Hemophilia AIDS Litigation
Baum Hedlund Settled Over 450 Hemophilia HIV/AIDS Cases
Baum Hedlund has represented clients worldwide and has represented victims of
defective pharmaceutical products since 1988. In particular, our attorneys successfully settled over 450
United States hemophilia HIV/AIDS cases. With
Michael Baum and Leslie Grisham at the helm, Baum Hedlund began representing HIV-infected
hemophiliacs in 1997 and quickly became a leader in the battle to obtain
compensation for them. Since then, Baum Hedlund added Fran Phares to the
team, an attorney who spent several years handling hemophilia-AIDS cases
with our co-counsel, Mull & Mull.
In the 1980s and 1990s, many hemophiliacs contracted the deadly HIV/AIDS
infection by infusing a plasma-derived medication (known as Anti-hemophilia
factor or “AHF”) that was intended to prevent bleeding and
promote blood-clotting in hemophiliacs. In addition to investigating domestic
cases of this phenomenon, our investigation of the late shipment and use
of non-heat treated AHF in various foreign countries including China,
Japan, Ireland and England led us to accepting select foreign hemophilia-AIDS
cases, as well.
Background: When Did Hemophiliac AIDS Infections Begin?
In the early 1980’s, Taiwanese hemophiliacs were infected with HIV
by contaminated American-made medications. They or their surviving families
filed claims for injuries they incurred due to those HIV-infections. Defendants
are American pharmaceutical companies Bayer Corporation (formerly known
as “Cutter”) and Baxter Healthcare who manufactured injected
medications designed to stop hemophiliacs’ uncontrolled bleeding episodes.
Anti-hemophilia medications (“AHF”) were derived from paid
donors whose plasma provided proteins that hemophiliacs needed to cause
their blood to coagulate and stop bleeding. Those proteins, “Factor
VIII” or “Factor IX,” were extracted from vats of plasma
by a multi-step process that resulted in a freeze-dried powder. Thousands
of plasma donations were pooled in those vats to make multiple products,
including the AHF powder. AHF powder could then be dissolved in a saline
solution and injected into infant, pediatric and adult hemophiliacs. Because
AHF was ultimately injected, it was important that the plasma donors used
to make AHF did not carry blood-borne diseases which would be transmitted
to hemophiliacs when they infused AHF to stop bleeds.
In the late 1970’s and early 1980’s, U.S. law required the
companies to use plasma from normal, healthy donors (U.S. Code of Federal
Regulations (“CFR”) §§640.51 and 640.63) and to
employ manufacturing practices to assure that blood products like AHF
were “safe, pure, potent and effective” §606.140a. By
1975 it was known that individuals whose sexual activity included rectal
intercourse with multiple partners had a high prevalence of hepatitis
B and other sexually transmitted diseases, and it was recommended that
these individuals “be advised to refrain from blood donations.”
Szmuness, et al., On the Role of Sexual Behavior in the Spread of Hepatitis
B Infection, Annals of Internal Medicine. October 1975; 489,494.]
Donors such as promiscuous urban “fast-track” gay males and
prisoners who engaged in rectal intercourse, and intravenous drug users,
were not considered to be “normal, healthy donors” and thus
more likely to be high risk for transmitting blood-borne diseases such
as HIV/AIDS and Hepatitis C. Notwithstanding, manufacturers sought these
high-risk donors (1) since their life styles (or prison conditions) exposed
them to diseases against which their bodies generated valuable antibodies
which could be harvested and sold at high prices — antibody-rich
general or disease-specific immune globulins were made from the same vats
of pooled plasma used to make AHF. It was cost effective, although unsafe
for hemophiliacs in the absence of a viral deactivation step, to make
multiple products from the same vats of plasma.
Defective AHF Shipped to Taiwan in 1970s
AHF was first shipped to Taiwan from the U.S. in the late 1970s. By July
of 1982, the Centers for Disease Control’s Morbidity and Mortality
Weekly Report (2) was reporting that hemophiliacs were exhibiting symptoms
of a disease previously observed in gay men, later termed “AIDS.”
AHF manufacturers quietly met to discuss the “political, moral and
liability” issues related to their having used plasma obtained from
By December 1982, after injecting chimpanzees (3) with AHF and noting that
they had developed “AIDS-like symptoms,” the manufacturers
had strong proof that AHF was highly likely to transmit the agent that
caused AIDS. Moreover, they had long known certain plasma-screening protocols
would make AHF safer and that a viral-deactivation treatment was available.
