Lilly Settles With 18,000 Over Zyprexa

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By ALEX BERENSON
Published: January 5, 2007
Eli Lilly agreed yesterday to pay up to $500 million to settle 18,000
lawsuits from people who claimed they had developed diabetes or other
diseases after taking Zyprexa, Lilly's drug for schizophrenia and
bipolar disorder.

Including earlier settlements over Zyprexa, Lilly has now agreed to pay
at least $1.2 billion to 28,500 people who said they were injured by
the drug. At least 1,200 suits are still pending, the company said.
About 20 million people worldwide have taken Zyprexa since its
introduction in 1996.

The settlement covers cases filed in state and federal courts by law
firms or groups of firms for 18,000 clients, Lilly said. The federal
suits have been overseen in Brooklyn by Judge Jack B. Weinstein of the
Eastern District of New York.

The settlement will not affect continuing civil or criminal
investigations of Zyprexa by state attorneys general and federal
prosecutors.

Both Lilly and lawyers for plaintiffs said they were pleased with the
agreement. With global sales of roughly $4.2 billion last year, Zyprexa
is Lilly's largest-selling drug and a major contributor to the
company's profits. Lilly shares were relatively flat after the
settlement announcement. They rose 11 cents yesterday, to $52.36.

Zyprexa is the brand name for olanzapine, a potent chemical that binds
to receptors in the brain to reduce psychotic hallucinations and
delusions. Clinical trials show that in many patients, Zyprexa also
causes severe weight gain and increases in cholesterol and blood sugar.

Documents provided to The New York Times last month by a lawyer who
represents mentally ill patients show that Lilly played down the risks
of Zyprexa to doctors as the drug's sales soared after its
introduction in 1996. The internal documents show that in Lilly's
clinical trials, 16 percent of people taking Zyprexa gained more than
66 pounds after a year on the drug, a far higher figure than the
company disclosed to doctors.

The documents also show that Lilly marketed the drug as appropriate for
patients who did not meet accepted diagnoses of schizophrenia or
bipolar disorder, Zyprexa's only approved uses. By law, drug makers
may promote their drugs only for diseases for which the Food and Drug
Administration has found the medicines to be safe and effective, though
doctors may prescribe drugs in any way they see fit.

In response to questions about the information in the documents, Lilly
has denied any wrongdoing and said it provided all relevant information
to doctors and the F.D.A. Lilly has also said it did not promote
Zyprexa for conditions other than schizophrenia or bipolar disorder.

In 2004, a panel of the American Diabetes Association found that
Zyprexa caused diabetes more than other widely used antipsychotic
drugs, in part because it tends to cause much more weight gain. But the
F.D.A. has never made a similar finding. Instead, the F.D.A. added a
warning in 2003 to the label of Zyprexa and other new antipsychotic
drugs about their tendency to cause high blood sugar.

In 2005, a $700 million agreement covered 8,000 patients, and the
company has made 2,500 individual settlements whose total value has not
been disclosed, Lilly said. The 2005 settlement valued claims at about
$90,000 a plaintiff, while yesterday's agreement values claims at
about $27,000 a plaintiff, at most.

The lower value for the new claims comes in part because of the F.D.A.
label change, which has allowed Lilly to say that it adequately warned
doctors of the risks of Zyprexa after 2003. The label change may also
help to protect Lilly from future lawsuits, analysts and lawyers say.

In its statement, Lilly said the settlement did not change its view
that Zyprexa is a safe and effective treatment for mental illness.

"We wanted to reduce significant uncertainties involved in litigating
such complex cases," Sidney Taurel, Lilly's chief executive, said
in the statement.

Richard Meadow, one of the lead lawyers for the plaintiffs, said the
deal was fair to both sides. "Prolonging this litigation further is
in no one's best interest," he said.