Parker, Waichman, Alonso LLP

Home » Articles

Eli Lilly Sued by Insurers, Unions for $7.7 Billion Over Zyprexa

Jul 7, 2008 | Parker Waichman Alonso LLP

To date, Eli Lilly and Co., has paid over $1 billion to settle legal claims over the side effects of its top-selling antipsychotic drug, Zyprexa and it now looks as if Lilly may have to pay billions more to insurers over claims it improperly marketed and overcharged for the drug.  On Thursday U.S. District Judge Jack Weinstein issued a 291-page draft order saying the case against Lilly is strong enough to warrant a trial, that Lilly may have excessively encouraged questionable uses of Zyprexa, and Lilly should negotiate a worldwide settlement with plaintiffs, who are seeking up to $7.7 billion in reimbursements.  The order is still in draft, and a July 17 hearing has been set in New York for responses.

Lilly still faces criminal and civil investigations by federal and state officials.  And, now, insurance companies and labor unions claim Lilly hid information about Zyprexa’s risks and spread misinformation about its effectiveness and safety.  The group claimed Lilly promoted and marketed the drug for off-label uses, such as depression, dementia, and panic.  Zyprexa is only approved for schizophrenia and bipolar disorder.  The group suing Lilly claim it violated the Racketeer Influenced and Corrupt Organizations Act (RICO) through mail fraud.  "There is sufficient evidence of fraud under RICO to go to a jury,” Weinstein wrote in the order, adding, ‘There is evidence that off-label use of Zyprexa was excessive and may have been encouraged by Lilly."  Weinstein ruled the payer group could sue as a class, but denied class-action status for individual patients.

Lilly has long denied it downplayed or hid Zyprexa’s side effects or promoted it for off-label uses.   "There was undoubtedly off-label use of all drugs in this area.  Doctors can use drugs for whatever they want to," said Michael Harrington, Lilly's general counsel. "But we deny we promoted the drug improperly."  The plaintiffs claim Lilly's actions resulted in them being overcharged for Zyprexa by as much as $7.7 billion, saying Zyprexa’s price was artificially inflated by Lilly’s false claims that Zyprexa was significantly more effective than previous generations of antipsychotic drugs.

The judge indicated he hoped the two sides could reach a settlement, avoiding a long trial. "A global settlement for the overpricing claims and any other claims is desirable," Weinstein wrote.  "Legal disputes of this nature should be resolved as quickly and comprehensively as possible so that government, the medical profession, and drug manufacturers can get on with their main job, protecting the people's health effectively at the cheapest practicable cost."  Lilly refuses to settle for the $7.7 billion saying, "The numbers that have been thrown around by the plaintiffs' lawyers are calculated to be inflammatory and get people's attention."

In the past year or so, several of Lilly's “late-stage drugs” have been deferred, including an inhaled insulin and a drug for treating eye diseases.  Most recently, the company's most critical experimental drug, a blood thinner called prasugrel, was delayed for three months at the FDA's request for further review.

Zyprexa has been approved in more than 80 countries and has been prescribed to over 23 million people since 1996.