Eli Lilly and the Case for a Corporate Death Penalty
By Bruce E. Levine, AlterNet
Posted on March 3, 2009, Printed on March 4, 2009
Eli Lilly & Company's rap sheet as a public menace is so
long that for Lilly watchers to overcome the
"banality-of-Lilly-sleaziness" phenomenon, the drug company must break
some type of record measuring egregiousness. Lilly obliged earlier this
year, receiving the largest criminal fine ever imposed on a corporation.
Americans are ever going to revoke the publicly granted charters of
reckless, giant corporations -- well within our rights -- we might want
to get the ball rolling with Lilly, whose recent actions appalled even
the mainstream media. And with Lilly's chums, the Bush family, out of
power, now might be the right time.
On January 15, 2009, Lilly
pled guilty to charges that it had illegally marketed its blockbuster
drug Zyprexa for unapproved uses to children and the elderly, two
populations especially vulnerable to its dangerous side effect. Lilly
plead guilty to a misdemeanor charge and agreed to pay $1.42 billion,
which included $615 million to end the criminal investigation and
approximately $800 million to settle the civil case.
One of the
eight whistle-blowers in this case, former Lilly sales representative
Robert Rudolph, says the settlement will not completely change Lilly's
business practices, and he wants jail time for executives. "You have to
remember, with Zyprexa," said Rudolph, "people lost their lives."
is not exaggerating. Zyprexa, marketed as an "atypical" antipsychotic
drug, has been promoted as having less dangerous adverse effects than
"typical" antipsychotic drugs such as Thorazine and Haldol. However, on
February 25, 2009, the Journal of the American Medical Association
reported that the rate of sudden cardiac death in patients taking
either typical or atypical antipsychotic drugs is double the death rate
of a control group of patients not taking these drugs.
though not nearly as well known as Lilly's previous blockbuster Prozac
-- is today one of the biggest-selling drugs in the world. Zyprexa has
grossed more than $39 billion since its approval in 1996, with $4.8
billion of that in 2007 (and it was projected to equal or surpass that
gross in 2008 when earnings are reported).
Lilly has had other
Zyprexa scandals, but in this current one, Lilly executives matched
Charles Dickens scoundrels. Zyprexa is approved by the Food and Drug
and Administration (FDA) for schizophrenia and bipolar disorder, but
Lilly illegally marketed it for sleep difficulties, aggression, and
other unapproved uses. Lilly sales reps aggressively pushed Zyprexa as
a wonderful drug to chill out disruptive children and the elderly who
were not schizophrenic or bipolar. The lawsuit against Lilly
stated, "In truth, this was Lilly's thinly veiled marketing of Zyprexa
as an effective chemical restraint for demanding, vulnerable and needy
Doctors can prescribe drugs for unapproved uses
(called "off-label prescribing"), but drug companies are not allowed to
market drugs for unapproved uses. Many drug companies break this rule,
but Lilly broke it with gusto. “The company made hundreds of
millions of dollars by trying to convince health care providers that
Zyprexa was safe for unapproved uses," said Laurie Magid, acting U.S.
Attorney for the Eastern District of Pennsylvania where the case was
prosecuted. Magid said that Lilly was responsible for "putting
thousands and thousands of patients at risk."
effort consisted of the Lilly sales force urging geriatricians to use
Zyprexa to sedate unruly nursing home and assisted-living facilities
patients. Lilly sales reps distributed a study claiming that elderly
patients taking Zyprexa required fewer skilled nursing staff hours than
were necessary for patients taking competing medications. Magid stated
that Lilly sales reps were "trained to use the slogan five at five,
meaning five milligrams at 5 o'clock at night will keep these elderly
patients quiet." Illegally marketing Zyprexa for elderly patients was
especially troubling for prosecutors because Zyprexa increases the
risks of heart failure and life-threatening infections such as
pneumonia in older patients.
In addition to targeting the misbehaving elderly, Lilly also targeted annoying kids. New York Times
reporters Gardiner Harris and Alex Berenson, who have been covering Eli
Lilly and Zyprexa for several years, reported on January 14, 2009, "The
company also pressed doctors to treat disruptive children with Zyprexa,
court documents show, even though the medicine's tendency to cause
severe weight gain and metabolic disorders is particularly pronounced
in children ... The children receiving Zyprexa gained so much weight
during the study that a safety monitoring panel ordered that they be
taken off the drug."
Mainstream reporters were so appalled by
Lilly's recent actions that some voiced caustic commentaries about the
relatively small price Lilly paid for its transgressions. CBS reporter
Sharyl Attkisson (January 15, 2009) noted, "Eli Lilly has pled guilty
to marketing the sometimes dangerous drug Zyprexa in ways never proven
safe or effective ... Lilly has agreed to pay $1.4 billion, including
the largest criminal fine ever imposed on a corporation. Ironically,
that's about as much as the company's Zyprexa sales in the first
quarter last year." However, the mainstream media failed to provide the
context of Lilly's horrendous history which goes back decades.
