Lilly To Pay Up To $500 Million In Second Zyprexa Settlement
This article was originally published in The Pink Sheet Daily
Executive Summary
The settlement resolves suits alleging Lilly inadequately warned patients of the risks of diabetes and hyperglycemia associated with the antipsychotic.
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Lilly will pay up to $500 million to settle the "vast majority" of claims alleging that the company failed to adequately warn patients of risks associated with the atypical antipsychotic Zyprexa (olanzapine), the firm announced Jan. 4. The settlements cover an estimated 18,000 claims, including federal and state product liability lawsuits. The agreements follow a master settlement Lilly already entered into in June 2005 covering approximately 8,000 claims. In that settlement, the company agreed to pay approximately $700 million (1 (Also see "Lilly To Pay Up To $690 Mil. To Settle Majority Of Zyprexa Injury Claims" - Pink Sheet, 10 Jun, 2005.)). Now Lilly said it has identified approximately 1,200 outstanding claims not included in either settlement. In a statement, Lilly said it is "happy" to have negotiated a settlement, as "the litigation stirred concern for physicians and spread fear among patients and caregivers, which has interfered with the process of physicians making treatment decisions." The litigation related to claims that Lilly inadequately tested for and warned about the diabetes and hyperglycemia risks associated with the schizophrenia and bipolar disorder medication. From the time Zyprexa was introduced in 1996 until September 2003, labeling for the drug listed the risk of diabetes and hyperglycemia as an infrequent adverse event. In September 2003, FDA requested class labeling for atypical antipsychotics to warn about the confounding risk of diabetes and recommend continued physician monitoring for signs of the side effect. Lilly is not disclosing the exact terms of the settlement, but said it expects to record a fourth-quarter 2006 charge related to the litigation that is "not expected to exceed $500 million." Lilly has been inundated with legal and media issues surrounding Zyprexa. Most recently, in a particularly damaging report, The New York Times reported Dec. 17 that Lilly was involved in a 10-year effort to intentionally play-down the health risks associated with its best-selling medication; the article pointed to hundreds of internal company documents. On Jan. 4, The New York Times also profiled a 41-year old patient, John Eric Kauffman, who gained 80 pounds while taking Zyprexa over five years and died of heart disease in March. Lilly criticized the paper in a Jan. 4 statement, saying, "it is inaccurate to imply that any single factor - including medication - was the cause of the unfortunate death of the patient." "Millions of patients around the world have benefited from Zyprexa, and Lilly is concerned that this tragic story about a single patient could unnecessarily frighten people with schizophrenia and bipolar disorder and cause them to discontinue their medication without first consulting a physician." Lilly is facing additional scrutiny over Zyprexa. In November, the firm disclosed that the California Attorney General's office is seeking documents related to "efforts to obtain and maintain Zyprexa's status on California's formulary, marketing and promotional practices" (2 (Also see "Antipsychotic Marketing Investigation Broadens" - Pink Sheet, 3 Nov, 2006.)). In August 2005, Lilly said it had received a subpoena from the Florida Attorney General's Medicaid Fraud Control Unit seeking "documents relating to sales of Zyprexa and our marketing and promotional practices" with respect to the drug (3 (Also see "Zyprexa Marketing Documents Sought By Florida Medicaid Fraud Unit" - Pink Sheet, 3 Aug, 2005.)). - Daniel Fowler ([email protected]) |