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Teva, Baxter, McKesson Must Pay $20 Million, Nevada Jury Says

A Teva Pharmaceutical Industries Ltd. (TEVA) unit and two other drugmakers were ordered by a jury to pay at least $20.1 million for selling the anesthetic Propofol in a way that led three colonoscopy patients to develop Hepatitis C.

Jurors in state court in Las Vegas deliberated a total of seven hours yesterday before finding Teva Parenteral Medicines Inc., Baxter Healthcare Corp. and McKesson Corp. wrongfully sold Propofol in vials large enough to be used on multiple patients. Anne Arnold, Richard Sacks and Anthony Devito contend they contracted Hepatitis C from reused vials during colonoscopy procedures.

The jury awarded Arnold, Sacks and Devito a total of $20.1 million in compensatory damages and will consider punitive damages today. The plaintiffs’ lawyers said during the trial that they may seek a punitive award of as much as $600 million.

“We believe that the allegations against Teva are without merit and we plan to appeal this decision,” Denise Bradley, a U.S.-based spokeswoman for Teva, said in an e-mailed statement.

It’s the second verdict against Baxter and the unit of Petach Tikva, Israel-based Teva over a 2008 hepatitis outbreak in Nevada tied to Propofol. The trial of the first case resulted in a verdict of more than $500 million against the drugmakers.

Deborah Spak, a Baxter spokeswoman, and Megan Hawkins, a McKesson spokeswoman, didn’t immediately return calls seeking comment on the verdict after regular business hours.

‘First Step’

“This is a good first step and we’re looking forward to the punitive damage phase of this case,” Will Kemp, one of the lawyers representing the colonoscopy patients, said in a phone interview.

Teva makes Propofol and San Francisco-based McKesson Corp. (MCK) serves as its current U.S. distributor. Baxter, based in Deerfield, Illinois, sold the drug for Teva until 2009, according to court filings. Teva has agreed to cover all damage awards arising from the Nevada cases on behalf of the distributors, according to court filings.

In yesterday’s ruling, jurors awarded a total of $9.4 million in compensatory damages to Arnold and her husband, $5.7 million to Devito and his wife and $5 million to Sacks. The plaintiffs had sought a total of $25 million in actual damages over the incurable liver disease.

Jumbo-Sized Vials

The drug is an intravenous agent used for sedation or anesthesia, according to Teva’s website. The patients’ lawyers allege Teva intentionally sold Propofol in jumbo-sized vials to encourage doctors to reuse them, even with the risk of spreading blood-borne diseases such as hepatitis.

Propofol is the same medication at issue in the involuntary manslaughter trial in Los Angeles of Conrad Murray, who was pop star Michael Jackson’s doctor. The physician is accused of giving the singer injections of Propofol and other sedatives that led to his 2009 death.

In the first Propofol case to go to trial in Las Vegas, jurors awarded Henry Chanin, a private-school principal, and his wife $5.1 million in compensatory damages and $500 million in punitive damages against Teva and Baxter. Chanin argued he developed Hepatitis C after getting tainted Propofol during a colonoscopy.

Jurors ordered Teva to pay $356 million of the punitive damages award while assessing $144 million of the award to Baxter. Teva officials have asked the Nevada Supreme Court to throw out Chanin’s verdict.

Hepatitis Outbreak

Teva faces almost 300 lawsuits stemming from a hepatitis C outbreak three years ago in southern Nevada, the company said in a regulatory filing last month. Probes by Nevada health officials and regulators from the federal Centers for Disease Control and Prevention blamed the reuse of Propofol vials for infecting patients with hepatitis.

Last year, a state grand jury indicted Dr. Dipak Desai, who ran the Endoscopy Center of Southern Nevada at the time of the outbreak, on criminal charges. Many of the hepatitis-related cases were linked to that colonoscopy clinic. Desai also faces federal charges over the outbreak.

Lawyers for Arnold, Sacks and Devito argued in the almost two-month-long trial that Teva stopped making smaller Propofol vials because the larger containers were more profitable. The drugmaker marketed the 50-milliliter vials knowing doctors and staff would reuse them to save money, the attorneys added.

Attorneys for Teva and the Propofol distributors countered that improperly sanitized medical equipment, not reused Propofol containers, caused some Nevada colonoscopy patients to develop hepatitis and that the drugmakers shouldn’t be held responsible for colonoscopy clinics’ shoddy medical practices.

The case is Sacks v. Endoscopy Center of Southern Nevada LLC, 08A572315, District Court for Clark County, Nevada (Las Vegas).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Liz Benston in Las Vegas at lbenston@yahoo.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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