Eli Lilly and Co. has reached an unusually early settlement with trial lawyers on 8,000 claims of damages over the Indianapolis-based company's top-selling drug Zyprexa. The $690 million settlement, announced last Thursday, came after only five plaintiffs had given depositions in the mass litigation and before any substantive depositions had been taken from Lilly executives or scientists. The deal is the largest settlement Lilly has undertaken of product liability claims against any of its drugs.
"While we believe the claims are without merit, we took this difficult step because we believe it is in the best interest of the company, the patients who depend on this medication and their doctors," Sidney Taurel, chairman, president and chief executive officer of Eli Lilly and Co., said in a statement released last week.
"Our decision to resolve these claims does not change the fact that Zyprexa has and will continue to improve the lives of millions of patients around the world who are suffering from schizophrenia and bipolar disorder. This settlement will enable Lilly to focus first and foremost on addressing unmet medical needs through research, educational programs and partnerships with doctors and patients," Taurel said.
Zyprexa is prescribed in the United States for the short- and long-term treatment of schizophrenia, acute mixed and manic episodes of bipolar 1 disorder and maintenance treatment of bipolar disorder. Since Zyprexa was introduced in 1996, it has been prescribed to more than 17 million people worldwide.
Most of the lawsuits claimed that before September 2003, the information in the medication label, which listed the risk of hyperglycemia and diabetes as an infrequent adverse event since 1996, was not adequately displayed. In September 2003, the FDA required label changes for all atypical antipsychotics to warn against this risk.
Lilly's legal liability to claims from new patients declined after the company sent a letter to doctors March 2004 warning that Zyprexa could cause the diabetes-related problems that are at issue in the proposed settlement.
According to the current warning label, hyperglycemia, in some cases extreme and associated with coma or death, has been reported in patients treated with atypical antipsychotics including Zyprexa. The most common side effects associated with Zyprexa in short-term schizophrenia and bipolar mania trials are excessive drowsiness. Other common effects include dizziness, weight gain, personality disorder, constipation, hypotension, increased appetite and tremor.
In 2002, British and Japanese regulatory agencies warned that Zyprexa may be linked to diabetes, but even after the FDA issued a similar warning in 2003, Lilly's Zyprexa remained on the market with only minor changes on warning labels. The drug had become especially vital to Lilly since Prozac - Lilly's best-known product, which once annually grossed over $2 billion - lost its patent protection.
Prozac has been the subject of hundreds of lawsuits since it came on the market in 1988. The company has settled dozens of those lawsuits, with the collective payouts estimated to run in the tens of millions of dollars.
When finalized, this settlement will resolve the majority of Zyprexa claims pending in the United States. This includes federal and state lawsuits that have been brought against Lilly, the filed nationwide class action lawsuits and the majority of approximately 5,000 claims that were the subject of "tolling agreements" that extended the deadline for potential claimants to file a lawsuit, as well as other potential claims against Lilly. The agreement will also result in the dismissal of claims against physicians and other health care professionals named as co-defendants in any cases covered by this settlement.
According to the agreement, Lilly will establish a fund not to exceed $690 million for plaintiffs who agree to settle their claims. The settlement fund will be overseen and distributed by claims administrators appointed by the plaintiffs' steering committee. The exact number of claimants covered by this settlement is unknown, but is estimated to be 8,000, comprising approximately 75 percent of claims identified to Lilly. Worldwide in 2003, Zyprexa grossed $4.28 billion, accounting for slightly more than one-third of Lilly's total sales. In the United States in 2003, Zyprexa grossed $2.63 billion, 70 percent of that attributable to government agencies, mostly Medicaid.
Lilly researchers announced findings of a diabetes study two days after the Zyprexa settlement was announced during the American Diabetes Association's 65th Scientific Sessions in San Diego. The program was developed through a public/private partnership with Eli Lilly and Co., the Arkansas Department of Human Services and the Arkansas Department of Health's Diabetes Prevention and Control Program to evaluate the cost effectiveness of the state's diabetes education program for Medicaid recipients with diabetes.