Zyprexa Lawsuits - Eli Lilly May Lose Insurance Coverage

August 11, 2006

by Pringle

http://www.opednews.com

In the company's first quarter report for 2006, Eli Lilly says its

having problems with insurance coverage. " We have experienced

difficulties in obtaining product liability insurance due to a very

restrictive insurance market, " the report says, " and therefore will

be largely self-insured for future product liability losses. "

Although Lilly has coverage for a portion of the Zyprexa product

liability claims exposure, the SEC filing states, third-party

insurance carriers have raised defenses to their liability under the

policies and are seeking to rescind the policies.

The dispute is now the subject of litigation in the federal court in

Indianapolis against certain carriers and in arbitration in Bermuda

against others. " While we believe our position is meritorious, " the

filing states, " there can be no assurance that we will prevail. "

" In addition, " it warns, " there is no assurance that we will be able

to fully collect from our insurance carriers on past claims. "

The filing also says Lilly cannot predict the additional number of

Zyprexa lawsuits that may be filed and that the ultimate resolution

of Zyprexa litigation could have a material adverse impact on the

company's consolidated results of operations, liquidity, and

financial position.

The situation no doubt looks gloomier since July 24, 2006, when the

state of Mississippi filed a lawsuit in Lafayette County Circuit

Court, claiming the company engaged in a calculated marketing plan

to defraud the state Medicaid program out of millions of dollars for

off-label uses of Zyprexa.

Mississippi's attorney general, Jim Hood, who is known for suing

companies on behalf of consumers, charged that Lilly promoted

Zyprexa for unapproved uses, including for children. The case is

titled, Hood v. Eli Lilly and Co., No. L06-280, Circuit Court,

Lafayette County, Mississippi.

The complaint alleges that the rapid growth of Zyprexa sales in

Mississippi " is primarily due to increased prescriptions by primary

care physicians for non-medically accepted indications that are

excluded from payment under the provisions of the Mississippi

Medicaid Prescription Drug Program. "

It alleges that after receiving FDA approval of Zyprexa for

treatment of patients with diagnoses of schizophrenia or a bipolar

disorder, Lilly formed a scheme to increase the sales while avoiding

the expense and delay of obtaining approval for other new, expanded

or additional uses of the drug.

It claims the scheme consisted of the promotion of Zyprexa for non-

medically accepted conditions that are excluded from payment under

the Mississippi Medicaid Prescription Drug Program.

Specifically, the lawsuit claims, Lilly trained and instructed its

primary care sales force to attempt to expand the drug's market by

convincing primary care physicians to prescribe the drug for mood,

thought and behavioral disturbances and that the company established

a consistent sales message " based on patients' symptoms and

behaviors, rather than on their confirmed diagnoses. "

Lilly, it says, through its primary care sales force, presented the

physicians with hypothetical patient profiles, which

included " patients complaining of symptoms such as anxiousness,

irritability, mood swings and disturbed sleep, and submitting to

physicians that such hypothetical patients would be medically

indicated for treatment with Zyprexa. "

The doctors are now prescribing the drug for non-approved uses, the

lawsuit claims, as a direct response to Lilly's conduct in marketing

the drug.

" As a result, " it states, " Mississippi is spending millions of

dollars on Zyprexa® for patients who are not indicated for the drug;

and further, who are being harmed by it. "

The complaint also alleges that Lilly did not properly warn of the

dangers related to the drug, such as the increased risk of diabetes

and that treatment for beneficiaries who became ill from Zyprexa

increased the state's Medicaid costs.

The suit charges that Lilly knew Zyprexa increased the risk of

diabetes, pointing out that in April, 2002, nearly a year and a half

before Lilly first warned of the risk of diabetes in the US, the

company changed the drug's labeling in the UK and Japan to include

warnings about the association between Zyprexa and diabetes related

injuries.

The investigation by the attorney general's office found that about

10% of patients who were prescribed Zyprexa have subsequently

developed insulin-dependent diabetes.

" Some of these patients are children, " the lawsuit says, " and

Zyprexa® has never been approved for, nor found to be effective, in

the treatment of children. "

According to Tim Balducci, Mississippi special assistant attorney

general, Lilly targeted Mississippi because the state's Medicaid

program is not set up to signal when a doctor prescribes a drug for

unapproved uses.

The lawsuit is seeking damages of $30 million in prescription costs

alone and requests civil penalties, punitive damages and litigation

costs as well.

Earlier this year, Lilly was served with similar lawsuits filed by

attorneys general from West Virginia and Alaska in the courts of the

respective states.

The fact is, according to its May 2, 2006 SEC filing, Lilly is

bogged down with Zyprexa legal actions coming from all directions.

