ACTOS UPDATE: (1) Eli Lilly Ducks Perjury Sanctions and (2) Blue Cross Sues Takeda & Eli Lilly

In April 2014, the U.S District Court in western Louisiana ordered a $6 billion penalty for Takeda's Actos and $3 billion for its business partner and co-defendant Eli Lilly and Company. It also ordered $1.5 million in compensatory damages in favour of the plaintiff.

In April 2014, the U.S District Court in western Louisiana ordered a $6 billion penalty for Takeda’s Actos and $3 billion for its business partner and co-defendant Eli Lilly and Company. It also ordered $1.5 million in compensatory damages in favour of the plaintiff.

(1) Eli Lilly Ducks Perjury Sanctions In Actos Trial

A federal judge on Wednesday declined to sanction Eli Lilly & Co. or subject a former executive to criminal investigation for zig-zagging on the stand during a bellwether trial alleging the diabetes drug Actos caused bladder cancer, saying the questionable testimony hadn’t stopped the plaintiffs from winning a $9 billion verdict.

The request for sanctions from plaintiffs Terrence and Susan Allen revolved around allegedly contradictory testimony given by Lilly’s former senior director of global marketing Ronald Hoven in the early days of the first federal personal injury trial against Actos manufacturer Takeda Pharmaceutical Co. Ltd. and Lilly, which marketed the drug in the U.S.

U.S. District Judge Rebecca F. Doherty sided with Lilly and denied the motion despite expressing deep frustrations over Hoven’s “regrettable” assertions on cross-examination that he had no knowledge about the bladder cancer concerns surrounding Actos or about his colleagues’ supposed ghostwriting of scientific papers on the drug.

The plaintiffs said his testimony contradicted earlier sworn declarations. When confronted with internal company communications that undercut his claims, Hoven recanted and said he should have testified that he did not remember having seen those documents, instead of flatly denying he ever knew of their content, according to the order.

Judge Doherty found the “blurring of distinction” highly questionable and devastating to Hoven’s credibility, but determined that the testimony was not so outrageous to justify the “draconian” sanction of entering a default judgment against Lilly under the court’s inherent power.

“His testimony, standing alone and as a whole, does not necessarily support the conclusion that he intentionally testified falsely as to his knowledge of the subject areas with which plaintiffs are concerned,” the judge said. “Rather, his testimony suggested, perhaps, and at the very best, confusion between not remembering having seen and testifying he had never seen certain specific documents.”

The sanctions questions would have normally been addressed before trial but had been deferred until afterward at the plaintiffs’ request, according to the order. The jury handed $1.5 million in actual damages to the Allens in April, coupled with a $9 billion punitive damages award, $3 billion of which fell on Lilly.

The judge further remarked that because the plaintiffs had declined the chance to put Hoven back on the stand a second time for strategic reasons, they could not demonstrate they had been prejudiced from his testimony, despite their claim that it allowed Lilly to present itself falsely to the jury as a “great humanitarian.”

“Given the jury’s apparent explicit rejection of Lilly’s entire defense inherent in their verdict against Lilly … this court is extremely doubtful that the plaintiffs suffered any prejudice in this trial at the hands of Mr. Hoven or Eli Lilly,” the judge said. “The decision was one based in strategy and reflected the considered conclusion that the damage, if any, caused by Mr. Hoven’s testimony had been sufficiently redressed.”

The judge stressed that she sympathized with the plaintiffs’ frustrations and that her decision was not a comment on whether a lesser sanctions request under the federal rules of civil procedure might have succeeded.

Having found no basis for invoking the inherent powers of the court, the judge declined to evaluate whether Hoven’s statements could be imputed to Lilly and form the basis for a sanction. The judge also found that the record did not justify referring Hoven’s conduct to prosecutors with the U.S. attorney’s office for an investigation into possible perjury, as the plaintiffs had requested.

Lilly had opposed the sanctions by arguing that the plaintiffs were using their request to find an excuse to put the company’s marketing of the antispychotic drug Zyprexa in front of the jury.

Lilly admitted in a 2009 criminal case to marketing Zyprexa improperly. As part of his testimony, Hoven denied being involved with Zyprexa, but the newly discovered documents suggested that he was.

Neither Takeda nor Lilly has yet filed post-verdict motions in the case, although they have already foreshadowed a fight over whether their marketing contract for Actos puts Takeda on the hook for Lilly’s share of any damages.

The Allen case is one of over 6,000 clustered in the Louisiana court over the drug’s allegedly carcinogenic side effects. The companies also face actions in state courts across the country, where Takeda is five-for-five in trials so far, including defense verdicts last month in Illinois and Nevada.

(2) Blue Cross and Blue Shield Sue Both Takeda & Eli Lilly Over Actos

Blue Cross and Blue Shield of Massachusetts Inc. launched a flurry of subrogation actions Wednesday in the Louisiana multidistrict litigation over the bladder cancer risks carried by Takeda Pharmaceuticals Co. Ltd. and Eli Lilly & Co.’s diabetes drug Actos, seeking to recoup the cost of medical bills for hundreds of alleged victims.

Standing in the shoes of its insureds, Blue Cross and its subsidiary Blue Cross and Blue Shield of Massachusetts HMO Blue Inc. filed more than 10 cases asserting that Takeda and Eli Lilly should shoulder health coverage payouts surrounding its subrogees’ personal injuries.

The defendants — Asia’s largest pharmaceutical company and its Indianapolis-based marketing partner — negligently or fraudulently concealed the link between Actos and bladder cancer, according to the complaint.

“By virtue of its payment for injuries sustained by an insured member as a direct result of the allegations herein, BCBSMA is subrogated to the rights of their insured members to recover from the person(s) or entity(ies) responsible for said injuries,” the suits said.

The complaints bring claims for negligence, breach of express and implied warranties, fraud, misrepresentation, and violations of Massachusetts law. Blue Cross also requested that the MDL court send the cases back to Massachusetts federal court “at the time of transfer … for further proceedings.”

Like the more than 6,000 personal injury cases clustered in the same court, Blue Cross is contending that before Takeda applied for approval from the U.S. Food and Drug Administration, it knew from the results of animal testing that Actos could cause bladder cancer.

When epidemiological studies in the 2000s reinforced the link, Takeda ignored the results and failed to alert consumers, regulators and the medical community about the dangers of taking Actos, according to the complaints.

The same Louisiana court recently oversaw the first federal jury decision in Actos product liability litigation, a $9 billion punitive verdict coupled with $1.5 million in actual damages to plaintiffs Terrence and Susan Allen.

The eye-popping award is likely to be reduced at some point but has already prompted a public kerfuffle between the two co-defendants over which is responsible for the $3 billion portion of the verdict that fell on Eli Lilly.

Takeda developed Actos and partnered with Eli Lilly to promote the drug from 1999 to 2006. After the Allen verdict, Eli Lilly publicly said that Takeda is responsible for providing indemnification for the damages by virtue of the companies’ marketing contract. Takeda countered that it was is reserving its rights to contest Eli Lilly’s claim.

The verdict was likely due to some degree to U.S. District Judge Rebecca Doherty’s devastating evidence destruction findings against Takeda, which resulted in tough sanctions that allowed the jury to take into account the drugmaker’s apparent spoliation of relevant documents, emails and other evidence.

Actos represented more than a quarter of Takeda’s total sales in 2011, at its peak. In June of that year, the FDA alerted the public that use of the drug for longer than a year could cause bladder cancer and discouraged doctors from prescribing it to patients with active bladder cancer.