Eli Lilly and Co. has paid more than $1 billion to settle legal battles over its top-selling drug Zyprexa, and it might have to write another large check soon. But a new lawsuit says the company should have known better.
Olanzapine (Zyprexa) is an atypical antipsychotic, approved by the FDA for the treatment of: schizophrenia on 1996-09-30 ; depressive episodes associated with bipolar disorder, as part of the Symbyax formulation, on 2003-12-24; acute manic episodes and maintenance treatment in bipolar disorder on 2004-01-14. The olanzapine formulations are manufactured and marketed by the pharmaceutical company Eli Lilly and Company, whose patent for olanzapine proper expires in 2011.
Two shareholders have accused Lilly executives and directors of recklessly disregarding risks posed by illegal drug marketing tactics, which have been alleged in lawsuits and newspaper articles.
Lilly spokesman Phil Belt calls the lawsuit "groundless." But it is the latest in a string of challenges over Zyprexa, which has generated billions of dollars — and reams of litigation — for Lilly.
Settling thousands of patient lawsuits over the drug, an anti-psychotic approved to treat schizophrenia, acute mania and bipolar disorder, has cost Lilly more than $1 billion. Many claims said the company failed to warn about the potential for diabetes or weight gain associated with the drug.
Lilly also could pay more than $1 billion to state and federal governments resulting from a a separate investigation, according to a report Wednesday by The New York Times.
The U.S. Attorney's office for the Eastern District of Pennsylvania is investigating Zyprexa marketing. About 30 state attorneys general also have subpoenaed documents detailing Lilly's sales practices for Zyprexa as part of a civil investigation under state consumer protection laws.
And Lilly faces lawsuits from several states and some third-party payers accusing it of promoting the "off-label" use of Zyprexa for treatments not approved by the U.S. Food and Drug Administration. A complaint filed in Utah, for instance, accuses Lilly of pushing doctors to prescribe it for conditions like Alzheimer's and dementia and depression.
Lilly representatives deny promoting these off-label uses.
Doctors are free to prescribe drugs for uses not approved by the FDA, but pharmaceutical companies are prohibited by law from marketing drugs for non FDA-approved uses.
The latest complaint, filed two weeks ago by shareholders N.A. Lambrecht and Jeffrey Jannett in U.S. District Court for the Southern District of Indiana, notes that the FDA has taken a strong stance against off-label promotion.
Lilly paid $36 million payment in 1998 to settle charges of off-label promotion for its osteoporosis drug Evista, the lawsuit says.
Three years later, TAP Pharmaceutical Products Inc. agreed to pay $875 million to settle charges it inflated prices and bribed doctors to prescribe the prostate cancer drug Lupron.
Belt, the Lilly spokesman, noted that the complaint was spurred in part by New York Times articles detailing the off-label allegations.
Beginning in late 2006, a series of articles in the Times, based on confidential documents, said Lilly downplayed the drug's risks and did off-label marketing.
"Those stories were full of inaccurate, incomplete and what we would say was misleading information," Belt said.
Nevertheless, he said the company's board has appointed a committee to complete a "thorough and importantly independent assessment" of the lawsuit's allegations.
Zyprexa was Lilly's top selling drug last year. It rang up $4.8 billion and accounted for 25 percent of the company's total sales.
The Times, citing anonymous sources, reported Wednesday that federal prosecutors are exploring a settlement of their investigation with Lilly, and the company could wind up paying more than $1 billion.
The company has declined to comment on that, as has Patty Hartman, a spokeswoman for the U.S. Attorney's office for the Eastern District of Pennsylvania.
Lehman Brothers analyst Tony Butler questioned whether a $1 billion settlement was in the works, saying the amount seemed "awfully large."
The federal government, however, has a history of levying hefty punishment on companies for this practice. Last year, Schering Sales Corp. and its parent, Schering-Plough Corp., were ordered to pay $435 million as part of a Justice Department settlement over accusations that it improperly marketed drugs for unapproved uses and lied to the government about drug prices.
