Takeda Agrees to Pay $2.3 Billion to Settle Actos Cases

Takeda Pharmaceutical Co. said it will pay $2.37 billion to resolve U.S. lawsuits accusing the company of hiding its Actos diabetes medicine’s cancer risks.

Takeda will put the money into a settlement fund if 95 percent of those with claims against Asia’s largest drugmaker agree to join the accord, Takeda officials said in a statement.

The company will take a $2.7 billion charge against earnings in the fourth quarter of fiscal year 2014 to cover the settlement and costs of defending the remaining suits, according to the statement from Osaka, Japan-based Takeda. The company’s loss for the year will be its first since being listed on the Nikkei in 1949, the Nikkei Asian Review said.

The terms of the accord would offer a payment of more than $296,000 per case to those who sign up for the settlement. The payment may be reduced depending on a patient’s age, smoking history and exposure to toxins, according to three people familiar with the deal who asked not to be identified because they weren’t authorized to speak publicly about the settlement.

The accord was spawned in part by a federal jury’s decision last year to order Takeda and Eli Lilly & 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.

‘Good Deal’

“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.

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 Actos accord is one of the largest U.S. settlements of suits targeting a drug’s side effects. In 2007, Merck & Co. agreed to pay $4.85 billion to settle about 30,000 lawsuits over its withdrawn painkiller Vioxx.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 claiming its Yasmin line of birth-control pills caused blood clots in women.

Earlier 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.

More Money

If the settlement’s participation rate climbs to 97 percent, Takeda will add $300 million to the settlement, bringing it to a total of $2.4 billion, officials said in the release. Still, if the settlement has less than a 95 percent participation rate, the drugmaker is unlikely to pull out of the deal, Gordon said.

“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.”

The settlement is likely to be opposed by some former Actos users who may argue that the accord doesn’t provide sufficient compensation for their injuries, the people said.

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

Reduce Uncertainties

“This settlement allows Takeda to reduce the uncertainties of complex litigation and focus on providing medicines for patients around the world,” Sandy Rodriguez, a Takeda spokeswoman, said in an e-mail.

Actos sales peaked in the year ended March 31, 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.

Nine Trials

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.

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 officials contend Takeda agreed to cover all legal costs stemming from its U.S. sales of Actos and for the entire Louisiana verdict.

The consolidated Actos cases in Louisiana are In Re Actos (Pioglitazone) Products Liability Litigation, 11-md-02299, U.S. District Court, Western District of Louisiana (Lafayette).

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