Drug company battles Alaska in court case

Posted: Monday, March 03, 2008

INDIANAPOLIS - Eli Lilly and Co. finally heads to court next week to fight the long-standing accusation that it failed to warn doctors and patients about complications tied to its top-selling drug Zyprexa.

Lilly will face the state of Alaska in a trial in Anchorage that centers on Medicaid patients who use Zyprexa, an anti-psychotic that treats schizophrenia and bipolar disorder. Alaska is the first of nine states suing Lilly over Zyprexa to head to trial.

Alaska sued Lilly two years ago, claiming the drug maker failed to warn the state, doctors, patients and even the Food and Drug Administration about Zyprexa's risks.

Lilly officials say the drug helps tame the most serious mental illnesses by eliminating hallucinations and allowing patients to function in society. But Zyprexa also has been linked to weight gain and high blood-sugar levels, both of which contribute to diabetes.

The state said in its complaint that Medicaid patients have suffered serious health problems after taking Zyprexa, forcing Alaska to cover additional treatment.

The state accuses Lilly of "consciously placing company profits above the public safety," according to a complaint filed in state court.

Lilly says it held nothing back about the drug.

"We have at all times disclosed important safety information to physicians, and we stand behind our sales and marketing practices," said Mike Harrington, Lilly's deputy general counsel.

Other states suing Lilly include Utah, Pennsylvania, West Virginia, Montana, Louisiana, New Mexico, Mississippi and South Carolina. Harrington declined to say whether the trial will affect those cases, which are pending.

"Our plan is to try this case and move on to the next one," he said. "We've got good arguments, and we'll make these arguments in future cases as they come along."

Zyprexa brought in $4.8 billion in sales last year, but Lilly has faced layers of litigation over the drug. The company has spent more than $1 billion to settle product liability claims from patients over Zyprexa, with many also alleging inadequate warnings.

About 1,200 cases remain, and some trials are slated to start in June.

Lilly won a pretrial argument last week in Alaska, when a judge dismissed a claim that the company pushed Zyprexa for off-label uses, or those not approved by the FDA.

Alaska had accused Lilly of marketing Zyprexa for several non-approved uses like Alzheimer's disease, Tourette's Syndrome and autism.

"What we've been saying all along is we only promote our medications for approved uses," spokeswoman Tarra Ryker said.

However, the company still faces similar claims in the other state lawsuits, and the U.S. Attorney's office for the Eastern District of Pennsylvania also is investigating Zyprexa marketing.

"We're cooperating with the Justice Department and we have discussions with them from time to time, but anything beyond that is pretty speculative," Harrington said.

Jury selection is scheduled to start Tuesday in the Alaska case. But Lilly filed a motion Friday asking for a delay so the Alaska Supreme Court can review its argument to dismiss the remaining claim about inadequate warning.

Analysts say these trials don't raise a lot of concern on Wall Street, where many view them as a normal part of business for drug companies.

"We've seen multiple drug companies in the past year or two paying big chunks to states to reimburse them," said Dr. Jon LeCroy, an analyst who follows Lilly for Natixis Bleichroeder Inc. "It's just expected."

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