There has been a great deal of activity recently in the Zyprexa litigation and none of it is good news for Eli Lilly & Co. The drug manufacturer will pay $22.5 million to settle a lawsuit involving the antipsychotic drug Zyprexa brought by the state of West Virginia. In that suit, the state alleged that the company improperly marketed Zyprexa. As we have previously reported, this drug has been the subject of federal and state investigations into whether the company marketed the drug, approved for schizophrenia and bipolar disorder, for unapproved, or what is referred to as off-label, uses.
Lilly had already settled a marketing investigation in January with the U.S. Justice Department. The company was required to pay $1.42 billion, which includes about $362 million to more than 30 states. As we have reported, there have been a number of individual lawsuits filed by states against Lilly over Zyprexa. The West Virginia suit was only one of a dozen individual state claims that were pending against Lilly seeking reimbursement for funds spent on Medicaid, the government’s health program for the poor. Lilly announced in July that it would take a pretax charge of $102 million during this quarter to settle a number of the state lawsuits over Zyprexa.
It was significant that West Virginia elected to file its own lawsuit instead of participating in the consolidated settlement. A state the size of West Virginia would have received only about $1.5 million in that settlement. So it’s obvious filing its own suit was the proper course of action. U.S. District Judge Jack Weinstein is now urging all states to settle their marketing claims against Lilly over Zyprexa. Judge Weinstein, who sits in Brooklyn and is overseeing all federal-court lawsuits over the drug, wrote in an order dated August 17, 2009 that “a global settlement of all cases, including those pending in state courts is desirable.”
After the West Virginia settlement, there were 11 state lawsuits pending against Lilly. All of these suits allege that the company withheld information about the side effects of Zyprexa, such as diabetes, and encouraged sales of the drug for unapproved purposes, including dementia and depression. While doctors can prescribe medicines for any use, drug makers can’t promote those medicines for any use not approved by the FDA. The states are seeking damages and fines for violation of laws against deceptive practices and false claims.
Shortly after the West Virginia settlement, Lilly agreed to settle, on confidential terms, lawsuits filed by seven of the 11 states that had sued over Zyprexa. A special master was appointed by Judge Weinstein to help push settlement negotiations. Competing the settlements will be delayed while the parties determine how much money the U.S. government will claim in compensation for federal dollars spent on Zyprexa through state Medicaid programs. If all of that is worked out, and the settlements are approved by the court, that would leave the remaining four state suits pending against Lilly. Settlement requirements were ongoing at press time in these cases.
A trial against Lilly, which was expected to last 3 to 4 weeks, started last month in South Carolina in that state’s Zyprexa lawsuit. You may recall that the only actual trial of a state’s Zyprexa lawsuit ended in March 2008 with an out-of-court settlement in which Lilly agreed to pay Alaska $15 million. Lilly also agreed in October to pay a total of $62 million to 32 states and the District of Columbia to settle consumer protection claims over improper marketing. So, as you can see, things have been very busy on the Zyprexa front.
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