsel for more than 3,000 plaintiffs whose Actos cases have been consolidated before Doherty in federal court for pre-trial information exchanges.
Under Doherty’s ruling, Takeda is responsible for paying $27.6 million in punitive damages and Lilly must pay $9.2 million. The jury also awarded Allen $1.5 million in compensatory damages.
Allen, a former hardware-store manager from Attica, New York, alleged that he developed bladder cancer after taking Actos for more than five years starting in 2006.
His lawyers argued Takeda executives ignored or downplayed concerns about the drug’s cancer-causing potential and misled regulators about its risks to protect billions of dollars in sales.
Allen’s attorneys presented jurors with “ample evidence” about Takeda’s and Lilly’s mishandling of the drug and the panel properly came up with a verdict intended to deter future misconduct, the judge found.
Still, the panel’s punitive-damages verdicts violated constitutional protections against excessive awards by assessing Takeda a punishment of more than 5,400 times the compensatory damage award and Lilly a punishment that was more than 8,100 times Allen’s actual damages, Doherty said.
Jurors in state court in West Virginia are hearing evidence that Takeda hid Actos’s health risks in a trial that started October 20. Earlier this month, a state court jury in Philadelphia ordered Takeda to pay $2 million in damages to a woman who blamed the medicine for her bladder cancer.
The Louisiana case is Allen v. Takeda Pharmaceuticals North America Inc., 12-cv-00064, U.S. District Court, Western District of Louisiana (Lafayette).
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