Takeda Pharmaceutical Co Ltd said it would contest $6
billion in punitive damages imposed by a jury in the United States in a case
that accused Japan's largest drug maker of concealing 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 by the jury in Louisiana on
Monday. It also awarded $1.475 million in compensatory damages.
Legal experts said it was unlikely that such a large award
would stand after challenges in court by both companies. Eli Lilly and Takeda
have said they would dispute the verdict, which could include appeals to a
higher court or filing motions asking the trial judge to set aside or reduce
the verdict.
"Although there's no mathematical bright line" to
determine how high is too high when it comes to punitive damage awards, federal
appeals courts generally scrutinize the ratio of punitive to compensatory
damages, preferring those that fall into the single-digit range, according to
Professor Catherine Sharkey, a tort law expert at New York University School of
Law.
Punitive damages are meant to discourage companies from bad
conduct. Compensatory damages are meant to pay victims for their actual losses.
With a ratio of more than 6,100 to 1 of punitive to compensatory damages, the
Actos award could be highly vulnerable.
"It's definitely the case that the U.S. Supreme Court
has signaled to lower courts that they should be restraining very large
punitive awards," Sharkey added.
Lilly, which co-promoted Actos from 1999 to 2006, said in a
press release it will be indemnified by Takeda for its losses and expenses
around the litigation based on the terms of its agreement with Takeda.
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.
Lilly shares fell 0.2 percent, or 12 cents per share, to
$58.50 per share in New York Stock Exchange trading.
The massive award was met with "stunned silence"
in the Lafayette, Louisiana, courtroom, plaintiffs' lawyer Mark Lanier said.
Lanier acknowledged it was not certain whether the damages
award would be sustained.
"Nobody has gone out and bought a new home,"
Lanier said. "This is a
conservative judge and a conservative court and she's very 'balls and strikes.'
We're not under any grand illusion."
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.
Lanier said the jury deliberated for only an hour and 10
minutes to deliver its verdict finding liability on all 14 questions, and 45
minutes longer to come out with the multibillion-dollar punitive damages.
The allocation of liability for compensatory damages was 75
percent for Takeda and 25 percent for Lilly, according to Lilly.
Takeda said judgments were entered in Takeda's favor in all
three previous Actos trials, while this was the first federal case to be tried
in a consolidated multidistrict litigation comprising more than 2,900 lawsuits.
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 because of concerns about a possible link
to cancer.
The case is In Re: Actos Products Liability Litigation Case
U.S. District Court, Western District Louisiana, No. 6:11-md-2299.
We believe that obtaining legal satisfaction from those who
harmed you shouldn’t require more hardship. That’s why we do everything we can
to streamline the process, and we will file a lawsuit on your behalf if
necessary. If you or a loved one has took Actos and later got bladder cancer,
contact Chhabra & Gibbs today by going to www.cglawms.com or by calling
this number: 601-948-8005.