Lilly's Zyprexa pact with health providers wins approval

January 12, 2012

Eli Lilly and Co. has won approval of a $4.5 million settlement with five union health funds and an insurer that alleged improper marketing of the company's best-selling medication, Zyprexa, raised their costs.

U.S. District Judge Jack Weinstein in Brooklyn, N.Y., approved the settlement at a hearing Thursday. The so-called third-party payors claimed Indianapolis-based Lilly’s marketing of Zyprexa, a schizophrenia treatment, caused them to pay more for the drug than what it was worth. A plaintiffs’ expert had estimated damages in the case as high as $7.7 billion, according to a 2010 appeals-court decision.

The U.S. appeals court in New York in September 2010 reversed Weinstein’s 2008 ruling that granted class-action status to third-party payors, forcing them to carry on with the litigation individually. The appeals court found that the link between marketing Zyprexa to doctors and the injury claimed by the payors was “attenuated.”

“It appears to be fair and reasonable,” Weinstein said about the settlement. “The class members of the previously certified class have been adequately consulted and protected.”

“This settlement represents a positive outcome for Eli Lilly, and allows us to return our focus to the patients and health-care professionals who rely on our medications,” Lilly spokeswoman Keri McGrath Happe said in an e-mail.

The plaintiffs include the New York-based United Federation of Teachers Health and Welfare Fund; Mid-West National Life Insurance Co. of Tennessee; and the Sergeants Benevolent Association Health and Welfare Fund, which represents current and retired New York City Police sergeants and their families.

At a Dec. 19 hearing, Thomas Sobol, a lawyer for the benefit providers, told Weinstein he conducted a search and found no others beyond the six entities.

“I can represent to the court that all of the clients assent to the resolution,” Sobol, a partner at Hagens Berman Sobol Shapiro LLP in Boston, told Weinstein. Anthony Vale, a partner at Pepper Hamilton LLP in Philadelphia, represented Lilly.

Zyprexa had $5.03 billion in sales in 2010. Sales of the drug are expected to decline by more than $3 billion this year, Lilly said Jan. 5, as it lost its patent. Zyprexa is approved by the U.S. Food and Drug Administration to treat schizophrenia and bipolar disorder.

The plaintiffs said Lilly’s allegedly excessive claims about Zyprexa’s usefulness compared with similar drugs and about its safety violated the federal Racketeer Influenced and Corrupt Organizations Act.


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