Teva Pharmaceutical Industries ($TEVA) is closing in on the last chapter of its propofol litigation. The Israeli drugmaker will pay $285 million to wrap up most of the liability suits spawned by a hepatitis C outbreak, leaving just 15 cases open. The deal comes as Teva was fighting its fourth bellwether suit--and after juries in the first three trials pummeled the drugmaker with extremely hefty damages.
Teva has been defending itself against allegations that its propofol packaging--in vials large enough to treat several patients--was to blame for the hep C outbreak at a colonoscopy clinic. Patients had sued Teva; Baxter International, which marketed the drug; and McKesson, which distributed it, but indemnification agreements put Teva on the hook for all damages. And those awards were piling up: The first three trials ended with $505 million, $163 million and $104 million in jury awards.
The settlement apparently covers not only some 120 cases that have yet to be tried, but at least two of the bellwether suits that went against the company. In May 2010, a jury awarded that $505 million in compensation and punitive damages to a private-school principal who contracted hepatitis C; Teva had appealed that verdict, but it's now part of the $285 million deal, Bloomberg's sources said. The plaintiffs in the third case to go to trial, Michael and Josephine Washington, agreed to participate in the settlement, too, their attorney told the Las Vegas Review-Journal.
Word of the settlement sent Teva's stock soaring in New York, and a spokeswoman told the Review-Journal that the company "is pleased to have put the vast majority of these matters behind us." 1st Source Investment Advisors' Scott Tapley told Bloomberg that it was "nice to see some progress" for the company. "There are so many clouds floating about Teva that seeing any one of them go away brings some sunshine in," he said.
- read the Review-Journal piece
- get more from Bloomberg