A potentially paradigm-changing lawsuit targeting Eli Lilly and Takeda Pharmaceuticals has cleared a major hurdle and could wind up being decided in a courtroom. If the case reaches trial, it would become the first non-settlement lawsuit targeting pharma with the Racketeer Influenced and Corrupt Organizations Act (RICO) pathway, normally reserved for mobsters.
Wisner Baum, which filed the case, is chasing damages as high as $7 billion, alleging that the companies conspired to hide evidence their diabetes drug Actos was linked to a higher risk of bladder cancer to maintain blockbuster profits.
Takeda previously agreed to a roughly $2.4 billion settlement with patients allegedly harmed by the drug. But the law firm is leveraging a financial angle to seek more.
The key allegation being levied by a Minnesota-based union health fund, along with consumers in four states, is that the companies concealed evidence of adverse health risks from the public and the FDA. After the cancer link came to light and the FDA slapped a warning label on Actos in 2011, sales dropped by as much as 80%. Thus, prescriptions received — and paid for — before the warning label was attached led the plaintiffs to pay for more doses than they would have otherwise, said Harrison James, a senior associate attorney at Wisner Baum.
Takeda declined to comment on the active litigation, and Lilly did not respond to an inquiry by the time of publication.
The lawsuit, originally filed in 2014, cleared a major hurdle in November when a federal appeals court allowed the nationwide class action against Takeda and Lilly to move forward. But there are other barriers to clear before it makes it to trial.
The companies recently asked the U.S. Supreme Court to review the case, which could halt the litigation. An answer is expected this spring, James said. If the Supreme Court declines to hear it, the companies could still attempt to convince a lower court to decertify the case by presenting additional evidence, he said. The case could get a trial date as early as next year. The companies could also decide to settle, but James thinks it’s unlikely.
A broader impact?
If this case goes to trial, the legal fallout could have industrywide implications.
Some experts believe that using the RICO statute substantially increases the risks to drugmakers. In this case, attorneys are seeking what are known as treble damages, allowed under RICO, which triple the amount of compensatory damages.
But while some predicted the case would fling open the floodgates to similar lawsuits against pharma, that hasn’t happened yet, and probably won’t, James said.
“It's not easy to win under this statute,” he explained.
Part of what could help the plaintiffs succeed in the case is that the alleged fraud was well documented, James added. Among the evidence presented so far were internal company documents and testimony from a safety consultant who said the companies were aware of cancer-related safety signals but didn’t disclose the information publicly.
“It’s a pretty high burden to succeed here. The facts were very, very strong to meet all the elements that we needed,” James said. “It's not every day that a case like that falls into your lap.”
Even though the outcome may not expose pharma to a high risk of similar lawsuits, James hopes the case will encourage drug companies to be more transparent about risks.
“I feel like it will induce a more open honest conversation with FDA [so drug companies can’t] be accused of any sort of deception,” James said.
In this case, the companies allegedly participated in systemic concealment of risk.
“In my opinion, using the RICO tool is another avenue for redress when you do have really severe fraud like this to deter this sort of conduct from continuing to take place,” James said.
