A high-profile drug fraud case that could see the pharmaceutical industry thrown into the Racketeer Influenced and Corrupt Organizations Act (RICO) legal realm has been allowed to advance with an order from the U.S. Supreme Court (SCOTUS).
Although RICO charges are typically reserved for parties involved in organized crime schemes, a lawsuit targeting Takeda and Eli Lilly looks to prove that pharma companies can fit the bill, too. The Supreme Court has now tossed the drugmakers’ arguments against the suit, with a March 23 order dismissing their petition for review, a recently updated docket shows. The order means that lower courts’ findings accepting the case’s legal structure can stand.
The case is a class-action lawsuit surrounding Takeda’s 1999-approved Type 2 diabetes drug Actos (pioglitazone), which Lilly co-promoted until 2006. The drug proved a blockbuster for Takeda but attracted controversy as safety concerns piled up linking the med to an increased risk of bladder cancer.
Lawsuits quickly followed, with plaintiffs targeting the companies for marketing the med despite allegedly knowing its risks. Takeda ultimately agreed to a $2.7 billion payment settling the “vast majority” of Actos liability lawsuits in 2015, although it continued to maintain that the company had “acted responsibly” with its promotion of the drug. Lilly has also been involved in the mountain of Actos litigation, but the former partners’ agreement ensures that Takeda is required to “defend and indemnify” Lilly against losses and expenses tied to the litigation, according to Lilly’s annual report (PDF).
What's at stake
Personal injury law firm Wisner Baum, which has fought many high-profile pharma legal battles and has ties to U.S. Department of Health and Human Services Secretary Robert F. Kennedy Jr., spearheaded the efforts to bring RICO charges upon the Actos makers with a suit accusing Takeda and Lilly of engaging in a decade-long conspiracy to hide the drug’s bladder cancer risks through “a pattern of racketeering activity” including mail fraud, wire fraud and the “use of interstate facilities to conduct unlawful activity.”
The case is the most advanced national RICO class action involving a pharmaceutical company that hasn’t resulted in a settlement. A 2023 decision by a California court opened the RICO door by certifying a national class of third-party payers that are seeking damages under the racketeering law, naming Minnesota’s Painters and Allied Trades District Council 82 Health Care Fund as the representative for the thousands of third-party payers who allegedly overpaid for Actos prescriptions.
The Ninth Circuit appeals court upheld this certification last year, further paving the way to a potential jury trial. RICO cases are known to result in higher payouts as courts can award “treble damages,” which are triple the amount of financial damage. According to Wisner Baum, the case could drain Takeda and Lilly of $7 billion or more.
Takeda and Lilly fought against these lower court decisions in an appeal to the Supreme Court, arguing that the case shouldn’t proceed since the plaintiff class may include parties that have not proved that they’ve suffered harm.
With the Supreme Court order tossing Takeda and Lilly's defensive, Lilly remains ready to “continue our vigorous defense of this case in the district court,” a company spokesperson said in an emailed statement, but it’s “disappointed that the Supreme Court declined this opportunity to clarify the law on these important issues.”
“The Ninth Circuit’s opinion created two untenable outcomes at odds with other circuit courts: it certified a class including uninjured plaintiffs, without requiring any way of figuring out who those uninjured plaintiffs are, and it allowed a generalized model about likelihood of harm to take the place of individualized proof that each class member was injured,” the Lilly spokesperson explained.
Wisner Baum, meanwhile, has hailed the case as a “watershed moment” and hopes to go to trial in 2026.
“We are ready to tell this story to a jury and recoup the billions Takeda and Lilly pilfered from our clients and all those similarly situated,” Brent Wisner, managing partner of the firm who councils the national class action, said in a June press release.
Takeda denied Fierce Pharma’s request for comment on the active litigation.
Actos’ bladder cancer ties were validated by the FDA when the agency in 2010 issued a safety alert flagging the potential risk. After another review and a label update in 2011, the agency officially concluded that pioglitazone-containing medicines “may be linked to an increased risk of bladder cancer” in 2016.
The drug had gone generic by 2012, eroding the blockbuster sales that once made up a large chunk of Takeda’s revenue. The Japanese drugmaker no longer reports Actos sales and has recently offloaded several of its diabetes drugs to focus instead on its core business areas.