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.
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.