Paying a big settlement over Zyprexa would amount to a "little bit of a black eye," for Lilly said George Farra, co-founder and principal of Woodley Farra Manion Portfolio Management. His firm manages about 284,000 Lilly shares.
"On the other hand it hopefully removes Zyprexa from the headlines regarding how its been marketed," he said.
Two shareholders have accused Lilly executives and directors of recklessly disregarding risks posed by illegal drug marketing tactics, which have been alleged in lawsuits and newspaper articles.
Lilly spokesman Phil Belt calls the lawsuit "groundless." But it is the latest in a string of challenges over Zyprexa, which has generated billions of dollars — and reams of litigation — for Lilly.
Settling thousands of patient lawsuits over the drug, an anti-psychotic approved to treat schizophrenia, acute mania and bipolar disorder, has cost Lilly more than $1 billion. Many claims said the company failed to warn about the potential for diabetes or weight gain associated with the drug.
Lilly also could pay more than $1 billion to state and federal governments resulting from a a separate investigation, according to a report Wednesday by The New York Times.
The U.S. Attorney's office for the Eastern District of Pennsylvania is investigating Zyprexa marketing. About 30 state attorneys general also have subpoenaed documents detailing Lilly's sales practices for Zyprexa as part of a civil investigation under state consumer protection laws.
And Lilly faces lawsuits from several states and some third-party payers accusing it of promoting the "off-label" use of Zyprexa for treatments not approved by the U.S. Food and Drug Administration. A complaint filed in Utah, for instance, accuses Lilly of pushing doctors to prescribe it for conditions like Alzheimer's and dementia and depression.
Lilly representatives deny promoting these off-label uses.
Doctors are free to prescribe drugs for uses not approved by the FDA, but pharmaceutical companies are prohibited by law from marketing drugs for non FDA-approved uses.
The latest complaint, filed two weeks ago by shareholders N.A. Lambrecht and Jeffrey Jannett in U.S. District Court for the Southern District of Indiana, notes that the FDA has taken a strong stance against off-label promotion.
Lilly paid $36 million payment in 1998 to settle charges of off-label promotion for its osteoporosis drug Evista, the lawsuit says.
Three years later, TAP Pharmaceutical Products Inc. agreed to pay $875 million to settle charges it inflated prices and bribed doctors to prescribe the prostate cancer drug Lupron.
Belt, the Lilly spokesman, noted that the complaint was spurred in part by New York Times articles detailing the off-label allegations.
Beginning in late 2006, a series of articles in the Times, based on confidential documents, said Lilly downplayed the drug's risks and did off-label marketing.
"Those stories were full of inaccurate, incomplete and what we would say was misleading information," Belt said.
Nevertheless, he said the company's board has appointed a committee to complete a "thorough and importantly independent assessment" of the lawsuit's allegations.
Zyprexa was Lilly's top selling drug last year. It rang up $4.8 billion and accounted for 25 percent of the company's total sales.
The Times, citing anonymous sources, reported Wednesday that federal prosecutors are exploring a settlement of their investigation with Lilly, and the company could wind up paying more than $1 billion.
The company has declined to comment on that, as has Patty Hartman, a spokeswoman for the U.S. Attorney's office for the Eastern District of Pennsylvania.
Lehman Brothers analyst Tony Butler questioned whether a $1 billion settlement was in the works, saying the amount seemed "awfully large."
The federal government, however, has a history of levying hefty punishment on companies for this practice. Last year, Schering Sales Corp. and its parent, Schering-Plough Corp., were ordered to pay $435 million as part of a Justice Department settlement over accusations that it improperly marketed drugs for unapproved uses and lied to the government about drug prices.
Paying a big settlement over Zyprexa would amount to a "little bit of a black eye," for Lilly said George Farra, co-founder and principal of Woodley Farra Manion Portfolio Management. His firm manages about 284,000 Lilly shares.
"On the other hand it hopefully removes Zyprexa from the headlines regarding how its been marketed," he said.