Bayer/Cutter’s medical consultant Dr. Lou Aledort of Mt. Sinai cautioned
that once this product was licensed, it would be unethical to place a
patient on other therapy” (emphasis supplied).
In 1983, Dr. Milton Mozen, head of Bayer/Cutter’s California research
lab, wrote to its R&D director Dr. Sternberg and virologist, Dr. Robert Louie:
The recent concern about AIDS . . . should encourage a rapid review and
approval of the submission [of an FDA license for heat-treated AHF]. .
. [I]t is certainly logical that a heat-treated product . . . should be
potentially safer than one not heated. Such a product should be made available
. . . in as rapid a time frame as possible even without the final unequivocal
demonstration of its freedom from hepatitis and/or AIDS.
However, in March of 1983, once Bayer/Cutter’s competitor, Baxter
Healthcare, was granted its license for heat-treated AHF, Bayer/Cutter
failed to heed the advice of Dr. Aledort and Dr. Mozen. Instead, Bayer/Cutter
discouraged use of the new heat treated AHF, recommending use of AHF like
Bayer’s that were supposedly subjected to heightened plasma screening.
That is, keep using Bayer/Cutter’s un-heated AHF and don’t
use Baxter’s heated AHF. (Exh. 65) Thus, heedless of the grave concern
over an AIDS epidemic spreading amongst AHF patients, in their overseas-marketing
materials (4) Bayer/Cutter suggested that a viral deactivation heat-treatment
of AHF had not been shown to be effective. So instead of focusing on making
AHF safer, it actively concealed its solicitation and use of high-risk
blood donors (5) such as IV-drug users, prisoners, and promiscuous fast-track
homosexuals; Bayer/Cutter dragged its feet in enacting safety measures
such as viral deactivation; and it actively resisted product recalls.
All this was done to protect profit (6) margins, with insufficient concern
for hemophiliacs who were unknowingly infusing contaminated and deadly
Bayer/Cutter maintained this marketing position critical of heat treating
until Bayer/Cutter could market a heat-treated product of its own even
after defendants’ heat-treated AHF was licensed. They began selling
the safer AHF in the U.S. but continued to sell excess inventories of
un-heated and HIV-contaminated AHF in foreign countries (7), including
Taiwan with no plans to halt or recall contaminated AHF because they would
lose money: “A major recall could deprive Cutter of up to $2 million
[in] sales in the Far East . . .during 1984.”
Bayer/Cutter Discovers that HIV Survives AHF Manufacturing Process
Bayer/Cutter participated in a study to determine whether HIV survived
the AHF manufacturing process. In May of 1984, it was reported that the
study determined that it did. Likewise, the study tested whether HIV survived
Bayer’s heat-treating process. The study determined that HIV did
not survive Bayer’s heat-treating process. Later in 1984, the CDC
MMWR published results of HIV testing in hemophiliacs who had been using
un-heated AHF. 75% of frequent Factor VIII AHF users tested HIV positive.
Thus, by mid 1984, Bayer knew its unheated product did not deactivate
the HIV virus, that most hemophiliacs using it were testing HIV-positive,
and that their heat-treatment process killed the HIV virus. Notwithstanding,
it continued to sell and distribute its inventory of unheated AHF.
Likewise, by 1984, some countries were becoming aware of the AIDS risk
from AHF. Bayer/Cutter’s 1985 Far East Marketing Plan (prepared
in August 1984) lamented that the “luster” was gone from their
AHF growth figures because sales to New Zealand “completely diminished”
when “AIDS became an issue there.” Fortunately, as the plan
advised, because hepatitis was prevalent in the Far East, “AIDS
will not become a major issue amongst Asian hematologists during 1985.”
So the company pushed even more contaminated AHF into the Far East, including
Taiwan. Bayer/Cutter projected that “[the company would] have excess
[AHF] in 1985 and [would] need to sell as much of it as possible, even
at marginal prices. . .” But the plan warned “[h]ysteria over
AIDS could reduce [AHF] sales. . .” Even so, the company had “no
immediate plans to introduce Koate-HT . . .” instead intending to
“dominate the [Taiwan] markets with low-cost standard Koate and
Konyne” and to introduce heat-treated AHF only “if necessary
to defend against AIDS.” To that end, it reassured Asian consumers
that its unheated AHF was “not hazardous” and was the “same
fine product we have supplied for years.”
Through June 1985, defendants actively depleted inventories of “this
same fine product,” which by then had been banned in the U.S. U.S.
