Drug giant Eli Lilly won a big victory on Friday, as a federal appellate court reversed class certification of a lawsuit concerning the company's schizophrenia drug Zyprexa.
The now-defunct class consisted of third-party payors -- including insurance companies, pension funds, and labor unions -- who paid costs for their members. The suit alleges that Lilly overstated the drug's effectiveness while downplaying its potential side effects, including weight gain, diabetes, and hyperglycemia.
Zyprexa, used to treat schizophrenia and bipolar disorder, has been used by around 20 million people worldwide since its 1996 introduction.
U.S. District Judge Jack Weinstein certified the class in September 2008, writing in a nearly 300 page opinion that the suit involves issues of great public interest, the health of hundreds of thousands of people, fundamental questions about our system of approval and monitoring of pharmaceutical products, and the funding for many health and insurance benefit plans. The class covered all payments made between June 20, 2001 and June 20, 2005.
No causation shown
Judge Gerald Lynch, who wrote the opinion of the three-judge panel, said that the plaintiffs failed to allege that they relied on Lilly's misrepresentations -- the misrepresentations at issue were directed through mailings and otherwise at doctors. Those alleged misrepresentations prove little, the court continued, since the third-party payors -- not doctors -- were the only ones in a position to negotiate the price paid for Zyprexa.
Lilly was, predictably, happy with the result, with its general counsel Robert Armitage saying in a statement that the company had always been confident that the suit filed by third-party payors was without merit and believed that the earlier decision would be overturned. Attorneys for the plaintiffs said they were reviewing their options.
Friday's ruling was especially significant given the potential stakes of the case. Several of the plaintiffs' expert witnesses testified that Lilly's liability could reach into the billions.
Good news for Lilly
And at this point Lilly must regard good news about Zyprexa litigation as long overdue. The company has already shelled out over $1 billion to settle the claims of over 28,000 consumers who say they suffered negative effects from taking the drug.
In January 2007 -- the date of Lilly's last big settlement -- The New York Times reported that internal documents obtained from a plaintiff's attorney showed that the company played down the risks of Zyprexa to doctors as the drugs sales soared after its introduction in 1996.
According to those documents, the paper reported, 16 percent of people taking Zyprexa gained more than 66 pounds after a year on the drug, a far higher figure than the company disclosed to doctors.
Lilly also paid $1.4 billion in January 2009 after admitting that it advertised Zyprexa for unapproved use. The company touted the drug as effective for dementia, a claim lacking support from the Food & Drug Administration.
Zyprexa, Lilly's best-selling drug, generated nearly $5 billion in sales -- 23 percent of the company's total -- just last year.
Zyprexa has produced a number of complaints to Consumeraffairs.com, but mostly about side effects.
"I ... took Zyprexa and it was a nightmare; gained a lot of weight; sleepless nights among other side effects," Denise, of Fresno, Calif., said.
Linda, of Vallejo, Calif., said she took Zyprexa for depression, but the side effects were worse.
"Caused severe weight gain, serious insomnia that could not be helped with medication. A kind of 'zombie' feeling during the day," she said. "It caused my children and friends to question my ability to think for myself. It made the depression worse."
