Baxter to Settle in Japanese Tainted Blood Case

Baxter International Inc. has agreed to settle with 400 Japanese hemophiliacs infected via contaminated blood products with the virus that causes AIDS, the American pharmaceutical giant said Thursday.

Baxter will join the Japanese government and four other drug companies in paying about $420,000 to each of the claimants, who will also receive an estimated $1,425 monthly payment for life. The award is one of the world’s largest to date in such cases, analysts said.

The settlement was announced in a dramatic televised news conference in Osaka at which the mother of one victim, dissatisfied with the “casual apology” offered by the drug executives, approached them and demanded more.

With that, several executives silently fell to their knees and slowly brought their foreheads to the floor for several minutes while the woman continued to cry.

“Baxter wishes to extend its heartfelt apologies to those people and their families who were the innocent victims of this insidious disease,” Bob Hurley, president of Baxter’s Japanese subsidiary, said in a written statement.

The settlement calls for $168 million in upfront payments, to be paid by the government and five companies--Deerfield, Ill.-based Baxter, Germany’s Bayer Yakuhin Ltd. and Japanese firms Green Cross Corp., Chemo Sero Therapeutic Research Institute and Nippon Zoki Pharmaceutical Co.

The government will pay 44%; the rest will be apportioned among the firms according to their market share in the early 1980s when the tainted blood products were distributed. That makes Baxter’s share 12.5%, or at least $12 million. Baxter said reserves and insurance will cover its part of the settlement.

The companies’ share is slightly less than the 60% that the Osaka and Tokyo district courts recommended in October. Baxter had insisted the government should pay more since it had knowingly barred access to safer products to give Japanese manufacturers time to match foreign blood technology.

The plaintiffs had also sought an admission of liability from the companies, something Baxter especially sought to avoid because it might provide ammunition for the 1,000 or so HIV-related claims pending worldwide. Baxter has already participated in government-sponsored settlements in tainted-blood cases in Germany and Canada.

“Baxter is agreeing to this court-imposed settlement to provide immediate relief to those in need while also putting an end to the litigation,” Hurley said.

The tainted products that Baxter and the other companies sold to hemophiliacs in Japan assisted in the blood-clotting process. Without such products, those with the genetic disease can bleed to death.

The suit had asserted that manufacturers took insufficient care in ensuring diseases were not transmitted through the products and that the Japanese government negligently allowed them into the market knowing they could be contaminated. Baxter said it did its best at the time--from 1983 to 1985--given what was known about the human immunodeficiency virus, which causes AIDS.

“We didn’t create AIDS,” Hurley said. “It got into bloodstreams and products before we knew how to stop it.”

Despite the troubles, Baxter has said it remains committed to Japan, its No. 2 international market. “We wouldn’t consider leaving Japan,” Hurley has said. “We have too much to offer this society.”