Photographer: JB Reed/Bloomberg

$9 Billion Eli Lilly Verdict Won't Stand

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of “The Up Side of Down: Why Failing Well Is the Key to Success.”
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A Louisiana jury has returned a $9 billion verdict against Eli Lilly & Co. and Takeda Pharmaceutical Co. for hiding the bladder cancer risks of Actos, a diabetes drug.

The jury had previously awarded $1.5 million in compensatory damages to a bladder cancer patient in the case.

According to the current label for Actos in the U.S., a long-term study of people taking the drug found a significantly higher risk of developing bladder cancer after more than two years of use. The study found that longer-term use of Actos increased the risk of developing bladder cancer by 40 percent, though only one person in 1,000 developed bladder cancer in a given year.

Holy torts, Batman! That's a lot of money! Is this a case of corporate greed run amok? Are Lilly and Takeda doomed?

Two things are worth noting about this case.

First, while it may be true that Takeda should have acted sooner, many cases of bladder cancer were unavoidable. That's simply the nature of drug development.

Whatever Takeda knew later, it's almost impossible that it could have known about the risk of bladder cancer before it released the drug. Look at the incidence: 1 in 1,000 people who have taken the drug for more than two years -- many of them, presumably, for much more than two years. That level of disease incidence is hard for clinical trials to pick up. If we are going to have new drugs, we are going to have to accept that sometimes, they will cause serious harm as well as good.

Second, this verdict was awarded in Louisiana. The state is a leader on the American Tort Reform Association's list of judicial hellholes, because its local judges and juries make it very plaintiff-friendly. Getting a massive verdict against a company in Louisiana is not exactly playing against the varsity. Moreover, these verdicts usually get reduced on appeal, so I wouldn't start writing Takeda's epitaph yet. If the company faces an existential threat, it is the hole in its pipeline left when Actos went off patent, not a blockbuster civil verdict that probably won't stand.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

(Megan McArdle writes about economics, business and public policy for Bloomberg View. Follow her on Twitter at @asymmetricinfo.)

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Megan McArdle at

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