Takeda agrees $2.4 billion settlement over Actos product liability law suits and claims

Japan’s largest drugmaker Takeda Pharmaceutical (TYO: 4502) and its US subsidiary, have reached an agreement expected to resolve the vast majority of Actos (pioglitazone) product liability law suits pending against Takeda in the USA, in one of the largest product liability settlements to date.

Takeda says it will take a $2.7 billion charge against earnings 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. The settlement will become effective if 95% of current litigants and claimants opt into the settlement. Once that threshold is achieved, Takeda will pay $2.37 billion into a settlement fund. However, that figure will rise to $2.4 billion if 97% or more of the current litigants and claimants opt to participate in the settlement.

The settlement comes a year after a Louisiana jury awarded $9 billion punitive damages against Takeda and its partner Eli Lilly (NYSE: LLY) for hiding alleged cancer risks associated with their diabetes drug Actos. The companies attempted, but failed to overturn this, but a US district Court later reduced the damages by nearly 99%. Lilly, which co-promoted Actos with Takeda from 1999 to 2006, was indemnified by the Japanese drugmaker.