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Minnesota sues Lilly over Zyprexa

Nov 4, 2008 | Parker Waichman Alonso LLP

Earlier last month we reported that Eli Lilly & Company, in its ongoing Zyprexa  scandal, agreed to pay $62 million to 32 states and Washington, D.C. to settle claims it improperly marketed Zyprexa.  Late last month we reported that Lilly posted a third-quarter net loss of $465.6 million—43 cents a share—amid charges related to the government investigations into its marketing of antipsychotic drug Zyprexa.  Now, the Associated Press (AP) is reporting that Minnesota has joined the many states looking for compensation from Lilly over its popular anti-psychotic drug, Zyprexa.

In addition to states, insurers, pension funds and unions have been among those groups legally seeking compensation from Lilly and accusing it of concealing Zyprexa's tendency to cause weight gain and diabetes and of marketing the drug for off-label uses.  Now, the Minnesota’s state attorney general’s office has filed a complaint in federal court, reports the AP.

The AP reported that Zyprexa brought Lilly over $4.7 billion in revenue last year; however, Lilly has spent over $1.1 billion since 2005 to settle product liability claims concerning Zyprexa.  Although Minnesota was not involved in the $62 million case, the state has been involved in settlement talks, said Ben Wogsland, a spokesman for the attorney general's office.  "We weren't frankly ... comfortable with the amount of money that was being offered to Minnesota, and we communicated that to the company and what our concerns were there," Wogsland said.  The AP notes that Minnesota spent over $175 million through public health programs on Zyprexa prescriptions between 2000 and 2007.  “Wogsland said the lawsuit helps the state learn more about the drug's impact on Minnesota through the discovery process,” reports the AP.  Lilly just recorded a third-quarter loss “largely due to a $1.4 billion charge related to the investigation of Zyprexa marketing practices,” notes the AP.

Zyprexa is only approved for the treatment of schizophrenia and bipolar disorder and was being marketed for use in milder cases of bi-polar disorder and for dementia.  The 33-state settlement closed an 18-month investigation led by the offices of the attorneys general of Illinois and Oregon who maintain that Lilly violated consumer protection laws by urging doctors to prescribe Zyprexa to patients who did not need the medication.  That case also represents the largest settlement paid by a drug company in a state consumer protection case and points to a possibly larger, separate deal connected to a civil and criminal investigation led by federal prosecutors in Philadelphia, in which Lilly is expected to pay over $1 billion in fines and restitution to states and the federal government.  Lilly may also plead guilty to a misdemeanor criminal charge related to off-label marketing of Zyprexa.   Both the states’ investigation and the Philadelphia case focus on Lilly’s marketing of Zyprexa for patients with dementia and milder forms of bipolar disorder, a violation of federal law.

Zyprexa is a potent brain tranquilizer that calms hallucinations related to schizophrenia and bipolar mania; however, internal Lilly documents and e-mail messages indicate Lilly marketed Zyprexa off-label.  Zyprexa can cause severe weight gain and an increase in blood sugar in many patients.  According to the American Diabetes Association, Zyprexa is likelier to cause diabetes than most other medicines for schizophrenia and bipolar disorder.