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Zyprexa Charges Take A Toll On Lilly

Oct 24, 2008 | Parker Waichman LLP

Earlier this month we reported that Eli Lily & Company, in its ongoing Zyprexa scandal, agreed to pay $62 million to 33 states to settle claims it improperly marketed Zyprexa.  Now, 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.  Last year, Lilly posted a net income of $926.3 million, or 85 cents a share.  Without a $1.48 billion charge for the Zyprexa probes and other charges in the quarter and prior-year insurance recoveries, the company would have reported that earnings rose to $1.04 a share from 91 cents a share.  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.

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.  The 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.

Pharmaceutical companies are only legally permitted to market and advertise medicines for those uses specified on the drug’s label.  It is illegal for drug companies to market medications off-label.

In July we reported on a former Lilly rep’s testimony in which he told a Senate committee that drug makers hire ex-cheerleaders, models, and jocks to schmooze with doctors, exaggerate drug benefits, and minimize drug risks. Shahram Ahari, who spent two years as a rep for Prozac and Zyprexa, said, "We were taught to minimize the side effects, how to use conversational ploys to minimize it or change the topic."  Ahari said he received specific training on how to:  Get around spending limits for important clients, use free samples to increase sales, create a quid pro quo with personal gifts and friendships, and exploit sexual tension with clients.

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