The New York Times 2009 article did at least go back as far as 2006, reminding readers of the Times exclusive on another Zyprexa scandal. In December 2006, a whistle blower handed over to the Times
hundreds of internal Lilly documents and e-mail messages among top
company managers that showed how Lilly had downplayed Zyprexa's
association with weight gain and metabolic disorders such as diabetes.
A Rolling Stone piece
earlier this year ("Marketing Lilly's Zyprexa, a Phony ‘Miracle' Drug")
details how Lilly minimized Zyprexa's relationship with dramatic weight
gain. In 1995, prior to FDA approval of Zypexa , Lilly's own panel of
experts concluded that Zyprexa produced an average weight gain of 24
pounds in a single year (one in six patients gained more than 66
pounds); that kind of weight gain can elevate blood-sugar levels and
cause diabetes. This data, however, was not submitted by Lilly to the
Lilly-Zyprexa scandals didn't just start in 2006. A 2003
Lilly-Zyprexa scandal involved Medicaid and the National Alliance for
the Mentally Ill (NAMI), ostensibly a consumer organization. That year,
Zyprexa grossed $2.63 billion in the United States, 70 percent of that
attributable to government agencies, mostly Medicaid. Zyprexa cost
approximately twice as much as similar drugs, and state Medicaid
programs, going in the red in part because of Zyprexa, were attempting
to exclude it in favor of similar, less expensive drugs. When
Kentucky's Medicaid program attempted to exclude Zyprexa -- its single
largest drug expense -- from its list of preferred medications, NAMI
bused protesters to hearings, placed full-page ads in newspapers, and
sent faxes to state officials. What NAMI did not say at the time was
that the buses, ads, and faxes were paid for by Lilly.
The Lilly-NAMI financial connection had already been exposed by Ken Silverstein in Mother Jones
in 1999. Silverstein reported that NAMI took $11.7 million from drug
companies over a three-and-a-half-year period from 1996 through 1999,
with the largest donor being Lilly, which provided $2.87 million.
Lilly's funding also included loaning NAMI a Lilly executive, who
worked at NAMI headquarters but whose salary was paid for by Lilly.
Zyprexa, in 2002 fingers were pointed at Lilly for tampering with the
Homeland Security Act. On November 25, 2002, soon after George W. Bush
signed the Act, New York Times columnist Bob Herbert discovered
what had been slipped into it at the last minute, "Buried in this
massive bill, snuck into it in the dark of night by persons unknown . .
. was a provision that – incredibly – will protect Eli Lilly and a few
other big pharmaceutical outfits from lawsuits by parents who believe
their children were harmed by thimerosal."
While it was recently
revealed that research published in 1998 that linked vaccine use to
autism was fraudulent, in 2002 the harmfulness of thimerosal (a
preservative that contains mercury and used by Lilly and other drug
companies in vaccines) was not clear. Specifically, in 1999 the
American Academy of Pediatrics and the Public Health Service had urged
vaccine makers to stop using thimerosal, and in 2001 the Institute of
Medicine concluded that the link between autism and thimerosal was
"biologically plausible." So in 2002, drug companies such as Lilly
which had used thimerosal in vaccines were nervous about what
scientists and the courts would ultimately determine.
did a drug-company protection provision get inserted in the Homeland
Security Act? Here's my bet for one of Herbert's "persons unknown." In
June 2002, then President George W. Bush had appointed Lilly's CEO,
Sidney Taurel, to a seat on his Homeland Security Advisory Council.
Ultimately even some Republican senators became embarrassed by the
drug-company protection provision, and by early 2003, moderate
Republicans and Democrats agreed to repeal that particular provision
from the Act.
The year 2002 was a banner one for "Lillygates,"
with "60 Minutes II" ultimately airing another juicy Lilly scandal.
Lilly's patent for Prozac had run out, and the drug company began
marketing a new drug, Prozac Weekly. Lilly sales representatives in
Florida gained access to patient information records, and, unsolicited,
mailed out free samples of Prozac Weekly. Though they primarily
targeted patients diagnosed with depression who were receiving
competitor antidepressants, at least one such Prozac Weekly sample was
mailed to a sixteen-year-old boy with no history of depression or
antidepressant use. Law suits followed.
The most cinematic of all
Lilly scandals began in 1989 and culminated in1997. One month after
Joseph Wesbecker began taking Lilly's antidepressant Prozac, he opened
fire with his AK-47 at his former place of employment in Louisville,
Kentucky, killing eight people and wounding twelve before taking his
own life. British journalist John Cornwell covered the trial for the London Sunday Times Magazine and ultimately wrote a book about it. Cornwell's The Power to Harm
is not simply about a disgruntled employee becoming violent after
taking Prozac; the book is about Lilly's power to corrupt a judicial
Victims of Joseph Wesbecker sued Lilly, claiming that
Prozac had pushed Wesbecker over the edge. The trial took place in 1994
but received little attention as America was obsessed at the time by
the O.J. Simpson spectacle. While Lilly had been quietly settling many
Prozac violence suits, the drug company was looking for a showcase
trial that it could actually win. Although a 1991 FDA "Blue Ribbon
Panel" investigating the association between Prozac and violence had
voted not to require Prozac to have a violence warning label, by 1994
word was getting around that five of the nine FDA panel doctors had
ties to drug companies -- two of them serving as lead investigators for
Lilly-funded Prozac studies. Thus with the FDA panel now known to be
tainted, Lilly wanted a Prozac trial it could win, and it believed that
Wesbecker's history was such that Prozac would not be seen as the cause
of his mayhem.
