Sanctions Imposed in Valsartan Recall Lawsuits Over Drug Maker’s Discovery Violations

Judge hopes Valsartan recall lawsuit sanctions over discovery failures will serve as a deterrent to other foreign companies considering disregard for U.S. laws.

The U.S. District Judge presiding over all Valsartan recall lawsuits filed in federal courts nationwide has fined and cited one of the generic drug’s manufacturers, Zhejiang Huahai Pharmaceutical Co, Ltd. (ZHP), for failing to make it’s Chief Executive Officer available for depositions.

The sanctions come as ZHP and other manufacturers continue to face more than 1,200 valsartan lawsuits being pursued by former users of certain versions of the generic blood pressure drug pulled from the market in 2018, following the discovery that changes to the manufacturing process caused pills to be contaminated with high levels of N-nitrosodimethylamine (NDMA), N-nitrosodiethylamine (NDEA) and other cancer-causing chemical byproducts.

The litigation includes both class action claims and personal injury lawsuits involving former valsartan users diagnosed with stomach cancer, liver cancer, esophageal cancer, prostate cancer, pancreatic cancer, and other injuries. However, nearly six years after the litigation emerged, the first Valsartan lawsuit still has not gone to trial, and the number of claims being pursued continues to grow, since many types of cancer caused by NDMA in Valsartan take years to develop.

Since 2019, all Valsartan lawsuits filed throughout the federal court system have been centralized in the U.S. District Court for the District of New Jersey, for coordinated discovery and pretrial proceedings, since they each involve common questions of fact and law.

While the claims were originally assigned to U.S. District Judge Robert B. Kugler, and the first Valsartan trial was expected to begin in March 2024, the litigation has been delayed following the judge’s sudden retirement earlier this year.

In April, the U.S. Judicial Panel on Multidistrict Litigation (JPML) issued an order reassigning the Valsartan MDL to U.S. District Judge Renee M. Bumb, who met with lawyers involved with the claims earlier this month.

Valsartan Recall Lawsuit Sanctions Filed Against ZHP

In a Order (PDF) issued on July 22, the Special Master assigned to oversee discovery issues between plaintiffs and defendants determined that ZHP had violated discovery orders, and granted a motion for sanctions filed by the plaintiffs.

The Special Master, retired Judge Thomas I. Vanaskie, ruled that the manufacturer had violated court orders which compelled the company to produce documents and make its CEO, Baohua Chen, available for deposition.

As a result of the discovery misconduct, Judge Vanaskie has determined that the court will provide instructions to the jury that they can infer from the lack of compliance that any testimony provided by Mr. Chen or the missing documents would have been unfavorable to the drug maker. In addition, ZHP will have to pay nearly $310,000 in attorney fees and $41,400 in plaintiffs’ expenses.

“These sanctions will also act as a deterrent to other foreign litigants who believe they are able to rely on foreign law as a means to avoid U.S. based discovery obligations,” Special Master Vanaskie wrote. “The permissive adverse inference as to the missing discovery materials cures, at least to some extent, the prejudice Plaintiffs faced by being unable to utilize all discovery materials they were entitled to in this matter while also permitting ZHP to rely on evidence accessible to both parties to defend itself. Finally, the award of attorneys’ fees and costs to Plaintiffs compensates Plaintiffs for their extensive and protracted efforts to obtain ZHP’s compliance with this Court’s discovery orders.”

Valsartan Settlement Negotiations

While facing reticence from some manufacturers, like ZHP, other negotiations have led to some settlements. Last month, the parties announced a Valsartan settlement agreement had been reached to resolve all claims involving one of the generic manufacturers involved in the litigation, Hetero Labs, resolving personal injury, economic loss and medical monitoring claims.

Details on the proposed settlement have not been released, but lawyers indicate the only Hetero Valsartan lawsuits that would remain unresolved are those associated with economic loss lawsuits linked to losartan, a similar hypertension drug from the same class of medications. Hetero is the only manufacturer involved in the settlement agreement, which has not yet been finalized.

Plaintiffs also indicated last month that they are preparing a motion calling for the preliminary approval of a Valsartan class action settlement agreement. However, the most recent status report indicates that negotiations to settle other Valsartan lawsuits have stalled, though defendants say they believe progress is being made.

Even if the Hetero Valsartan settlement agreement is finalized, it will still leave hundreds of lawsuits pending against ZHP and other manufacturers, which will likely face future bellwether trials to help the parties gauge the average payout juries may award for individuals diagnosed with various forms of cancer. However, if those drug makers fail to settle the remaining Valsartan claims or otherwise resolve the litigation, hundreds of individual cases may later be remanded back to different U.S. District Courts nationwide for separate trial dates in the future.