In April, we wrote that Asia’s biggest pharmaceutical company, Takeda, and their marketing partner, Eli Lilly, faced $9 billion in punitive damages stemming from potential cancer risks from their diabetes drug, Actos. The companies recently moved for a new trial and a reduction of the damages. While Louisiana U.S. District Judge Rebecca Doherty denied them a new trial, she greatly reduced the damages. Her opinion is essentially a 100-page lashing of Takeda and Eli Lilly, but she ended up finding that “the punitive damages awards made by the jury must bow to the weight of the Due Process Clause.” She moved the punitive damages to about $37 million, an $8.6 billion swing.
View the original judgment here, and see the punitive damage award on page 3 (a lot of zeroes in $6,000,000,000.00 for Takeda plus $3,000,000,000.00 for Eli Lilly).
View the motion for new trial here (page 99 for change in damages).
Original case
This revised punitive damages award stems from a 2011 lawsuit filed by Terrence Allen and his wife, Susan Allen, who alleged that the Actos diabetes medication caused Mr. Allen’s bladder cancer. The plaintiffs alleged that Takeda and Lilly concealed their knowledge of the drug’s cancer risks and failed to provide adequate warnings.
Takeda has continuously maintained that the plaintiff’s bladder cancer wasn’t caused by Actos, and that the drugmaker provided proper warnings as they became known over the years.
The jury awarded the Allens about $1.5 million in compensatory damages before considering punitive damages, which seek to punish the wrongdoer rather than reimburse the victim. Indeed, in contemplating the punitive damages, the jury was told to consider the net worth of Takeda in 2013, which totaled almost $24 billion, and that the net sales of Actos in the U.S. over a 13 year period also totaled $24 billion. In this way they could land on a number that would hurt.
Punitive damages are often calculated as a percentage of compensatory damages. Here, they reflected a ratio of 1:5,424 compensatory damages to punitives based on a finding that both Takeda and Eli Lilly had engaged in a “wanton and reckless manner.”
Adjustments to Damages
Judge Doherty stated that in Takeda’s type of motion, the standard of review is “especially deferential” to the jury’s determination. She also stated that the parties were in the “unenviable situation” of having to rely on the court’s “constitutional sensibilities” in making adjustments to damages. She had to make her decision based on “full and complete consideration to the law, the jury’s verdicts, the evidence and the arguments presented by counsel.”
She found among other things:
- Takeda and Lilly knew or should have known that their product increased the risk of bladder cancer for an identifiable and extremely vulnerable group
- They undertook a 12 year effort to hide this link from the public, physicians, and FDA and to avoid putting adequate warning of that risk
- This conduct caused personal injury, bodily harm, and risk of premature death to Mr. Allen and injury to Mrs. Allen
- The companies greatly benefitted from these activities, selling $24 billion worth of Actos.
“The defendants effectively wrote off the public health and welfare and the health and lives of the most vulnerable of their target population, such as Mr. Allen, and chose, instead, to honor their own pursuit of profit,” the Judge stated. Thus, she found that the punitive damages were warranted. “However,” she notes, “this Court, also, finds the ratio of the harm actually caused to Mr. and Mrs. Allen and the total punitive damages, awarded of 1:5424 for Takeda and 1:8136 for Lilly, cannot withstand the more objective proportionality analysis under the now existing jurisprudence.”
Because there is no “bright-line test,” however, Judge Doherty struggled to define a monetary value. Ultimately she ended on a ratio of 1:25 of compensatory damages to punitive damages, creating an award of punitives against Takeda for $27.7 million and Lilly for ($9.2 million). She noted that this might “provide those Courts higher than this one the opportunity to grant clarity and instruction in the important area of the law.”
Before signing off on the motion, Judge Doherty warned companies and the leaders of corporate entities that this case squarely focused on Mr. and Mrs. Allen—future cases (including the “almost 8,000 pending throughout the United States”) could seek similar punitive damages that could add up very quickly.
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Earlier this year, the plaintiff’s attorney, Mark Lanier predicted the downward adjustment. “There’s no way that these [damages] will be $9 billion at the end of the day,” he said. The Wall Street Journal’s Law Blog noted that the Supreme Court has ruled that punitive and compensatory damages “must bear some relationship to one another.” The article stated that generally “punitive damages that are more than nine times that of compensatory damages have a poor survival rate.”
Despite the drastic cutback, this case’s punitive damages still almost tripled that general rule. On appeal, higher courts may have the potential to add clarity, as Judge Doherty notes, to the punitive damages ceiling. Right now, there is no definitive limit to punitive damages, and the court in this case struggled to find the “correct” amount.
Kenneth D. Greisman, senior vice president and general counsel of Takeda Pharmaceuticals stated: “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 and we will appeal,” He went on to say that “patient safety is a critical priority for Takeda. There is no credible scientific evidence that establishes a causal link between ACTOS and this disease.”
Interestingly, judgments were entered in Takeda’s favor in all three previous Actos trials before the $9 billion bombshell. Bloomberg reports that last year, “state juries in California and Maryland ordered Takeda to pay a total of $8.2 million in damages to former Actos users,” but “judges in both states threw out the verdicts.” This year, jurors in a Las Vegas state court rejected claims that the company failed to properly warn consumers about the risks of Actos.
Perhaps looking to avoid the situation Judge Doherty foreshadowed where hundreds of suits line up for large punitive damage awards, Takeda and Lilly plan to appeal this decision, despite the more than 99% reduction in damages. “While we have empathy for the plaintiff, we believe the evidence did not support his claims,” Mike Harrington, Lilly’s general counsel, stated in an e-mailed statement to Bloomberg. “We will continue working vigorously to overturn the verdict.”