Alaska Zyprexa Lawsuit Settled for $15 MillionMar 27, 2008 | Parker Waichman LLP
Eli Lilly and Company and the state of Alaska have mutually agreed to settle that state's lawsuit against Lilly over the use of Zyprexa. Lilly will pay the state of Alaska $15 million and agreed to ensure that Alaska is "treated as favorably as any other state" that may settle with the company in the future over similar claims. Lilly and Alaska Attorney General Talis J. Colberg announced the settlement in a press release. Zyprexa, which is often prescribed in the U.S. and in more than 80 other countries, is a short- and long-term treatment of schizophrenia and specific bipolar disorders. Lilly shares closed at $50.17 at the end of Tuesday's trading.
Last month, two shareholders accused Lilly of recklessly disregarding risks posed by illegal drug marketing practices related to its anti-psychotic drug Zyprexa. Connecticut’s Attorney General, Richard Blumenthal, is also suing Eli Lilly over the marketing of Zyprexa as are at least nine other states for similar reasons; federal prosecutors are also involved and reportedly in talks over a large settlement with the drug giant. For its part, Connecticut is looking to recover over $190 million it spent on Zyprexa over many years on the grounds that Lilly illegally marketed the Zyprexa for unapproved uses and concealed risks associated with the drug. “The illegal marketing campaign exploited children and senior citizens—causing severe weight gain, diabetes, and cardiovascular problems,” Blumenthal said in a statement. “This scheme involved payments to public officials, bogus educational events, and ghostwritten promotional articles summarizing suspect studies.”
Alaska filed a $270 million suit against Lilly in 2006, claiming Lilly withheld data on Zyprexa's side effects, costing its Medicaid program millions by increasing the incidence of diabetes. The trial began March 3 in Anchorage. In a statement, Lilly general counsel Robert Armitage said the company had a "strong defense," but that settling was in the best interests of all parties adding that, "Our decision to resolve this case does not change the fact that Zyprexa can continue to improve the lives of patients around the world who are suffering from schizophrenia and bipolar disorder."
Lilly may be forced to pay at least $1 billion to state and federal governments. The U.S. Attorney's office for the Eastern District of Pennsylvania is investigating Zyprexa marketing and about 30 state attorneys general have subpoenaed documents detailing Lilly's sales practices as part of a civil investigation. Lilly faces other lawsuits from several states and third-party payers accusing Lilly of promoting Zyprexa’s off-label use for treatments not approved by the U.S. Food and Drug Administration (FDA). A complaint filed in Utah accuses Lilly of persuading doctors to prescribe Zyprexa for conditions such as Alzheimer's, dementia, and depression. Lilly denies promoting off-label uses and said the claims are without merit. Doctors are free to prescribe drugs for uses not approved by the FDA—off-label uses—however, pharmaceutical companies are prohibited by law from marketing drugs for non FDA-approved uses.
So far, Eli Lilly has paid over $1 billion—not including this recent settlement in Alaska—to settle thousands of legal battles.