U.S. judge slashes $9 billion award vs Takeda, Lilly over diabetes drug

(Reuters) - A U.S. judge on Monday slashed a $9 billion punitive damages award to $36.8 million against Takeda Pharmaceutical Co and Eli Lilly & Co over their Actos diabetes drug, although she rejected their request for a new trial.

U.S. District Judge Rebecca Doherty in Louisiana in a court filing granted a motion from the drugmakers to reduce the $9 billion in combined punitive damages awarded earlier this year.

In the first federal case to go to trial in a consolidated group of lawsuits, the companies were accused of failing to warn users that Actos could raise the risk for bladder cancer.

In her ruling, Doherty said the original $9 billion damages award was “excessive” and violated the companies’ constitutional rights to due process.

She ordered Takeda to pay $27.6 million and Eli Lilly to pay $9.2 million for a total of $36.8 million. Doherty said that, while far smaller than the jury’s original award, the reduced punitive damages were still “large enough to accomplish the jury’s clear aim: to send a message to the defendants that their wrongdoing must stop...”

The $9 billion in punitive damages was among the largest ever from a U.S. jury. Legal experts doubted it would stand, since appellate courts and the U.S. Supreme Court typically reject punitive damages that are vastly out of proportion to compensatory damages.

In her ruling, Doherty urged the higher courts to give more guidance on whether there should be an upper limit to punitive damages when a jury finds defendants engaged in “seriously reprehensible behavior.”

The companies also had sought a new trial, arguing that the court had made prejudicial rulings on evidence and jury instructions that tainted the trial’s outcome.

Doherty rejected that request Monday, writing that the evidence during the trial showed that the companies “disregarded, denied, obfuscated and concealed” for more than a decade that Actos could increase patients’ risk for bladder cancer.

Takeda’s U.S. general counsel, Kenneth Greisman, said they viewed the reduced award as a “step in the right direction,” but would continue to challenge the verdict on appeal.”

Lilly’s general counsel, Mike Harrington, said in a statement that the company would continue to fight the verdict. “While we have empathy for the plaintiff, we believe the evidence did not support his claims,” he said.

Plaintiffs’ lawyer Richard Arsenault called the ruling “thorough” and noted its focus on the need for “meaningful deterrence for these multi-national, billion-dollar corporations.”

Actos, an oral medication used to regulate blood sugar levels in patients with type-2 diabetes, has been on the market since 1999. Lilly, which co-promoted Actos from 1999 to 2006, has said it will be indemnified by Takeda for its losses and litigation expenses.

The case, brought by plaintiff Terrence Allen, is among more than 3,700 consolidated before Doherty. The companies face thousands of additional lawsuits in state courts.

The jury had also awarded Allen $1.475 million in compensatory damages, which both parties agreed to reduce to $1.27 million.

Reporting by Jessica Dye in New York; Editing by Alexia Garamfalvi, Chris Reese, Jeffrey Benkoe and Andrew Hay