Eli Lilly shares rise as Supreme Court allows Actos fraud suit
Market shrugs off multibillion-dollar RICO class action against diabetes drug maker
Eli Lilly shares rose 0.9% on Monday after the U.S. Supreme Court declined to hear the pharmaceutical company's appeal of a multibillion-dollar racketeering lawsuit over its diabetes drug Actos, allowing the class action to proceed despite potential damages estimated to exceed $7 billion.
The high court's decision on March 23 clears the way for the case, Painters and Allied Trades District Council 82 Health Care Fund v. Takeda Pharmaceutical Co. Limited, to advance to a jury trial. The lawsuit alleges that Eli Lilly and Takeda Pharmaceutical engaged in a decade-long scheme to conceal Actos' link to bladder cancer from insurers and third-party payers who reimbursed prescriptions.
The muted market reaction—Eli Lilly added just $7.85 to close at $914.54—reflects investor confidence that the litigation represents a distant risk for a company now valued at $811.5 billion. Even a judgment at the upper end of estimates would amount to less than 1% of the drugmaker's market capitalization.
"This is legacy litigation from a product that hasn't been a growth driver in years," said analysts tracking the company. "The core investment thesis around Eli Lilly remains focused on their obesity and diabetes franchises, not a drug they co-marketed until 2006."
The RICO class action represents tens of thousands of insurers and other payers who allege they covered Actos prescriptions they would have otherwise rejected had they known of the bladder cancer risks. The lawsuit marks the first non-settlement national RICO class action certified against a major pharmaceutical company, according to court documents.
Eli Lilly and Takeda had appealed to the Supreme Court after the Ninth Circuit affirmed class certification in June 2025. The companies argued that the federal appeals court had improperly certified the class, contending there wasn't a viable method to exclude members who hadn't suffered harm.
The latest legal action is distinct from the bladder cancer personal injury litigation that largely concluded with Takeda's $2.4 billion settlement in 2015, which resolved approximately 9,000 claims. That settlement, one of the largest pharmaceutical settlements in U.S. history at the time, averaged nearly $300,000 per plaintiff according to court records.
One notable bellwether trial in 2014 resulted in a Louisiana jury awarding $9 billion in punitive damages—later reduced to $36.8 million by a judge—with Takeda found 75% liable and Eli Lilly 25% liable. The federal multidistrict litigation for Actos bladder cancer lawsuits closed in April 2018.
Eli Lilly's current business focus has shifted dramatically from Actos, which it co-marketed with Takeda in the United States until 2006. The Indianapolis-based company now generates revenue of $65.2 billion over the trailing twelve months, with quarterly revenue growth of 42.6% driven primarily by its weight-loss and diabetes treatments.
The company's earnings per share reached $22.94, while its profit margin stands at 31.7%. Analysts maintain a predominantly positive outlook, with 24 buy ratings compared to 6 hold ratings and just one sell rating, according to market data. The consensus price target of $1,209.34 suggests potential upside of more than 30% from current levels.
Eli Lilly's growth story centers on Mounjaro and Zepbound, its GLP-1 receptor agonists that have transformed the obesity treatment market. These newer products have propelled the company's stock up more than 47% over the past year, far outpacing the broader pharmaceutical sector.
The Supreme Court's decision means the Actos RICO case will now proceed through district court, though a trial remains potentially years away given the complexity of racketeering litigation and the likelihood of additional appeals. Legal experts note that pharmaceutical companies often prevail in RICO cases or reach settlements significantly below initial damage estimates.
For Eli Lilly, the litigation represents another chapter in the long-running Actos saga rather than a material threat to its current trajectory. With $893 million shares outstanding and institutional ownership at 84.7%, the company's investor base appears focused on its future growth prospects rather than legacy legal challenges from a product that peaked nearly two decades ago.