Teva said to pay $250 million to end colonoscopy hepatitis cases

Teva Pharmaceutical Industries Ltd. will pay more than $250 million to settle more than 80 lawsuits alleging the drugmaker sold the anesthetic Propofol in a way that led colonoscopy patients to develop hepatitis C, people familiar with the accords said.

Officials Teva, the world’s biggest maker of generic medicines, agreed last week to resolve claims by Las Vegas residents that the company intentionally sold Propofol in vials large enough to be reused by doctors, the people familiar with the settlement said. They spoke on the condition they not be named because they aren’t authorized to speak publicly about the agreements.

The deal also resolves a May 2010 case over Teva’s sales of the anesthetic that spawned a jury award of more than $500 million against the Israeli drugmaker, according to the people familiar with the settlements and a filing with the Nevada Supreme Court. Henry Chanin, a private-school principal from Las Vegas, alleged he developed hepatitis C after getting tainted Propofol during a colonoscopy.

“The parties notify the court that they have agreed to a settlement in this matter,” Chanin’s lawyers told the Nevada Supreme Court in a Feb. 17 filing. Teva had asked the state’s highest court to overturn Chanin’s verdict.

Denise Bradley, a U.S.-based spokeswoman for of Petach Tikva, Israel-based Teva, didn’t immediately return a phone call and an e-mail seeking comment on the Propofol settlements.

Rising Profits

The settlement comes a week after Teva executives said fourth-quarter profit rose 23 percent as last year’s acquisition of Cephalon Inc. shifted the company further away from its original identity as a generic-drug maker.

Earnings rose to $1.4 billion, or $1.59 a share, from $1.1 billion, or $1.25, a year earlier, the company said Feb. 15. Teva bought Cephalon, based in the Philadelphia suburb of Frazer, Pennsylvania, for $6.5 billion last year in a bid to broaden its portfolio of brand-name drugs.

Teva makes Propofol and San Francisco-based McKesson Corp. serves as its current U.S. distributor. Baxter Healthcare Corp., based in Deerfield, Illinois, sold the drug for Teva until 2009, according to court filings. Teva signed an indemnity agreement accepting financial responsibility for all the Nevada Propofol cases.

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 jumbo-sized vials to encourage doctors to reuse them, even with the risk of spreading blood-borne illnesses such as hepatitis, an incurable liver disease.

Propofol is the same medication that was at issue in the involuntary manslaughter trial in Los Angeles of Conrad Murray, who was pop star Michael Jackson’s doctor. Murray was convicted in November and sentenced to four years in jail for giving the singer injections of Propofol and other sedatives that led to his 2009 death.

Big Vials

Lawyers for Las Vegas colonoscopy patients argued during a series of trials that Teva officials stopped selling Propofol in single-use-sized vials because it was more profitable to sell it in larger containers that encouraged reuse.

Probes by Nevada health officials and regulators from the federal Centers for Disease Control and Prevention blamed the 2008 hepatitis C outbreak on the reuse of Propofol vials.

In 2010, a state grand jury indicted Dr. Dipak Desai, who ran the Endoscopy Center of Southern Nevada at the time of the outbreak. Many of the hepatitis-related cases were linked to that colonoscopy clinic. Desai also faces federal charges over the outbreak.

Teva faced a series of multimillion-dollar verdicts over its Propofol sales in Nevada, including the award to Chanin and more than $162 million awarded to fellow colonoscopy patients Anne Arnold, Richard Sacks and Anthony Devito in October.

The settlement resolves all those verdicts and a Propofol trial that was under way before Judge Jerry Wiese in Las Vegas, the people familiar with the agreements said. The case involved four colonoscopy patients who blamed their hepatitis C on tainted Propofol from large vials sold by Teva.

The settlement resolves most of the remaining Propofol cases on the docket in state court in Las Vegas, the people added.

The Nevada Supreme Court case is Teva Parenteral Medicines Inc. v. Chanin, No. 07085, Supreme Court of Nevada (Carson City).