In March 2004, the US Attorney for the Eastern District of

Pennsylvania advised Lilly that it has commenced a civil

investigation related to its marketing and promotional practices,

including Lilly's communications with physicians and remuneration of

physician consultants and advisors, with respect to Zyprexa, Prozac,

and Prozac Weekly.

In October 2005, the US Attorney's office advised the company that

it is also conducting an inquiry regarding rebate agreements Lilly

entered into with a pharmacy benefit manager covering Zyprexa and

four other drugs, and includes a review of Lilly's Medicaid best

price reporting related to the product sales covered by the rebate

agreements.

A few months earlier, in June 2005, Lilly received a subpoena from

the office of Attorney General, Medicaid Fraud Control Unit, of the

State of Florida, seeking production of documents relating to the

company's marketing and promotion of Zyprexa.

" It is possible that other Lilly products, " the SEC filing

says, " could become subject to investigation and that the outcome of

these matters could include criminal charges and fines, penalties,

or other monetary or non-monetary remedies. "

The filing says the company cannot determine the outcome of these

matters or estimate the amounts of any fines or penalties that might

result from an adverse outcome. " It is possible, however, " the

filing warns, " that an adverse outcome could have a material adverse

impact on our consolidated results of operations, liquidity, and

financial position. "

The report says Lilly has been named as a defendant in a large

number of Zyprexa lawsuits in the US and has been notified of many

other claims by individuals who have not yet filed. " The claims seek

substantial compensatory and punitive damages and typically accuse

us of inadequately testing for and warning about side effects of

Zyprexa, " the filing states. " Many of the claims also allege that we

improperly promoted the drug, " it says.

Almost all of the federal lawsuits are part of a Multi-District

Litigation proceeding in the Federal District Court for the Eastern

District of New York (MDL No 1596), and include three lawsuits

requesting certification of class actions.

In December 2004, Lilly was served with two lawsuits filed in

Louisiana on behalf of the Louisiana Department of Health and

Hospitals, and they are also now part of the MDL proceedings in the

Eastern District of New York.

In these cases, the Department of Health and Hospitals seeks to

recover the costs it paid for Zyprexa through Medicaid and other

drug-benefit programs, as well as the costs the department says it

has incurred and will incur to treat Zyprexa-related illnesses.

According to the SEC filing, Lilly has entered into agreements with

various plaintiffs' counsel and halting the running of the statutes

of limitation (tolling agreements) with respect to a number of

claimants who do not have lawsuits on file.

" Since June 2005, " the company reports, " we have entered into

agreements in principle with various claimants' attorneys involved

in U.S. Zyprexa product liability litigation to settle a majority of

the claims. "

The agreements reportedly cover approximately 10,500 claimants,

including a large number of previously filed lawsuits (including the

three purported class actions mentioned above), tolled claims, and

other informally asserted claims. 'The agreements in principle are

subject to certain conditions, " the report notes, " including

obtaining full releases from a specified number of claimants. "

The Zyprexa claims not subject to these agreements, Lilly says,

include approximately 800 lawsuits covering 4,700 claimants, and

approximately 850 tolled claims. In addition, the filing says, Lilly

has been served with a new lawsuit seeking class certification in

which the members of the purported class are seeking refunds and

medical monitoring.

In 2005, two lawsuits were filed in the Eastern District of New York

purporting to be nationwide class actions on behalf of all consumers

and third party payers, excluding governmental entities, which have

made or will make payments for their members or

insured patients being prescribed Zyprexa.

These actions have now been consolidated into one lawsuit, filed

under state consumer protection statutes, the federal civil RICO

statute, and common law theories, seeking a refund of the cost of

Zyprexa, treble damages, punitive damages, and attorneys' fees.

Two additional lawsuits were filed this year in the Eastern District

of New York on similar grounds, the filing states.

Finally, in early 2005, Lilly was served with five lawsuits seeking

class action status in Canada on behalf of patients who took Zyprexa

with allegations similar to those in the US.

In the second quarter of 2005, Lilly recorded a net pre-tax charge

of $1.07 billion for product liability matters. " The $1.07 billion

net charge, " the SEC report states, " takes into account the

estimated recoveries from insurance coverage related to these

matters. "

During 2005, $700 million was paid out in connection with Zyprexa

settlements, according to the report.

" Because of the nature of pharmaceutical products, " the SEC filing

states, " it is possible that we could become subject to large

numbers of product liability claims for other products in the

future. "

Zyprexa was first only approved for the treatment of adults with

schizophrenia, but four years later, it was approved for short-term

treatment of adults with manic episodes associated with bipolar

disorder.

