(Adds comments from Lilly in seventh paragraph.)
Aug. 29 (Bloomberg) -- Takeda Pharmaceutical Co. and Eli Lilly & Co. lost a bid to have a judge throw out a combined $9 billion punitive-damage award over claims the drugmakers hid the cancer risks of their Actos diabetes medicine.
Jurors properly considered evidence showing officials of Osaka, Japan-based Takeda and Indianapolis-based Lilly knew Actos was linked to bladder cancer and failed to properly warn patients and doctors before assessing the damages, U.S. District Judge Rebecca Doherty in Lafayette, Louisiana, ruled yesterday.
The verdict, which is likely to be reduced on appeal, is the second-largest in the U.S. in 2014 according to data compiled by Bloomberg.
“The jury acted within its role and discretion to attach whatever weight and make whatever reasonable inference it deemed appropriate when assessing the defendants’ conduct,” Doherty said in her 101-page decision.
The decision didn’t resolve a defense request for a new trial in Terrence Allen’s case, which was the first federal trial over claims that Actos causes bladder cancer.
Both Takeda and Lilly disagreed with the ruling.
“We disagree with the ruling and await a ruling on our motion for a new trial,” Kenneth Greisman, a spokesman for Osaka, Japan-based Takeda, said in an e-mailed statement. “We continue to believe that binding legal precedent requires the judge to disregard the verdict in its entirety and grant a new trial.”
“Lilly respectfully disagrees with the verdict and we intend to vigorously pursue all post-verdict options, including an appeal,” Candace Johnson, a Lilly spokeswoman, said in a e- mailed statement. “ We believe the evidence did not support claims that Actos caused his bladder cancer.”
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 served as Takeda’s U.S. partner in selling and marketing the drug over seven years starting in 1999. While that partnership ended in 2006, Lilly retained rights to sell Actos in parts of Asia and Europe, as well as in Canada and Mexico.
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.
He argued that Takeda executives ignored or downplayed concerns about the drug’s cancer-causing potential and misled regulators about its risks to protect billions in sales.
Jurors deliberated for little more than an hour March 8 before finding that Takeda and Lilly acted with “wanton and reckless disregard” in marketing Actos and that the drugmakers should pay a combined $9 billion in punitive damages. It was the sixth-largest punitive award in U.S. history, according to data compiled by Bloomberg.
The jury had earlier awarded $1.5 million in compensatory damages to Allen.
The panel ordered Takeda to pay $6 billion in punitives while saying Lilly was responsible for the other $3 billion. Because of indemnity agreements between the two drugmakers, Takeda may wind up paying the full award.
The $9 billion award, the sixth-largest punitive verdict in U.S. history according to data compiled by Bloomberg, will probably be cut because the U.S. Supreme Court has said such bad-conduct awards must be proportional to compensatory damage verdicts that underlie them.
A majority of the court has said that in limited cases, punitive awards that amount to no more than 10 times a compensatory award may be acceptable.
Takeda officials said today that a completed Actos study was sent to global health regulators, including the U.S. Food and Drug Administration. The 10-year study found no significant risk of bladder cancer in Actos patients or link between the duration of the drug’s use and the disease, company executives said in an e-mailed statement. The study was conducted by the University of Pennsylvania and Division of Research at Kaiser Permanente Northern California.
Takeda rose 0.3 percent to 4,733 yen in Tokyo trading as of 9:46 a.m. today. The stock dropped 5.2 percent to 4,572 yen on April 8 after the two companies were ordered to pay a combined $9 billion in punitive damages.
The case is Allen v. Takeda Pharmaceuticals North America Inc., 12-cv-00064, U.S. District Court, Western District of Louisiana (Lafayette).
--With assistance from Kanoko Matsuyama in Tokyo.