Zyprexa continues to cause headaches for Eli Lilly and Company. So far, has paid over $1 billion to settle thousands of legal battles over Zyprexa, and it’s likely Lilly may be writing another equally large check in response to a new shareholder lawsuit. Two shareholders are accusing Lilly of recklessly disregarding risks posed by illegal drug marketing practices.
This suit is the latest in a string of challenges over Zyprexa—an anti-psychotic drug approved for treating schizophrenia, acute mania, and bipolar disorder—which has generated both big money in sales and huge losses in litigation for Lilly. Many allege Lilly failed to warn consumers about the potential for diabetes or weight gain associated with Zyprexa, which realized sales of $4.8 billion last year, 25 percent of the company’s total sales.
Lilly may also be forced pay additional amounts of over $1 billion to state and federal governments stemming from a separate investigation. The U.S. Attorney’s office for the Eastern District of Pennsylvania is investigating Zyprexa marketing and about 30 state attorneys general also have subpoenaed documents detailing Lilly’s sales practices for Zyprexa as part of a civil investigation under state consumer protection laws. Lilly also faces other lawsuits from several states and some 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, for instance, accuses Lilly of persuading doctors to prescribe Zyprexa for conditions such as Alzheimer’s, dementia, and depression. Lilly representatives deny promoting these off-label uses. The latest complaint, filed two weeks ago by shareholders N.A. Lambrecht and Jeffrey Jannett in U.S. District Court for the Southern District of Indiana, notes that the FDA has taken a strong stance against off-label promotion.
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.
In a similar situation in 1998, Lilly paid $36 million to settle charges of off-label promotion for its osteoporosis drug Evista. Three years later, TAP Pharmaceutical Products Inc. agreed to pay $875 million to settle charges it inflated prices and bribed doctors to prescribe the prostate cancer drug Lupron. Belt, the Lilly spokesman, noted the complaint was spurred in part by New York Times articles detailing off-label allegations. Beginning in late 2006, a series of articles in the Times, based on confidential documents, said Lilly downplayed the drug’s risks and conducted off-label marketing. “Those stories were full of inaccurate, incomplete and—what we would say was—misleading information,” Belt said. Nevertheless, he said the company’s board has appointed a committee to complete a “thorough and importantly independent assessment” of the lawsuit’s allegations.
The federal government is strongly opposed to off-label marketing and, just last year, Schering Sales Corporation and its parent, Schering-Plough Corporation, were ordered to pay $435 million as part of a Justice Department settlement over accusations that it improperly marketed drugs for unapproved uses and lied to the government about drug prices.
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