Jury Says Botox Causes Brain Damage: Here's Allergan's Worst-Case Scenario

Last Updated Apr 29, 2011 11:55 AM EDT

The $212 million verdict against Allergan (AGN) from a Virginia jury that found Botox gave a man brain damage cracks open a Pandora's Box of future potential liabilities for the company. Allergan will likely appeal, and you can assume that appeal will be aggressive because it will be a disaster for the company if a "Botox causes brain damage" meme catches on in either the media or the courts. Here's a look at Allergan's concerns:
  • Although Allergan has tried to diversify, the company is still dominated by Botox, with $1.42 billion of its sales (29 percent) coming from the botulinum toxin.
  • Allergan faces two more suits making the same claim. If they are successful, it could open the floodgates.
  • The verdict highlights an issue that concerns the FDA and doctors who are critics of Botox but that has not yet received a great deal of attention in the media or medical literature: The fact that Botox can travel in the body far from the site of the injection.
  • Although Allergan believes its punitive damages will be capped at $350,000, the Virginia Supreme Court may rule that caps on damages are unconstitutional.
Allergan firmly believes there is no evidence that Botox causes brain damage, and that Ray's condition was actually CADASIL, a genetic stroke syndrome. That may be true, but the worst-case scenario that Allergan faces is what happened to Dow Corning. In the 1990s, Corning was bankrupted by lawsuits alleging its breast implants caused a variety of illnesses even though the Institute of Medicine eventually concluded that they don't. (And yes, Allergan makes implants too.)

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