The Wall Street Journal Home Page
WELCOME jimgotts | Log Out
My Account Messages Preferences
As of Thursday, February 28, 2008Set My Home Page|Customer Service
Today's Newspaper
My Online Journal
Multimedia & Online Extras
Markets Data & Tools
Special Offer
Subscribe to the print Journal today and receive 8 weeks FREE! Click Here!
Advertiser Links
Click to email this article Click to email this article Click to format this article for printing Click to format this article for printing View a list of most popular articles on our site
Also read these stories:
NEW: Sign up now for Keyword or Symbol Alerts. Click here
Don't miss the latest health news and analysis. Sign up to receive our daily newsletter. Check the box, then click below to subscribe.
In Today's Paper
The Health Edition
To view all or change any of your e-mail settings, click to the E-Mail Setup Center
Dow Jones, Reuters

* At Market Close
Personalized Home Page Setup
Put headlines on your homepage about the companies, industries and topics that interest you most.

Lilly Faces Initial Zyprexa Trial

Alaska's Civil Suit Might Set
Pattern for Other Actions
February 28, 2008; Page D6

Eli Lilly & Co. is set to square off next week in the first trial over its schizophrenia drug Zyprexa, defending a civil suit by the state of Alaska that will be closely watched by state and federal prosecutors investigating the drug company.

The trial's outcome -- or even evidence introduced along the way -- could influence fragile settlement talks under way with the U.S. Attorney for the Eastern District of Pennsylvania and state attorneys general. An unfavorable verdict for Lilly might also embolden other states to file suit.


Plaintiffs and prosecutors have alleged for years that the Indianapolis drug maker failed to adequately warn that its powerful antipsychotic drug could lead to inordinate weight gain and diabetes. Lilly, which has sold about $35 billion of Zyprexa since its 1996 launch, has set aside $1.2 billion to settle with about 31,000 private claimants. But an additional 1,200 private suits are pending, and the company hasn't been able to strike a deal with public-sector plaintiffs.

Alaska accuses the company of failing to warn patients of Zyprexa's side effects, and of making deceptive claims in marketing the drug. Its 2006 complaint, filed by the state's attorney general, also alleges that Lilly improperly marketed Zyprexa "off-label" to the state's Medicaid recipients, costing Alaska more than it should have to reimburse patients. The state's Medicaid program spent about $40 million on Zyprexa in the past five years, about a third of it for off-label uses.

Lilly assistant general counsel Michael Harrington said the state wants to penalize Lilly for allegedly misleading consumers, while Alaska's own officials have, in other court proceedings, compelled mentally ill patients to use Zyprexa. One of the state's experts conceded in a deposition that some patients respond differently -- and sometimes better -- to antipsychotic drugs including Zyprexa, which could also bolster Lilly's defense.

Zyprexa is approved by the Food and Drug Administration to treat schizophrenia and bipolar disorder, but plaintiffs claim Lilly improperly promoted it for other uses such as dementia and depression. Because Lilly didn't disclose that the drug could lead to diabetes, the state alleges, its Medicaid program is also bearing the cost of treating that disease.

The allegations overlap somewhat with those being investigated by federal prosecutors, who launched a probe in 2004 and served Lilly with a grand jury subpoena late last year. The subpoena, which raises the possibility of a criminal indictment, heightened the urgency around a settlement. The course of the Alaska trial is likely to help both Lilly and the government calibrate their stances. The trial also could influence whether some 30 other states that are investigating the company opt to sue rather than join a settlement.

"A big verdict against Lilly in Alaska will either force a quick resolution in Philadelphia or the feds saying, 'The old offers are no longer on the table because we can get a lot more money,' " says Patrick Burns at Taxpayers Against Fraud, a Washington group that represents workers who allege misbehavior by their employers.

Connecticut Attorney General Richard Blumenthal recently withdrew from negotiations among Lilly and state and federal prosecutors, citing "reservations about the allocation of monies and the roles of individual states" in those talks.

Eight other states have pending Zyprexa litigation, meanwhile, and a victory by Alaska could persuade more to sue.

Conversely, a favorable result for Lilly could harden its stance.

The case could settle before next week's start of jury selection in Superior Court in Anchorage, though the parties remain far apart on numbers: Lilly floated an offer of about $2 million and Alaska wants closer to $200 million, according to lawyers who attended a recent mediation session.

"The feds have investigated these folks, and it seems like this one [case] in particular had some good evidence," said Ed Sniffen, senior assistant attorney general in charge of the case for Alaska.

The first part of the trial will address whether Lilly warned physicians of the diabetes risk and misled consumers. A second phase would look at damages in the event Lilly loses on the merits. Under Alaska's consumer-protection laws, the state is asking for $5,000 for each of the roughly 200,000 Zyprexa prescriptions written for residents since 2002.

Write to Avery Johnson at

More related content Powered by Sphere
Click to format this article for printing Click to format this article for printing  View a list of most popular articles on our site Find out about distributing multiple copies of this article Find out about distributing multiple copies of this article 
Blank ImageSponsored byBlank Image
Return To Top
WSJ Digital Network:
AllThingsDigital|Dow Jones News Alerts|MORE
Log Out   Contact Us   Help   Email Setup   My Account/Billing  Customer Service: Online | Print
Privacy Policy   Subscriber Agreement & Terms of Use   Copyright Policy   Mobile Devices   RSS Feeds
Copyright © 2008 Dow Jones & Company, Inc. All Rights Reserved