Food and Drug Administration (“FDA”) head Dr. Harry Meyer
told Cutter that it must quietly surrender its license for unheated AHF
or it would be publicly revoked, a scenario he and the manufacturers wanted
to avoid. Although AHF manufacturers, including Bayer/Cutter, “responded
with a list of reasons why they had problems with the proposal, including
the value of the inventory . . .” Meyer responded, “no one
anywhere in the world should be allowed continued exposure to the HTLVIII
virus.” Reluctantly, the company surrendered its license. (8)
Unethical and Dangerous Recall Practices in Taiwan
Among the dangerous conduct Bayer/Cutter hid was its recall practice in
Taiwan. In October 1983, it recalled 16 contaminated AHF lots shipped
to both U.S. and international consignees, including Taiwan. The U.S.
consignees were told all 16 lots were being recalled (9) because they
contained plasma from a donor with AIDS, but the Taiwan consignee was
only told that two lots were being recalled and then merely because a
donor was suspected of having AIDS.
By April of 1984, Bayer/Cutter was training its international sales force
to sell heat-treated AHF. Yet it delayed for over a year before sharing
with overseas customers that heat-treated AHF was safer and non-heat treated
AHF was a thing of the past. Finally, over 18 months after it began selling
heat-treated AHF in the U.S., and five months after an international symposium
had warned against using non-heat treated AHF, Bayer/Cutter notified its
local rep in Taiwan to return any unheated AHF.
A few HIV-infected American hemophiliacs sued the AHF manufacturers in
the mid-1980s. In the late 1980s and early 1990s, many more Americans
sued, and their claims were settled in 1997. In re Factor VIII or IX Concentrate
Blood Products Litigation, 159 F. 3d 1016 (7th Cir. 1998). More claims
were litigated and/or settled separately around this time.
Meanwhile, in early 1998, defendants negotiated an agreement through Taiwan’s
Department of Health (“DOH”) and hemophiliac representatives
to provide “humanitarian aid to hemophiliacs who contracted HIV.”
In that negotiation, Bayer falsely claimed (10) that it was not at fault,
and [had] won all relevant cases worldwide. Bayer representatives (11)
who participated in the negotiations identified in discovery were Dr.
Michael Strucksberg, a German resident who led the negotiation, and four
Bayer employees from outside Taiwan: Horst Mueck of Germany, American
attorneys, William Hammes and Thomas Kerr, and an individual named Paul
Martin, whose current location has never been established. Bayer’s
local counsel, attorney C.T. Lee, translated documents.
Dr. Strucksberg also prepared a news release which ran in Taiwan newspapers.
A companion article was published in Taiwan’s United Daily News.
Contrary to what they represented to the DOH and the press, in truth,
defendants had not “won all relevant cases worldwide”: In
March 1997, a jury had found Bayer negligent and awarded $2 million to
plaintiffs. Bayer had also lost a summary-judgment motion, which led to
Instead of disclosing these critical losses, Bayer asserted its innocence
by claiming to have “won,” (12) a case where the plaintiff
exclusively used another company’s AHF during the time period he
became infected with HIV. Against this fraudulent backdrop, the defendants
offered a nominal sum of $60,000 US, which they termed “humanitarian
aid” for this “unavoidable tragedy,” to each Taiwanese
Crucial to the agreement was a “most-favored-nation” or “scale-up”
clause which provided: “After having paid monetary compensations
to some Claimants, if [the] Manufacturer decides to raise the compensation
amount of paragraph 1 of this agreement or provide additional benefits
in order to reach settlement with other Claimants regarding [the] Infection
Incident, it shall also provide the same additional amount or additional
benefits to Claimants who have already been paid.”
Consistent with the scale-up clause, Taiwan’s United Daily News reported
on February 14, 1998, that Taiwan’s Minister of Health had said
that the compensation/humanitarian aid “shall not be different from
other countries.” Between the spring of 1998 and the end of 2002,
Taiwanese plaintiffs signed a Chinese-language version of a humanitarian-aid
On May 22, 2003, the New York Times published an article entitled 2 Paths
of Bayer Drug in 1980’s: Riskier Type Went Overseas, which revealed
the defendants’ negligent, intentional, and fraudulent conduct.
The article was republished in Taiwan newspapers.
Shortly thereafter, plaintiffs learned that defendants had paid other HIV-infected
claimants more compensation. In May 2004 plaintiffs sent a letter to Bayer’s
U.S. counsel requesting enforcement of the scale-up clause. The defendants
refused, and plaintiffs timely sued in California.
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