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No Legwork Mondays – Takeda, Eli Lilly And Actos

Most people have seen advertisements which extol a drug's benefits while simultaneously warning of its potential side effects. Comedians often point out that the side effects can seem worse than conditions the drug addresses.

More important, however, the warnings can foreshadow larger problems.

Massive Punitive Damages Judgment

In April 2014 drug makers Takeda Pharmaceutical (OTC: TKPYY), a Japanese company, and its American partner Eli Lilly (NYSE: LLY) were ordered to pay $9 billion in punitive damages for their marketing of the diabetes drug Actos.

The companies were found to have hidden from consumers the fact that the drug can cause cancer.

Takeda was charged with $6 billion of the $9 billion, Lilly $3 billion of it. Lilly, however, is reportedly indemnified by Takeda, meaning that if the judgment stands, Takeda will likely have to pick up Lilly's tab.

The judgment, one of the largest of its kind, is just one step in a series of Actos lawsuits. The next likely step will be an appeal by the companies.

Incentive To Over-Market

This latest scandal is sure to further erode the public’s trust in the pharmaceutical manufacturers. The companies themselves may be wondering just how to go about the business of drug manufacturing and marketing without exposing themselves to the massive risks of being sued.

Companies spend tens of millions of dollars and many thousands of man hours conceiving, developing, testing, and marketing their various drugs. When one of these projects produces a drug which seems to be a breakthrough medication, the company and its researchers have a lot invested in its success.

Perhaps this investment is why there have been a number of cases in which drug makers have broken the law by how they marketed drugs which were known to have caused serious side effects, including death.

Unlike so many corporate fails, which may involve a failed product, an accounting scandal, or misreading the markets, when drug makers ignore science the victims are often the most vulnerable among of us, those who are elderly or ill.

So, while most people would agree that the pharmaceutical business does more good than harm, the need for highly effective and profitable drugs seems to be creating situations in which manufacturers put profits over people.

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