Yet despite its limited indications for use, Zyprexa has become the

top selling antipsychotic, with more than 17 million people

worldwide having used the drug.

There is no way that Zyprexa could have rose to such prominence

without Lilly's illegal promotional tactics. When it came on the

market their was no good news to offer medical professionals on the

drug.

Based on the results of a six-week clinical trial sponsored by

Lilly, the FDA granted approval. The trial involved 2,500 people,

and two-thirds of the participants didn't even complete the program.

Among those who stuck it out, 22% of the Zyprexa subjects suffered

a " serious " adverse effect, compared to 18% in the group taking

Haldol, according to Leonard Roy , author of Zyprexa: A

Prescription for Diabetes, Disease and Early Death, August 2005

Edition of Street Spirit.

That same year, FDA data obtained by investigative reporter and

author, Whitaker, under the Freedom of Information Act,

revealed Zyprexa's adverse effects to include: cardiac abnormalities

and hypotension 10% to 15%; Parkinson-like motor impairment 11.7%;

unbearable restlessness (akathisia) 7.3%; and acute weight gain

(50%) increasing the risk of diabetes.

The data also disclosed a participant dropout rate during 6-week

clinical trials of 65%. In a one-year trial, the drop out rate rose

to 83%.

FDA reviewers found an average weight gain of almost one pound a

week for subjects during the six-week trial, and a 26-pound increase

for Zyprexa patients who remained in the trial for a year. Other

side effects included shaking, spasms, sedation, diabetic

complications, rapid heartbeat, restlessness, constipation,

seizures, liver problems, white blood cell disorders, decreased

blood pressure; and neuroleptic malignant syndrome, which are

potentially fatal.

There were also 20 deaths, including 12 suicides, in the Zyprexa

group. " Shockingly, these deaths went unreported in the scientific

literature, " Mr said, " The death cover-ups also took place in

reporting trial results of several other atypicals during the

1990s. "

In his book, Mad In America, Mr Whitaker, reported that one in every

145 subjects who entered the trials for Zyprexa, Risperdal,

Seroquel, and Serdolect had died.

And the studies reported after Zyprexa was on the market contained

no selling points either. In December 2000, the British Medical

Journal published a review of 52 randomized trials comparing

atypical antipsychotics with the older antipsychotics that concluded

there was " no clear evidence that atypical antipsychotics are more

effective or better tolerated than conventional antipsychotics. "

In November 2003, the Journal of the American Medical Association

published the results of a two-year trial comparing patients on

Zyprexa with patients on Haldol, concluding there were " no

significant differences " between the two groups and Zyprexa had no

advantage over Haldol in terms of compliance, symptoms, or overall

quality of life.

To determine whether the new atypicals were worth their price, the

National Institute of Mental Health conducted one of the largest and

longest studies ever, the Clinical Antipsychotic Trials of

Intervention Effectiveness, or CATIE. Four years and $44 million

later, the results in September 2005, concluded: the new drugs " have

no substantial advantage " over the old ones.

In 2002, P Murali Doraiswamy, the chief of biological psychiatry at

Duke University, conducted a review of adverse events reported to

the FDA by Zyprexa patients and found:

Of the 289 cases of diabetes linked to Zyprexa, 225 were newly

diagnosed cases. One hundred patients developed ketosis (a serious

complication of diabetes), and 22 developed pancreatitis, or

inflammation of the pancreas, which is life threatening. There were

also 23 deaths, including a 15-year-old patient who died of

necrotizing pancreatitis, according to the journal Pharmacotherapy,

in July 2002.

Yet with this track record, by 2003, Zyprexa was Lilly's top selling

drug with worldwide sales of over $4 billion. According to a May

2003 report in the New York Times, government programs paid for 70%

of the Zyprexa sold in the US that year. California Medicaid alone

spent over $500 million on Zyprexa, Risperdal, and Seroqual in 2003.

Apparently drug makers would have us believe that there is an

epidemic of schizophrenia in the US. The mass marketing of these

drugs is the same in states all across the country. In the past 5

years, prescription costs for Iowa Medicaid have increased 82.5%,

and by class, antipsychotics reflect the largest increase for mental

health drugs.

In 2005, while the average monthly cost for any first generation

antipsychotic to Iowa Medicaid was only $36, a month's supply for

one of the new antipsychotics cost between $100 – $1000, depending

on dose, drug and formulation, according to the December 8, 2005

Mental Health Subcommittee Report to the Medical Assistance

Pharmaceutical and Therapeutics Committee.

In fact, worldwide in 2005, antipsychotics were the fourth-highest-

ranking class of drugs in sales, and two of the top ten selling

drugs were antipsychotics.

