Former Lilly partner set to pay $2.3B to settle Actos cases

Takeda Pharmaceutical Co. executives have agreed to pay more than $2.3 billion to resolve lawsuits accusing the company of hiding its Actos diabetes medicine’s cancer risks, three people familiar with the accord said.

Takeda directors still must vote on the deal, designed to resolve more than 8,000 suits, said the people, who asked not to be identified because they weren’t authorized to speak publicly about the settlement.

A federal jury in Louisiana last year ordered Takeda and Indianapolis-based Eli Lilly and Co. to pay a combined $9 billion in damages to a shopkeeper who blamed Actos for causing his bladder cancer. That award, the seventh-largest in U.S. history based on data compiled by Bloomberg, was later reduced by more than 99 percent, to $36.8 million, by a judge.

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.

Lilly said earlier this year that  it "will be indemnified by Takeda for its losses and expenses with respect to the U.S. litigation and other related expenses in accordance with the terms of its indemnification agreement."

The settlement accord would offer a payment of more than $287,000 per case to those who sign up for the settlement program while former Actos users whose injuries warrant more compensation can continue to litigate their claims, the people said. Asia’s largest drugmaker, which hasn’t settled any Actos cases up to this point, is accused in the suits of ignoring the drug’s link to bladder cancer.

“It’s a good deal for Takeda,” Erik Gordon, a professor at the University of Michigan’s business and law schools who teaches classes about how drugs are developed and regulated, said in an e-mailed statement about the proposed settlement.

More compensation

The accord largely removes the threat of more juries finding “Takeda’s mishandling of this drug is worthy of large punitive damage awards,” Gordon said. The deal may not be as good for former Actos users, he added. “Given the apparent strength of the cases, the plaintiffs probably deserved more compensation than this deal offers.”

The accord would be one of the largest U.S. settlements of suits targeting a drug’s side effects.

“Takeda has confidence in Actos as a treatment option,” said Minori Koshino, a spokeswoman for Osaka, Japan-based Takeda. The company “cannot make any comment on activities going on around litigation at this moment.”

In 2007, Merck & Co. agreed to pay $4.85 billion to settle about 30,000 lawsuits over its withdrawn painkiller Vioxx.

Takeda’s $2.3 billion settlement would dwarf the more than $1 billion Bayer AG paid out to resolve suits that its Yasmin line of birth-control pills caused blood clots in women.

This month, Takeda offered more than $2.2 billion to settle the bulk of the Actos cases, but plaintiffs’ lawyers leading the litigation held out for more money, the people said. Lawyers for some patients may still object to the agreement.

The final terms of the Actos deal have been agreed upon, though Takeda’s board still must sign off on the agreement, the people said. The settlement has a provision allowing the drugmaker to pull out of the agreement if less than 95 percent of those with claims over Actos agree to join it, the people added.

Final payment

“The participation requirement is boilerplate that is unlikely to be invoked,” Gordon said. “Takeda wants to put as many of the cases to bed as it can, and doesn’t want to wake them back up because a few plaintiffs hold out.”

Under the proposed accord’s terms, former Actos users’ final settlement payment will be affected by the patient’s age, smoking history and exposure to toxins, the people said.

That’s likely to prompt opposition to the settlement because some lawyers contend the reductions will leave their clients with insufficient compensation for their injuries, the people said.

Paul Pennock, one of two lawyers overseeing the federal- court litigation for plaintiffs, didn’t respond to phone and e- mail messages seeking comment on the proposed settlement.

Sales peak

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 over the drug from Ranbaxy Laboratories Ltd.

More than 3,500 Actos suits have been consolidated before U.S. District Judge Rebecca Doherty in Lafayette, Louisiana, for pretrial information exchanges, according to court dockets. The company faces another 4,500 cases in state courts in Illinois, West Virginia, California and Pennsylvania, according to court records.

Takeda has faced at least nine trials since 2013 over claims it hid Actos’s cancer risks, including the Louisiana trial. The company has won three defense verdicts and other damage awards against the drugmaker have been thrown out or are on appeal.

Still, five juries that have reviewed the evidence of Takeda’s handing of Actos have found the company liable for consumers’ injuries.

Former Actos users argued Takeda executives ignored or downplayed concerns about the drug’s cancer-causing potential before it went on sale in the U.S. in 1999 and misled U.S. regulators about the medicine’s risks.