Tens of thousands of Australians are thought to have taken the diabetes drug Actos, which has been linked to a 40 per cent increased risk of bladder cancer.

Law firm Maurice Blackburn said it would join a class action against Takeda and Eli Lilly, the co-manufacturers and distributors of the drug.

Maurice Blackburn Principal Damian Scattini said the companies had behaved “terribly”.

“They knew before they even released the drug that it had a tendency to induce tumours in rats but they proceeded irrespective of that,” he said.

International studies have found the main ingredient of Actos, pioglitazone, causes an increased risk of bladder cancer after patients have been taking it for between one and two years.

He said the legal case about the drug, held in California, had resulted in the jury awarding $6.5 million dollars in compensation to victims, before the judge overturned the decision on technical grounds.

“Initial signs look very good for this case,” he said. “The science is terrible for the defendant and what they did is terrible”.

The law firm is initially joining the action on behalf of one patient, Brisbane man Peter Marshall, but has since been contacted by other patients.

More than 1.7 million prescriptions for the drug have been filled in Australia over the past four years, Medicare figures show.

Australia's drug regulator in 2011 issued a warning about pioglitazone, stating: “use of ... pioglitazone, for more than a year may be associated with an increased risk of bladder cancer”. At that time it said it was undertaking a comprehensive review of the data and would provide more information to consumers when this was completed.

The warning caused prescriptions to drop from nearly 437,000 in 2011 to just over 378,800 in 2012.

Mr Scattini said consumers in France and Germany were no longer exposed to the drug as it had been taken off the market, and in America a black-box warning said long-term use was linked to bladder cancer.

But in Australia and New Zealand the drug was still available and in-packet warnings were weaker.

“I don't know why Australians are not entitled to the same protection as other first world countries,” he said.

Actos is not the first diabetes drug to be linked to serious health problems.

The manufacturer of the diabetes drug Avandia, GlaxoSmithKline, has paid out more than $460 million to settle thousands of personal-injury lawsuits after it was accused of not revealing links between Avandia and heart attacks.

A spokeswoman for the TGA said it had published information on its website and in the consumer product information for Actos explaining the link with bladder cancer.

This information said “pioglitazone should not be used in patients with bladder cancer or a history of bladder cancer [and] the risk of bladder cancer should be considered in the care of all patients treated,” she said.

She added that the risks and benefits of using any drug should be discussed by patients with their doctor.

Eli Lilly Australia has been contacted for comment.