Dec. 3, 2019 – San Francisco, California – – Takeda Pharmaceuticals Company and Eli Lilly and Company will face revived class action claims after the U.S. Court of Appeals for the Ninth Circuit reversed a Central District of California court decision.
The plaintiffs, a Minnesota-based healthcare fund and consumers from multiple states, brought the federal Racketeer Influenced and Corrupt Organizations (RICO) Act class action against Takeda and Eli Lilly, alleging the companies intentionally misled consumers and refused to change the Actos warning label or otherwise inform the public after learning that Actos increased the risk of bladder cancer in patients taking the medication.
The plaintiffs alleged their purchase of Actos was directly and proximately caused by the companies’ racketeering activity. According to the complaint, Takeda and Eli Lilly engaged in “a pattern of racketeering activity” that included acts of mail fraud, wire fraud, and the “use of interstate facilities to conduct unlawful activity,” all to increase their profits from the sale of Actos.
The Central District of California court had held the plaintiffs failed to allege their harm was “by reason of” the alleged RICO violation. The Ninth Circuit disagreed.
Ninth Circuit Reverses District Court Dismissal of Actos RICO Class Action
In an order issued on December 3, 2019, the U.S. Court of Appeals for the Ninth Circuit reversed the district court judgment, finding the plaintiffs satisfactorily alleged that Takeda and Eli Lilly proximately caused their claimed damages.
The Ninth Circuit had never before addressed whether patients and third-party healthcare companies adequately allege proximate cause under RICO when arguing they would never have purchased a drug if the drug maker had disclosed a known safety risk. The Ninth Circuit held that third-party payors and patients may sue pharmaceutical companies for concealing an allegedly unknown risk about a drug and satisfy RICO’s proximate cause requirement.
The panel held that, although prescribing physicians were intermediaries between Takeda and Eli Lilly’s fraudulent omission of Actos’ bladder cancer risk and the plaintiffs’ payments for Actos, they were not an intervening cause to cut the chain of proximate causation.
Had the Ninth Circuit denied the appeal, “drug manufacturers would be insulated from liability for their fraudulent marketing schemes, as they could continuously hide behind prescribing physicians and pharmacy benefit managers,” the court said.
The case is now remanded back to the district court.
“We appreciate the Court’s careful and detailed order allowing our clients to proceed on this well-documented fraud by Takeda and Eli Lilly,” said plaintiffs’ attorney, R. Brent Wisner, who argued the case before the Ninth Circuit panel.
“This case marks an important turning point for RICO pharmaceutical cases, both in this circuit and others. The Ninth Circuit held that proximate causation—an element created by the Court to make the RICO statute more equitable—should not be perverted to shield drug companies who engage in fraudulent conduct from being held accountable for their wrongdoing. We are very excited about getting this long-delayed case back on the rails and push this case to trial.”
Judge Carlos T. Bea wrote the Ninth Circuit panel opinion. Judges Jacqueline H. Nguyen and Paul J. Watford joined the opinion.
The case is captioned:
Painters and Allied Trades District Council 82 Health Care Fund, third-party healthcare payor fund; Annie M. Snyder, a California consumer; Rickey D. Rose, a Missouri consumer; John Cardarelli, a New Jersey consumer; Marlyon K. Buckner, a Florida consumer; and Sylvie Bigord, a Massachusetts consumer on behalf of themselves and all others similarly situated, Plaintiffs-Appellants
Takeda Pharmaceuticals Company Limited, a Japanese Corporation; Takeda Pharmaceuticals U.S.A., FKA Takeda Pharmaceuticals North America, Inc., an Illinois corporation; and Eli Lilly and Company, an Indiana corporation, Defendants-Appellees
No. 18-55588 D.C. No. 2:17-cv-07223- SVW-AS
Attorneys for the Plaintiffs:
R. Brent Wisner and Michael L. Baum
Baum Hedlund Aristei & Goldman PC, Los Angeles, California
Christopher L. Coffin and Nicholas R. Rockforte
Pendley Baudin & Coffin LLP, New Orleans, Louisiana
Attorneys for the Takeda Pharmaceuticals:
Jonathan S. Franklin
Norton Rose Fulbright US LLP, Washington, D.C.
Darryl W. Anderson and Geraldine W. Young
Norton Rose Fulbright LLP, Houston, Texas
Attorneys for Eli Lilly
Randall L. Christian and Susan E. Burnett
Bowman and Brooke LLP, Austin, Texas
What is Actos?
Takeda Pharmaceuticals and Eli Lilly developed and marketed Actos (pioglitazone) to lower blood sugar for people with type 2 diabetes. Approved by the FDA and introduced to the North American market in 1999, Takeda and Eli Lilly made billions of dollars annually in Actos sales. In 2010 alone, Actos brought in roughly $5 billion in sales.
But safety advocates have long been concerned about Actos’ safety. Studies show Actos is linked to bladder cancer and other serious health issues, including heart failure, blindness, and bone fractures. The FDA issued a safety alert for Actos in 2011, warning that long-term consumers were at an increased risk for developing bladder cancer. The FDA also advised physicians to stop filling Actos prescriptions for patients with previous bladder cancer diagnoses.
About Baum, Hedlund, Aristei & Goldman
The law firm of Baum, Hedlund, Aristei & Goldman represented many clients in the Actos bladder cancer personal injury and wrongful death litigation. The firm has resolved thousands of cases across numerous areas of practice in the United States and abroad, obtaining more than $4 billion in verdicts and settlements on behalf of their clients. With a track record of success handling cases stemming from pharmaceutical drug injuries, product liability, commercial transportation accidents, harmful consumer products, whistleblower claims, and class actions, the firm has earned a reputation for breaking new ground and holding negligent companies accountable.