Flashback: Zyprexa 2008, WSJ Alaska Settlement Article

By 
• AVERY JOHNSON

Eli Lilly & Co. struck a $15 million settlement with the State of Alaska that closes the book on a potentially costly trial over the antipsychotic medicine Zyprexa.

Zyprexa, which notched $4.8 billion in sales last year, is approved by the Food & Drug Administration to treat schizophrenia and bipolar disorder. Thousands of product-liability suits have been filed against Lilly, alleging the company didn't adequately disclose information about Zyprexa's links to weight gain and diabetes. Other suits claim Lilly pushed the drug for unapproved purposes, causing state Medicaid programs and third-party payers to bear unwarranted costs.

Lilly already has reached a $1.2 billion settlement with 31,000 plaintiffs. It still faces nine cases filed by other state attorneys general, 1,600 by individual plaintiffs, and others by shareholders and third-party payers such as insurers.

In addition, Lilly is in talks with the U.S. attorney for the eastern district of Pennsylvania to resolve a probe into the Indianapolis drug maker's marketing practices.

The central issue in Alaska's suit, which sought $5,000 for each of the roughly 200,000 Zyprexa prescriptions written for state residents, was whether Alaska's consumers were deceived because Lilly failed to adequately warn about a link to diabetes.

Before Tuesday night's settlement ended the three-week trial, closing arguments had been set to begin as early as Friday.

Lilly didn't admit any wrongdoing and said it settled to avoid having the trial drag on. "This represented, from the company's perspective, a very good way to resolve this matter and get back to business," said Nina Gussack of Pepper Hamilton LLP, a law firm representing Lilly.

Alaska Assistant Attorney General Ed Sniffen said the state took the deal because damages would be difficult to prove and the certainty that Lilly would appeal an unfavorable verdict made a final outcome uncertain. He said $200 million would have been the "best-case scenario," but added that, "at the end of the day, our original estimates kept getting refined, and as the trial went on it became clear that we could take some money now or risk more later."

Anchorage Superior Court Judge Mark Rindner bolstered the state's position last week when he said the FDA has proven incapable of policing drug regulation, according to an Associated Press report.

But both Lilly and the state also were anticipating a U.S. Supreme Court ruling this fall on whether FDA approval pre-empts state claims regarding drug defects. A decision in favor of pre-emption could have made moot any judgment in Alaska's favor.

While the $15 million is a fraction of the penalties the state sought, it is a substantial sum relative to Alaska's population of 670,000. The attorneys general for other states that have sued -- as well as those for the roughly 30 states with Zyprexa probes under way -- could use their larger populations to multiply any claims based on the Alaska settlement, says Edward Sherman, a specialist in complex litigation at Tulane University Law School in New Orleans.

A clause built into Tuesday's deal requires the company to pay Alaska more per capita if any other state gets a better deal.

Ms. Gussack said Lilly would consider each claim separately and that $15 million wouldn't be a benchmark. She said "the reason the number is so small is because Lilly's defense was so good," not because Alaska's population is small.

Connecticut Attorney General Richard Blumenthal, who filed suit against Lilly March 11, said he was "highly encouraged" by the Alaska settlement.

Write to Avery Johnson at avery.johnson@WSJ.com

Eli Lilly’s Zyprexa: Profit Outweighs Patient Risk?

Here’s a few alarming notes gleaned from “Bitter Pill,” the February 5, 2009 Rolling Stone expose, written by Ben Wallace-Wells, about Elli Lilly’s “atypical antipsychotic” (or AA) blockbuster drug,  Zyprexa (olanzapine).

The Perils of Aggressive Marketing

In 2001 when Eli Lilly’s patent on their blockbuster antidepressant drug Prozac (which produced nearly a third of the company’s total revenues) was set to expire, Lilly “bet the farm” that Zyprexa would prove to be their next blockbuster product. It was hoped that this new “atypical antipsychotic” Zyprexa would match or top the success of clozapine in treating schizophrenia, while mitigating those chemicals that caused the devastating extrapyramidal movement disorders of the older antipsychotics.

On September 30^th, 1996 the FDA approved Zyprexa for the treatment of schizophrenia, making it the fastest “drug to market” in history. The drug label did little to warn doctors and consumers of a sizeable risk for severe weight gain or hyperglycemia, even though internal Lilly documents raised concerns about these side effects. It would be nine years before a comprehensive government study would reverse claims of a safer “side effect” efficacy that surrounded Zyprexa and the other AAs, and raise disturbing questions about hidden risks.

Due to aggressive “off-label” marketing campaigns, AAs as a class swelled beyond their original “marked territory” (estimated at $170 million for schizoprenia), far exceeding the country’s supply of schizophrenic brains, with sales zooming past $2 billion, all the way to $16 billion by the 1990s.

A Lilly company memo stressed, “The ability of Eli Lilly to remain independent and emerge as the fastest-growing pharma company of the decade depends solely on our ability to achieve world-class commercialization of Zyprexa.” The sales problem was there simply weren’t enough schizophrenics in the world as such to save Lilly’s bottom line.

Even as studies slowly emerged that criticized the side effects, Zyprexa continued to win market share.

As  Zyprexa and AAs expanded their marketing campaigns to treat “off-label” conditions beyond schizophrenia, by 2006 they were so successful that nearly 1 in 5 children who visited a psychiatrist’s office left with a prescription for the drugs. Meanwhile, there was little evidence that Zyprexa really did any good for these off-label uses. Even so, this lack of science didn’t deter doctors from prescribing them to children.

By 2001, more than 20 million people had taken Zyprexa. In 2007, the drug generated $4.78 billion, 25% of Lilly’s total revenue.

A Terrible Side Effect Emerges -- Risky Weight Gain

Some medical researchers say the AA drugs may eventually be responsible for tens of thousands of cases of diabetes and other potentially fatal diseases.

While the extrapyramidal movement disorders seemed to be diminished as hoped,  Zyprexa caused a startling amount of weight gain. By the end of just one week, physicians often noted dramatic weight gain, and by the end of a year, some of the patients had gained up to 125 pounds.

In an Indiana University study, a group of male students were given 10 mg/day to test the side effects. Within two weeks the students had gained 5 pounds more than those in a control group. Taking 10 mg was the equivalent of eating 1500 additional calories every day. Some students gained 15 pounds in two weeks.

While Eli Lilly’s experts concluded from their own studies that Zyprexa only caused an average weight of 24 pounds a year, other clinical trials later found 1 in 6 patients gained more than 66 pounds in a year. Such a staggering side effect could raise a patient’s blood sugar – an indication the drug could cause diabetes.

However, relying on conflicting studies provided by Eli Lilly, the FDA instead concluded that patients would only have an average weight gain of 11 pounds.

It was later found that kids prescribed the drug have gained as much as 35 pounds, in as little as 8 weeks, and also have seen their cholesterol and insulin levels rise.

Upon the point of reaching 5,000,000 users, a senior Lilly scientist estimated that Zyprexa had caused as many as 100,000 (2%) of those users to gain 90 pounds. The health risks of that kind of weight gain are profound. Internally, Lilly’s own experts were criticizing the company for covering up the link between Zyprexa and diabetes.

Lilly has agreed to pay a $2.6 billion fee to settle charges (without admitting guilt) that it built the market first by concealing its side effects, and then by marketing it “off label” for diseases for which it had not been approved by the FDA.