A crucial component of the victims' attorneys'
strategy was for the jury to hear about Lilly's history of reckless
disregard. Victims' attorneys especially wanted the jury to hear about
Lilly's anti-inflamatory drug Oraflex, introduced in 1982 but taken off
the market three months later. A U.S. Justice Department investigation
linked Oraflex to the deaths of more than one hundred patients, and
concluded that Lilly had misled the FDA. Lilly was charged with 25
counts related to mislabeling side effects and plead guilty.
the Wesbecker trial, Lilly attorneys argued that Oraflex information
would be prejudicial, and Judge John Potter initially agreed that the
jury shouldn't hear it. However, when Lilly attorneys used witnesses to
make a case for Lilly's superb system of collecting and analyzing side
effects, Judge Potter said that Lilly itself had opened the door to
evidence to the contrary, and he ruled that Oraflex information would
now be permitted. To Judge Potter's amazement, victims' attorneys never
presented the Oraflex evidence, and Eli Lilly won the case.
it was discovered why victims' attorneys remained silent about Oraflex.
In a manipulation Cornwell described as "unprecedented in any Western
court," Lilly cut a secret deal with victims' attorneys to pay them and
their clients not to introduce the Oraflex evidence. However, Judge
Potter smelled a rat and fought for an investigation, and in 1997 Lilly
quietly agreed to the verdict being changed from a Lilly victory to
"dismissed as settled."
If Americans want to take on Lilly, they
might want to do it during a time when the Bush family is out of power.
Sidney Taurel, former Lilly CEO and George W. Bush appointee to the
Homeland Security Advisory Council, is not the only Bush family-Lilly
connection. George Herbert Walker Bush once sat on the Eli Lilly board
of directors, as did Bush family crony Ken Lay, the Enron chief
convicted of fraud before his death. Mitch Daniels, George W. Bush's
first-term Director of Management and Budget, had actually been a Lilly
vice president, and in 1991 he had co-chaired a Bush-Quayle fundraiser
that collected $600,000. This is the same Mitch Daniels who is now
governor of Indiana, Lilly's home state.
Currently, the public's
right to revoke corporate charters is still recognized by the courts,
but attorneys general today rarely exercise this option, and then only
against small corporations. Loyola Law School Professor Robert Benson,
who in 1998 petitioned California's attorney general to revoke the
corporate charter of Union Oil of California (Unocal), notes that state
attorneys general "don't hesitate to draw this particular arrow from
their quivers when the target is some small, unpopular or socially
marginal enterprise." But when it comes to egregious large
multinationals, Benson concludes, "They don't even want you to know
about it because they don't want to appear to be soft on corporate
In his book When Corporations Rule the World,
David Korten, former Harvard Business School Professor writes, "In the
young American republic, there was little sense that corporations were
either inevitable or always appropriate." Early in American history,
Americans were very much concerned about any entity achieving too much
power, and so in corporate charters there were clear limits placed on:
years permitted to exist, borrowing, land ownership, extent of
enterprise, and sometimes even on profits. Korten notes that in the
first half of the nineteenth century, "Action by state legislators to
amend, revoke, or simply fail to renew corporate charters was fairly
The Program on Corporations, Law & Democracy
(POCLAD) was created in 1994, in part to inform Americans that they can
in fact revoke corporate charters. In 1890, POCLAD explains, the
highest court in New York State revoked the charter of the North River
Sugar Refining Corporation in this unanimous decision: "The judgment
sought against the defendant is one of corporate death ... the
defendant corporation has violated its charter, and failed in the
performance of its corporate duties, and that in respects so material
and important as to justify a judgment of dissolution."
drug corporations -- especially ones that make a killing selling
dangerous drugs by hyper-pathologizing people who can't defend
themselves -- get my adrenaline going; and so my candidate to get the
ball rolling is Lilly, which has now made themselves vulnerable by
getting in so much damn trouble. But with Lilly's man Mitch Daniels
currently governor of Lilly's home state, Lilly still has pull; and so
I won't be upset if some other giant sleazebag corporation receives the
death penalty before Lilly.
Given the fact that Americans already
have a history of revoking corporate charters, why shouldn't this
practice be continued? Yes we did, yes we still can, and so yes let's
Bruce E. Levine, Ph.D., is a clinical psychologist and author of Surviving America’s Depression Epidemic: How to Find Morale, Energy, and Community in a World Gone Crazy (Chelsea Green Publishing, 2007).His Web site is www.brucelevine.net
© 2009 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/129709/