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Lilly to Settle Zyprexa Claims

Jun 9, 2005 | Eli Lilly announced late Thursday that it will settle about three-quarters of the liability clams stemming from its Zyprexa schizophrenia drug.

Lilly will establish a fund not to exceed $690 million for plaintiffs who agree to settle their claims. The number of claimants covered by the settlement is estimated to be 8,000, comprising about 75% of the claims.

The Indianapolis drugmaker anticipates taking at least a $700 million pretax charge in the second quarter of 2005 to cover this settlement, as well as other product liability claims not covered by the settlement.

"While we believe the claims are without merit, we took this difficult step because we believe it is in the best interest of the company, the patients who depend on this medication, and their doctors," said Sidney Taurel, Lilly chairman and CEO, in a statement. "Our decision to resolve these claims does not change the fact that Zyprexa has and will continue to improve the lives of millions of patients around the world who are suffering from schizophrenia and bipolar disorder.

The settlement will resolve the majority of Zyprexa claims pending in the U.S. That includes federal and state lawsuits against Lilly, the filed nationwide class action lawsuits, and the majority of some 5,000 claims that were the subject of "tolling agreements" that extended the deadline for potential claimants to file a lawsuit, as well as other potential claims against Lilly.

"We believe that this settlement is in the best interest of our clients, as well as patients, physicians and caregivers," said, a member of the plaintiffs' steering committee, which had been directing the federal litigation for the claimants. "The patient population to which this drug is given has difficult medical histories. Protracted litigation was in no one's interest."

Most of the lawsuits claimed that before September 2003, the information in the medication label, which listed the risk of hyperglycemia and diabetes as an infrequent adverse event since 1996, was not adequately displayed.

In September 2003, the FDA required label changes for all atypical antipsychotics to warn against this risk.

"Given the background rate of diabetes in the population at large, and particularly in people with serious mental illness," said Seeger, "we are pleased with the label change and the additional information being provided to physicians and their patients about both the risks and benefits of the drug."

The agreement involves claimants who asserted that they developed diabetes-related conditions from their use of Zyprexa. Claimants not covered by the final settlement are those represented by attorneys who are not participating in the agreement in principle. Lilly will contest the use of Zyprexa in those cases.

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