A federal judge in Brooklyn, New York, ruled recently that pension funds, labor unions and insurance companies that bought Eli Lilly & Co’s Zyprexa drug could sue as a group and were entitled to a jury trial of claims the medicine was overpriced. As we have reported, Zyprexa is approved to treat schizophrenia and bipolar disorder. The Plaintiffs claim Lilly urged doctors to prescribe Zyprexa for uses not approved by the FDA. The institutional buyers, who sought $6.8 billion in damages, claim Lilly overpriced the drug by making excessive claims about Zyprexa’s usefulness, violating the Racketeer-Influenced and Corrupt Organizations Act, or RICO. The judge found “sufficient evidence of fraud” by Lilly in selling the drug to justify a jury trial. The judge certified the case as a class action on the RICO claims for all Plaintiffs except individual patients who bought the drug, rejecting Lilly arguments that the pension funds, unions and insurance companies had claims too different to be tried together. These Plaintiffs, all third-party payors, bought the drug for members or customers.
The court has limited the claim for damages to four years, from June 20, 2001 until June 20, 2005 when the suit was filed. The third-party payors include: the United Federation of Teachers Welfare Fund, or UFCW (a Philadelphia-based fund representing 20,000 food and commercial workers), Mid- West Life Insurance, and the Sergeant Benevolent Association Health and Welfare Fund, which represents current and retired New York City Police sergeants and their families — 33,000 people. The judge denied class action status to individuals with claims because he found their proposed leaders can’t properly represent the proposed class.
This case will be watched closely for further developments. Since the Plaintiffs’ state law claims weren’t certified for class status, and claims by individual payors weren’t included, the court’s decision is said to be a partial win for both sides.
Source: Bloomberg News
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