In early April, a jury awarded a record $9 billion in damages to a plaintiff who alleged that Takeda Pharmaceuticals, makers of the diabetes drug Actos, concealed the cancer risks of the drug.
The plaintiffs argued that Takeda and Eli Lilly, a co-marketer of the drug, knew about the drug’s bladder cancer risks, hid those risks and failed to provide adequate warnings. In that case, the plaintiff began taking Actos in 2006 and was diagnosed with bladder cancer in 2011. Takeda claimed in court that the plaintiff’s bladder cancer wasn’t caused by Actos, and that the company provided proper warnings as they became known over the years.
At trial, plaintiffs alleged that Takeda executives failed for at least seven years to provide specific warnings about research showing a bladder cancer risk. This failure was not accidental or even an oversight, plaintiffs claimed.
The Purpose of Punitive Damages
It took the jury only one hour and 10 minutes to find the drug makers liable on all 14 counts. The jury allocated 75% of the liability to Takeda and 25% to Eli Lilly.
The initial verdict was a $1.5 million compensatory damages award for the plaintiff to cover his and his family’s medical costs, pain and suffering, and other losses. In addition to compensatory damages, a jury can award punitive damages. The purpose of punitive damages is not to compensate the plaintiff, but to punish a bad acting defendant and deter other companies from similar actions.
Other large punitive awards include:
- A $5 billion punitive damages award against Exxon Mobil Corp. for the Exxon Valdex oil spill that occurred in Alaska in 1989;
- A $253 million award against Merck & Co. to a Texas man who died after taking the Vioxx painkiller.
Six million dollars of the Actos punitive damage award was assigned to Takeda, with three million assigned to Eli Lilly.
Punitive Damages tend to be Reduced on Appeal
The U.S. Supreme Court has held that punitive damages should be proportional to the injury suffered by a plaintiff. It is likely that the $9 billion awarded in the Actos case will be reduced and Takeda Pharmaceuticals announced its intent to appeal.
The U.S. Supreme Court later reduced the Exxon’s Valdez award of $5 billion to $500 million, finding the $5 billion to be excessive.
While punitive damage awards do need to be proportional to the loss, judges have also held that juries can take a company’s profits into consideration. It’s reasonable to assume that the Actos jury was swayed by the gigantic profits that Takeda reaped from Actos over the period that it failed to disclose the known cancer risks.
Court filings showed that Actos sales have exceeded $16 billion since its release in 1999. According to Bloomberg, Actos sales peaked at $4.5 billion in the year ended March 2011; the drug accounted for 27% of Takeda’s revenue at the time.
Thomas Law Offices is currently representing individuals who have been diagnosed with bladder cancer while taking Actos.