Despite Recent Zyprexa Settlements Uncertaintly Looms for Eli Lilly

Last week, Eli Lilly annnounced the second phase of settlements surrounding its blockbuster anti-psychotic drug Zyprexa. The drug generated more than $4.2 billion in sales in 2005, and makes up more than 25% of Lilly’s entire revenue. By settling these cases, the company hoped it would remove the dark cloud over the drug and regain the confidence of doctors and patients. However, with competing drugs gaining in popularity it may be difficult for Lilly to get the results out of Zyprexa that they expect.

Further complicating the complicating the outlook for Lilly is Zyprexa’s patent situation. The drugs patent is set to expire in just four years, meaning that the company needs to capitalize on the drug’s sales before generic competitors are allowed to enter the market. The company is also facing patent expirations for several other medications.

The recent settlement does not completely close the chapter on Zyprexa related litigation. The company still faces about 1,200 Zyprexa realted claims as well as lawsuits from several states. Louisiana, Alaska, Mississippi, and West Virginia have sued Lilly seeking to recover Medicaid money spent caring for Zyprexa patients. If these states are successful many other states may also file suit.

The lawsuits alledge that Zyprexa caused diabetes and other blood sugar disorders. Up unti September 2003, the information on the package insert did not contain any information about these risks. After September 2003, the Food and Drug Administration required label changes for Zyprexa, <"">Risperdal and <"">Seroquel that added information about diabetes.

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