And regardless of the thousands of lawsuits filed against Lilly

claiming Zyprexa is being illegally promoted and sold for off-label

uses, the drug is still selling like hot cakes. According to Lilly's

2006-second quarter earning report, its sales in the second quarter

totaled $1.12 billion, a 2% increase over the second quarter of

2005. US sales fell 1% to $542.9 million due to a lower demand, the

filing noted, but the lower sales were partially offset by higher

prices.

However, Zyprexa's high sales days may soon be over, according to a

July 7, 2006, press release by Decision Resources, Inc, a research

and advisory firm on pharmaceutical and healthcare issues, that says

the antipsychotic market will experience negative growth falling

from $15 billion in 2006, to a little over $10 billion in 2015.

A new Pharmacor report titled, Antipsychotics: Analysis of Disease

Markets and Emerging Agents, predicts the tumble will be due to

generic erosion, reimbursement constraints, and the lack of ground-

breaking emerging therapies.

The most severe threat to the market, the report says, is the risk

of therapeutic substitution with generic risperidone, when the drug

loses patent protection in 2008 in the US, in 2007 in Europe, and

2006 in Japan.

" The launch of generic risperidone will affect the sales of all

branded atypical antipsychotics -- both those currently on the

market and emerging drugs, " said Kate Hohenberg, director at

Decision Resources.

" Although this trend did not happen in the antidepressant arena

following Prozac's patent expiration, " she explained in the press

release, " it will happen with risperidone because of the relatively

high cost of antipsychotics and the growing reimbursement

constraints in all regions -- even in the lucrative U.S. market. "

While the public health agencies in Japan and the UK issued Zyprexa

warnings about the increased risk of diabetes in 2002, the FDA

waited until September 2003, to make Lilly add a warning.

Ironically, Lilly's second best selling product line in 2003 was

diabetes drugs, including Actos, Humulin, and Humalog, which

together had sales of $2.51 billion in 2003.

According to Ellen Liversridge, a plaintiff in the class action that

was settled in June 2005, who's 39-year-old son died as a result of

taking Zyprexa, " both the FDA and Lilly fought putting a warning on

the label, but thorough articles on the front pages of the Baltimore

Sun, Wall St. Journal, and new York Times so embarrassed the FDA

that they finally gave in to warnings. "

" The FDA required the same warning on all atypical labels, " Ellen

notes, " even though Zyprexa was associated with a 37% increase in

the risk of diabetes as compared to other atypical anti-psychotic

medications. "

" After the settlement in June 2005, " she says, " they continued to

deny the ill effects of Zyprexa, and only mentioned diabetes, not

hyperglycemia or death. "

In addition to diabetes, the new antipsychotics have been linked to

numerous other serious health problems. In a recent analysis, the

FDA found that elderly patients using Zyprexa had " a higher chance

for death than patients who did not take the medicine. "

According to Dr Louis Caplan, MD, Professor of Neurology at Harvard

Medical School, the overuse and abuse of antipsychotics may cause

the death and morbidity of patients who have been admitted to a

hospital for an acute illness.

" These drugs used to control agitation, " he said, " are often given

in high doses to very sick patients in intensive care units or on

medical and surgical units, " in the February 21, 2006, journal

Neurology, Volume 6 p 4.

" Agitation is not a disease; " he explains, " it is a symptom of

complex medical and neurological problems. "

" Unfortunately, " he notes, " the antipsychotics cause oversedation

that impairs speech and other interactions making it difficult to

take a history or perform the neurological examination. "

" They make patients feel wooden, " Dr Caplan advises, " and grossly

diminish activity and communication skills. "

When patients rebound and become more alert they naturally become

agitated and then they are knocked down again, he says, and it may

take weeks and months for the CNS effects to wear off.

" Originally, " he points out, " these antipsychotics were used for

young schizophrenic patients. "

" Old sick people with abnormal brains do not tolerate these drugs

well, " he says. " In patients with Lewy-body disease and some

Parkinsonian syndromes, their use is a disaster, setting patients

back for weeks, " he warns.

" They cause symptoms and neurological dysfunctions that are a common

reason for neurological consultations in the hospital, " Dr Caplan

warns.

Most neurologists are circumspect about their use, Dr Caplan

says, " but psychiatrists, non-neurology intensivists, and surgeons

are not, and these drugs are grossly over-prescribed and overused. "

Information for injured parties may be found at Lawyers and

Settlements.com

http://www.lawyersandsettlements.com/articles/zyprexa_lawsuit.html

Pringle

evelyn.pringle@...

Pringle is a columnist for OpEd News and investigative

journalist focused on exposing corruption in government and

corporate America.

Contact Author

August 11, 2006