Healthy Skepticism Library item: 14249

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Hurtado P, Van Voris B
Lilly Zyprexa Group Buyers Win Class Action Status
Bloomberg.com 2008 Sep 5
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1xvxgo48su0

Full text:

A U.S. judge ruled that pension funds, labor unions and insurance companies that bought Eli Lilly & Co. ‘s Zyprexa drug could sue as a group and were entitled to a jury trial of claims the medicine was overpriced.

Zyprexa is approved to treat schizophrenia and bipolar disorder. The plaintiffs claim Lilly, based in Indianapolis, Indiana, urged doctors to prescribe Zyprexa for uses not approved by the U.S. Food and Drug Administration.

The institutional buyers, who sought $6.8 billion in damages, claim Lilly overpriced the drug by making excessive claims about Zyprexa’s usefulness, violating the Racketeer- Influenced and Corrupt Organizations Act, or RICO. Zyprexa was the company’s top-selling drug last year, with $4.76 billion in sales.

``There is sufficient evidence of fraud’‘ by Lilly in selling the drug to justify a jury trial, said U.S. District Judge Jack Weinstein, in a 294-page decision issued today in Brooklyn, New York.

The judge certified the case as a class action on the RICO claims for all plaintiffs except individual patients who bought the drug, rejecting Lilly arguments that the pension funds, union and insurance companies had claims too different to be tried together. These plaintiffs, so-called ``third-party payors,’‘ bought the drug for members or customers.

Today’s ruling is nearly identical to a draft of the decision that Weinstein issued July 2, as part of an attempt to persuade both sides to settle. Class certification gives the plaintiffs more leverage to settle the dispute.

Damages Sought

All the plaintiffs were initially seeking as much as $7.7 billion in damages covering a 10-year period. The ruling limits the time frame for damages to four years, from June 20, 2001 until June 20, 2005 when the suit was filed. The third-party payors had claimed damages for as far back as 1996.

Without the individual patients who paid for Zyprexa themselves, damages sought by the other plaintiffs were as high as $6.8 billion over the ten-year period, Weinstein said.

Weinstein said the third-party payors include: the United Federation of Teachers Welfare Fund , or UFCW, a Philadelphia- based fund representing 20,000 food and commercial workers; Mid- West Life Insurance and the Sergeant Benevolent Association Health and Welfare Fund, which represents current and retired New York City Police sergeants and their families — 33,000 people.

The judge denied class-action status to individuals with claims because he found their proposed leaders can’t properly represent the proposed class. ``They have a conflict of interest since they are suing Lilly for personal injury,’‘ he said.

350 Documents

Weinstein permitted the parties to make an immediate appeal of his class certification to a U.S. appeals court in New York. In April, that court reversed Weinstein’s decision to certify a nationwide class of light cigarette smokers in a case claiming as much as $800 billion from U.S. tobacco companies.

The judge also granted the plaintiffs’ motion for an order to unseal about 350 documents previously designated as confidential in the case. He immediately stayed that order too to give Lilly a chance to appeal it.

``Lilly’s legitimate interest in confidentiality does not outweigh the public interest in disclosure at this stage of the litigation,’‘ Weinstein said. ``The documents are now so outdated that unsealing will not significantly harm Lilly.’‘

He said access to the documents was warranted, ``because this litigation involves issues of great public interest, the health of hundreds of thousands of people, fundamental questions about our system of approval and monitoring of pharmaceutical products, and the funding for many health and insurance benefit plans.’‘

Lilly Comment

Lilly spokeswoman Marni Lemons said the company will appeal the class certification ruling which it regards as being ``in error.’‘ The company won’t contest the document order, she said.

Lemons said the judge recognized in his opinion that Zyprexa is a valuable and effective medicine that has reduced hospital costs for many patients. The information that has become public in recent years hasn’t convinced insurers to remove Zyprexa from their lists of approved drugs, she said.

Lilly fell 65 cents to $45.44 in New York Stock Exchange composite trading.

The case is: UFCW Local 1776 and Participating Employers Health and Welfare Fund v. Eli Lilly and Co., No. 05-CV-4115, U.S. District Court, Eastern District of New York (Brooklyn).