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Lilly’s insurers win $10-million settlement, but the case is on appeal
Litigation over mishandled shipments is a customary, if unfortunate, part of the relationship between pharma manufacturers (shippers) and their contract carriers. A case adjudicated in March in the US Southern District of Florida, however, highlighted some new twists to how temperature-controlled shipments are to be settled. The high points: the record of temperature shown on validated dataloggers can be acceptable evidence, even without any testing of the presumably damaged goods themselves; and that, barring specific contract terms between the shipper and the carrier, the transfer price of pharmaceuticals between one corporate entity and another can define the value of the damages (as opposed to, for instance, the cost to manufacture the product).
The case, CV-23048, involves a shipment that Lilly France sent to Eli Lilly (US) in December 2004. DHL and subsidiary companies, and air carrier Lufthansa, handled the shipment through Munich where, at some point, the shipment was exposed to sub-freezing temperature. In the court case, Lilly called on testimony from Sensitech (Beverly, MA), manufacturers of the TempTale dataloggers. It also called on its own expert witness who testified that insulin can be made unusable by subzero temperature even without outward sign of damage; the ultimate test would have to be done clinically. Furthermore, the ruling judge noted that FDA regulations preclude subsequent use of drugs damaged in transit, writing that “the exposure or likelihood of exposure to sub-freezing temperatures rendered the insulin products unsaleable and thus useless, regardless of whether actual observable damage occurred.”
High value, high risk
The court record shows a lot of tussling between the parties over how the case should have proceeded; at one point, Lufthansa accused Lilly France of acting negligently by authorizing the shipment to go through Munich. Nevertheless, a DHL spokesperson says that “We intend to appeal the decision of the trial court and believe that we have strong grounds for appeal.”
One legal observer comments that “cases like this are routine for ocean shipping, but are unusual in the air freight business, where much higher-value products are usually being transported, at much higher prices.” Meanwhile, Sensitech, like the cat with a canary in its paws, is enjoying the market value of its validatable datalogging capabilities. PC