Bloomberg News

Teva, Baxter Ordered to Pay $14 Million Over Anesthetic Drug

October 10, 2011

(Updates with company comment in third paragraph.)

Oct. 10 (Bloomberg) -- Units of Teva Pharmaceutical Industries Ltd. and Baxter International Inc. must pay $14 million over sales of reusable vials of the anesthetic Propofol that a colonoscopy patient blamed for his hepatitis, a jury ruled.

Jurors in state court in Las Vegas deliberated about six hours before finding Teva Parenteral Medicines Inc. and Baxter Healthcare Corp. improperly sold Propofol in vials large enough to be used on multiple patients. Michael Washington contends he was diagnosed with Hepatitis C in 2007 after getting the anesthetic from a reused vial.

It’s the third verdict against the Baxter unit and the unit of Petach Tikva, Israel-based Teva over a hepatitis outbreak in Nevada tied to Propofol. Another jury in the same courthouse today awarded three colonoscopy patients a total of $162.5 million in punitive damages over the companies’ Propofol marketing practices.

“We believe that the allegations against Teva are without merit and we plan to appeal this decision,” Denise Bradley , a U.S.-based spokeswoman for Teva, said in an e-mailed statement.

Deborah Spak, a Baxter spokeswoman, didn’t immediately return a call and an e-mail seeking comment on the award.

Rick Friedman, a lawyer for the Washingtons, declined comment on the verdict citing a gag order the judge issued in the case.

Compensatory Award

The jury awarded Washington and his wife $7 million each in compensatory damages over his developing hepatitis, an incurable liver disease, after getting Propofol from a reused vial. The couple’s lawyers had sought $5 million each. Jurors will come back Oct. 12 to decide how much in punitive damages the companies should pay to the couple.

Teva makes Propofol and San Francisco-based McKesson Corp. serves as its current U.S. distributor. Baxter, based in Deerfield, Illinois, sold the drug for Teva until 2009, according to court filings.

McKesson isn’t a defendant in Washington’s case. Teva has agreed to cover all damage awards arising from the Nevada cases on behalf of the distributors, according to court filings.

The drug is an intravenous agent used for sedation or anesthesia, according to Teva’s website. The patients’ lawyers allege Teva intentionally sold Propofol in oversized vials to encourage doctors to reuse them, even with the risk of spreading blood-borne diseases such as hepatitis.

Propofol Cases

Propofol is the same medication at issue in the involuntary manslaughter trial in Los Angeles of Conrad Murray, who was pop star Michael Jackson’s doctor. The physician is accused of giving the singer injections of Propofol and other sedatives that led to his 2009 death.

In the first Propofol case to go to trial in Las Vegas, jurors awarded Henry Chanin, a private-school principal, and his wife $5.1 million in compensatory damages and $500 million in punitive damages against Teva and Baxter. Chanin argued he developed Hepatitis C after getting tainted Propofol during a colonoscopy.

Jurors ordered Teva to pay $356 million of the punitive damages award while assessing $144 million of the award to Baxter. Teva officials have asked the Nevada Supreme Court to throw out Chanin’s verdict.

Teva faces almost 300 lawsuits stemming from a hepatitis C outbreak three years ago in southern Nevada, the company said in a regulatory filing last month. Probes by Nevada health officials and regulators from the federal Centers for Disease Control and Prevention blamed the reuse of Propofol vials for infecting patients with hepatitis.

Air Force Retiree

Last year, a state grand jury indicted Dr. Dipak Desai, who ran the Endoscopy Center of Southern Nevada at the time of the outbreak, on criminal charges. Many of the hepatitis-related cases were linked to that colonoscopy clinic. Desai also faces federal charges over the outbreak.

Lawyers for Washington, a 71-year-old retired U.S. Air Force mechanic, told jurors Teva executives pushed sales of 50- milliliter Propofol vials because they were more profitable than 20-milliliter containers even though they knew the larger vials presented a risk of reuse.

“The only use for 50-milliliter vials in an endoscopy clinic is multidose,” Rick Friedman, one of Washington’s lawyers, said in closing arguments last week. “Everyone knows that. Endoscopy centers don’t need 50-milliliter vials.”

In their closing arguments, attorneys for Teva and Baxter countered the companies sold Propofol in appropriately sized containers given the disparity in the size of patients that undergo colonoscopy procedures.

‘Practice Problem’

“It’s not a vial problem,” Glenn Kerner, a lawyer for Teva, said in closing arguments. “It’s a practice problem,” he said, blaming doctors and medical staff for violating safety practices by reusing needles to draw out the anesthetic.

Jennifer Levy, a lawyer representing Baxter, noted that the U.S. Food and Drug Administration approved use of 50-milliliter vials at outpatient clinics and the companies shouldn’t be held responsible for doctors’ miscues.

“What happened to the Washingtons is horrific,” she said. “But it is important that the right people be held responsible.”

The case is Washington v. Endoscopy Center of Southern Nevada LLC, 07A572224, District Court for Clark County, Nevada (Las Vegas).

--With assistance from Steve Kanigher in Las Vegas. Editors: Glenn Holdcraft, Fred Strasser

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net; Valerie Miller in Las Vegas at valeriemusicmagic@yahoo.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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