Sanofi ex­pects Zan­tac ar­bi­tra­tion case with Boehringer In­gel­heim to be re­solved ear­ly this year

Af­ter years of Zan­tac heart­burn med­ica­tion le­gal ac­tion, French phar­ma Sanofi is see­ing a res­o­lu­tion to at least some of the lit­i­ga­tion.

In Q4 guid­ance re­leased Wednes­day, Sanofi said it ex­pects the oblig­a­tions and in­dem­ni­fi­ca­tion rights be­ing dis­put­ed through ar­bi­tra­tion with Boehringer In­gel­heim will be re­solved this year, with ear­li­est at the end of Q1. Sanofi bought Zan­tac from Boehringer in 2017.

The ar­bi­tra­tion case it­self, ac­cord­ing to an an­a­lyst re­port from Bar­clays in Au­gust of 2022, was ini­ti­at­ed by Boehringer In­gel­heim against Sanofi as it seeks com­pen­sa­tion for loss­es it could in­cur as a re­sult of Zan­tac lit­i­ga­tion in the US. Sanofi is dis­put­ing the claim and has brought up sev­er­al coun­ter­claims. The dis­pute al­so has roots in the in­dem­ni­fi­ca­tion oblig­a­tions agreed up­on be­tween both com­pa­nies as part of a swap be­tween Sanofi’s an­i­mal health sec­tor for Boehringer In­gel­heim’s con­sumer health care busi­ness.

As for fu­ture Zan­tac lit­i­ga­tion, Emi­ly Field, the head of Eu­ro­pean Phar­ma­ceu­ti­cals eq­ui­ty re­search for Bar­clays, said in an email to End­points News that it should not have an im­pact.

Field said:

It would just as­sert who would owe any li­a­bil­i­ties in the event of a judg­ment against the de­fen­dants – i.e. as a hy­po­thet­i­cal ex­am­ple, if BI pre­vails here and Sanofi has to­tal­ly in­dem­ni­fied BI against li­a­bil­i­ty, if a plain­tiff bought OTC Zan­tac in 2016 and the ju­ry ruled against BI, Sanofi would then owe the mon­e­tary judg­ment.

Field al­so told End­points that since GSK was sell­ing the over-the-counter prod­uct, what goes on be­tween Sanofi and Boehringer In­gel­heim should im­pact any cas­es where the plain­tiffs bought OTC Zan­tac.

In an­oth­er an­a­lyst re­port for Bar­clays in Oc­to­ber, Field said that this ar­bi­tra­tion case is a “black box” and is dif­fi­cult to de­ter­mine if any award will be giv­en. Still, where Sanofi is con­cerned, the award could pro­vide some de­gree of clar­i­ty on Sanofi’s share of any fu­ture set­tle­ment or li­a­bil­i­ty, al­though Bar­clays doesn’t ex­pect the de­ci­sion to pro­vide com­plete cer­tain­ty.

“Le­gal ex­perts we have worked with pre­vi­ous­ly have not­ed that ar­bi­tra­tors have his­tor­i­cal­ly of­ten met some­where in the “mid­dle of the road” rather than award­ing an en­tire ar­bi­tra­tion award to one par­ty. How­ev­er, re­cent ar­bi­tra­tions we’ve seen in our space have in fact award­ed en­tire ar­bi­tra­tions awards to one par­ty,” the re­port said.

Field al­so told End­points that it’s hard to know the range of out­comes but giv­en that the ar­bi­tra­tion could some­how quan­ti­fy the li­a­bil­i­ty that may be faced by Sanofi, in­vestors have been view­ing it as a po­ten­tial­ly pos­i­tive cat­a­lyst.

“What’s been so hard about this sit­u­a­tion all along is that there are two un­known vari­ables: what the to­tal li­a­bil­i­ty pie could be … and then, of that pie, who owes what?” Field said.

Sanofi has been in­volved in some le­gal ac­tions con­cern­ing the drug out­side of its ar­bi­tra­tion with Boehringer In­gel­heim, in­clud­ing a re­cent­ly set­tled case in the state of Cal­i­for­nia. In that case, Sanofi wrote in the Wednes­day re­lease that it set­tled “not be­cause it be­lieves these claims have any mer­it, but rather to avoid the ex­pense and dis­trac­tion of a tri­al in Cal­i­for­nia.”

“Sanofi re­mains con­fi­dent in its le­gal de­fens­es and was pleased with the fed­er­al Mul­ti-Dis­trict Lit­i­ga­tion (MDL) court’s de­ter­mi­na­tion in ear­ly De­cem­ber that there is in­suf­fi­cient ev­i­dence that ran­i­ti­dine can cause plain­tiffs’ al­leged can­cers. This rul­ing sig­nif­i­cant­ly de­creased the scope of the lit­i­ga­tion and sub­stan­ti­ates Sanofi’s sci­en­tif­ic de­fens­es to the claims be­ing as­sert­ed,” Sanofi’s guid­ance said.

While the amount of re­spon­si­bil­i­ty that Sanofi will have is still up in the air, a Sanofi spokesper­son said in an email to End­points that there is no “re­li­able ev­i­dence” that Zan­tac caus­es any of the al­leged in­juries un­der re­al-world con­di­tions.

“Sanofi re­mains ful­ly con­fi­dent in its de­fens­es,” the spokesper­son said.

The Zan­tac brand has faced lit­i­ga­tion in sev­er­al as­pects af­ter a test­ing lab­o­ra­to­ry, Val­isure, filed a cit­i­zen pe­ti­tion in 2019 call­ing for the re­call of all ran­i­ti­dine prod­ucts due to high lev­els of ND­MA, which can cause can­cer.

Since the re­quest­ed re­call of Zan­tac in 2020 by the FDA, some le­gal cas­es have been dis­missed, but GSK still has sev­er­al more cas­es to con­tend with.

Illustration: Assistant Editor Kathy Wong for Endpoints News

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