Healthy Skepticism Library item: 13337

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Publication type: news

Demer L.
State settles lawsuit over lack of warnings on dangerous drug
Anchorage Daily News 2008 Mar 27
http://www.adn.com/front/story/357247.html

Full text:

Eli Lilly to pay $15 million in first of many cases

Just days before its case would have gone to a jury, the state settled a lawsuit against Eli Lilly over the drug Zyprexa for $15 million in a deal that disappointed lawyers fighting in court for the state but was still a “good result,” according to Attorney General Talis Colberg.

The state of Alaska sued for unspecific millions to cover costs to the state Medicaid program for treating what it said were Zyprexa-related health problems, including diabetes and severe weight gain.

Had the case gone to a jury, whoever lost would have appealed and the matter wouldn’t have been decided for months if not years, lawyers said.

Evidence presented during the trial in Anchorage Superior Court suggested Lilly failed to clearly warn doctors of dangerous side effects because company officials worried it would reduce sales. Testimony began March 6.

Zyprexa is a widely used anti-psychotic and Lilly’s best selling product worldwide.

A team of Outside lawyers in court every day for the state didn’t want to settle. One of them, Scott Allen of Houston, Texas, didn’t show up Wednesday for the announcement.

“I got the sense they were disappointed and I don’t blame them,” said Ed Sniffen, a senior assistant attorney general who supervised the case for the state.

Sniffen said the decision to settle was made by Colberg and based on an analysis of how much damages the state would likely be able to prove to a second jury that would be seated to make that judgment.

If the judge had allowed every Zyprexa prescription written for Medicaid patients to count as a violation of the state’s unfair trade practices act, the state could have won $200 million. And that’s at the minimum $1,000 penalty for each of 200,000 prescriptions written over multiple years, Sniffen said.

But Superior Court Judge Mark Rindner indicated he wasn’t going to count each prescription, Sniffen said.

Beyond that, the state was seeking damages for out-of-pocket Medicaid costs for treating Zyprexa-related health problems.

Nine other states have suits pending against Lilly, and another 1,200 private individuals are awaiting trial Outside. The Alaska suit was the first to go before a jury. It was seen as a test of evidence on both sides, a harbinger of how both Lilly and the many plaintiffs might fare in other courtrooms.

So, who won? Lawyers for Lilly were calling the settlement “appropriate and reasonable” in Anchorage on Wednesday. Investors bid up the stock price for Eli Lilly shares during the day, raising the value of the company on a day that prices for other drug companies and the overall market fell.

“I think other states will have to realize Lilly is serious about defending this life-saving medication,” said Andrew Rogoff, a Philadelphia-based lawyer for Lilly.

According to the settlement, the $15 million can be adjusted upwards if necessary to make sure that Alaska gets treated as well as any other state that settles with Lilly.

The Outside lawyers hired by the state will get 20 percent of the $15 million, plus costs, which should amount to about a half-million dollars, Sniffen said. In all, about $3.5 million of the $15 million will go to the lawyers, he said.

Those lawyers also represent many of the other plaintiffs.

The settlement was announced late Tuesday night in a press release from Eli Lilly headquarters in Indiana and shared with the jury when court convened here Wednesday.

Jurors, some of whom filled legal pads with notes during the trial, seemed surprised when Rindner told them they would not be asked for a verdict. Afterward, they talked about their views of the case with lawyers and the judge, sharing what they thought for the first time.

Three of the 12 jurors were leaning toward Lilly and the rest were for the state, but the Lilly-leaning group probably would have gone the state’s way after talking it out, said juror No. 1, Dennis Jump, who counted himself in the minority.

“I guess in the end, Lilly … pushed a line and they probably at points pushed it too far,” Jump said. He thought the benefits of Zyprexa for conditions like schizophrenia outweighed the risks, but not for depression, a market that Lilly hoped to reach.

Zyprexa was approved by the federal Food and Drug Administration in 1996 for treatment of schizophrenia and later for bi-polar disorder.

Rindner ruled before the trial to exclude a state claim that Lilly improperly promoted the drug for other conditions, but state lawyers still got in some evidence about off-label use though they didn’t call it that. Jurors heard testimony about a 2001 guide for Lilly sales representatives that pitched Zyprexa as treatment for depression and mood changes.

Jennifer Mitchell, another juror, said she was disappointed she didn’t get to hear all of Lilly’s evidence “but that said, the State of Alaska had a really strong case.”

Internal Lilly e-mail presented by the state in which one executive urged the company to come clean especially struck her, she said. While Lilly may not have known at the start about Zyprexa’s serious health risks, once the drug had been on the market a couple of years, the company had enough reports about “adverse reactions” to put a clear warning on its label, she said.

“A definite cover-up,” is how another juror, Misty Steed, described Lilly’s tactics. Lilly was trying to minimize the risks and it tortured the data from studies, she said.

The jurors all knew they were sitting on an important case.

“I was concerned about what this is doing not only to Alaska, but also the nation,” Steed said.

“The jurors got it,” said Tommy Fibich, a Houston lawyer on the state team. “There were some people on there that absolutely blew me away with the breadth of the knowledge of some of the subtleties and nuances of our evidence.”

“It’s not that it was a bad drug or needed to be taken off the market,” Fibich said. But patients should know about the risks, state lawyers said, and Lilly didn’t give enough warning until the label was changed in October 2007.

Zyprexa is still being used to treat psychiatric patients in Alaska, and Medicaid is still covering its costs. Lilly acknowledges that Zyprexa causes weight gain but says there’s no proof even now that it causes diabetes, only that obesity is a risk factor for the disease.

Each side relied heavily on expert witnesses and studies that essentially canceled each other out, said Jump, the juror.

“Where’s the army of Alaskan doctors who are mad and said Lilly’s people came into our office and bald-faced lied to me?” Jump asked.

The settlement talks were mediated by Superior Court Judge Morgan Christen. On Tuesday, as the trial continued to unfold, Nina Gussack, a Philadelphia-based lawyer for Lilly, and Sniffen were absent from the courtroom, making the deal.

Rindner told the lawyers Wednesday they had covered every possible angle in presenting their sides.

Gussack said none of the lawyers ever before had a judge willing to meet them on weekends or after hours to pick up additional paperwork to review.

Both sides relied on high-tech electronics of the sort not usually seen in Alaska state court. And an Outside media business provided live video feeds of the trial to paying clients.