Takeda to pay $2.7 bn to settle suit over diabetes drug Actos

Japanese drugmaker Takeda Pharmaceutical Co. today said that it has agreed to pay $2.4 billion to settle thousands of lawsuits in the US for allegedly hiding the risk of cancer from its diabetes drug Actos.

The Tokyo-based company said that it will take a $2.7-billion charge in the fourth quarter of fiscal year 2014 to cover the settlement and the costs associated with defending remaining cases and for other related litigation.

It would cause the company a net loss of $1.2 billion for the year ended 31 March, which would be the first loss it would be reporting since its listing in 1949.

It added that the settlement will become effective if 95 per cent of current litigants and claimants opt for the settlement. Once that threshold is achieved, Takeda will pay $2.37 billion into a settlement fund, and noted that the figure will rise to $2.4 billion if 97 per cent or more of the current litigants agree to the settlement.

Eli Lilly, whic had co-marketed Actos from 1999 to 2006, will be released from liability under the terms of the settlement.

Takeda believes that the claims made in the litigation are without merit, and does not admit liability, but its decision to settle will reduce financial uncertainties for the company and allow it to focus on developing drugs.

The case was brought by Terrence Allen, who had used Actos from 2004 and 2011 ad was diagnosed with bladder cancer in 2011.

Allen alleged that Takeda knew for years that the drug heightened the risk of bladder cancer but continued to sell the drug. There are over 9,000 cases filed by patients and their families in the US courts alone.

A  jury in Louisiana had ordered Takeda and Eli Lilly to pay a combined $9 billion in punitive damages last year after deciding that Takeda had hidden cancer risks. (See: Takeda Pharmaceutical Co, Eli Lilly lose $9 bn damages over Actos drug)

Legal experts had then said that it was not likely that such a large award would stand after it was challenged in court by both companies. On filing appeals, the damages were reduced to $36.8 million.

Lilly had earlier said it would be indemnified by Takeda for its losses and expenses from the litigation based on the terms of its agreement with Takeda.

Actos, a diabetes drug, was approved by the US Food and Drug Administration (FDA) in 1999. Its patent expired in August 2012, but not before more than 10 million people globally had used the drug.

Actos, is  a competitor to GlaxoSmithKline's blockbuster diabetes drug Avandia, and both drugs were found to have an increased risk of congestive heart failure in a 2007 study, which ld to the FDA adding a "black-box" warning.

Regulators in the European Union (EU) in 2010 suspended the sale of Avandia, while the US regulator imposed severe restrictions on concerns that the drug increased the risk of heart attacks in diabetic patients. (See: Regulators in EU, US "kill" Glaxo's diabetes drug Avandia)

GSK pulled the drug from both the EU and the US markets, which made Actos more widely prescribed in the US since it was the only drug in the market to help diabetics despite the evidence of increased risk to those who took the drug.

Actos peaked at $4.5 billion in the year ending in March 2011 and generated more than $16 billion of sales since its 1999 launch.