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Eli Lilly to Pay Up to $500 Million to Settle Claims

By ALEX BERENSON Published: January 4, 2007 The New York Times

Eli Lilly agreed today to pay up to $500 million to settle 18,000 lawsuits from people who claimed they developed diabetes or other diseases after taking Zyprexa, Lillys drug for schizophrenia and bipolar disorder

Including earlier settlements over Zyprexa, Lilly has now agreed to pay at least $1.2 billion to 28,500 people who claim they were injured by the drug. At least 1,200 suits are still pending, the company said. About 20 million people worldwide have taken Zyprexa since its introduction in 1996.

The settlement covers cases filed in state and federal courts by 14 plaintiffs law firms or groups of firms, Lilly said. The federal suits have been overseen by a judge in Brooklyn, Jack B. Weinstein of the Eastern District of New York.

The settlement will not affect civil or criminal investigations pending over Zyprexa from state attorneys general and federal prosecutors, which are continuing.

Both Lilly and lawyers for plaintiffs said they were pleased with the agreement. With sales of $4.2 billion last year, Zyprexa is Lillys largest-selling drug and a major contributor to the companys profits. Lilly shares were little changed after the settlement announcement.

Zyprexa is the brand name for olanzapine, a potent chemical that binds to receptors in the brain to reduce psychotic hallucinations and delusions. Clinical trials show Zyprexa also causes severe weight gain and increases in cholesterol and blood sugar in many patients.

Documents provided to The New York Times last month by a lawyer who represents mentally ill patients show that Lilly played down the risks of Zyprexa to doctors as the drugs sales soared after its introduction in 1996. The internal documents show that Lillys own clinical trials found that 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.

The documents also show that Lilly marketed the drug as appropriate for patients who do not meet accepted diagnoses of schizophrenia or bipolar disorder, Zyprexas only approved uses. By law, drugmakers may only promote their drugs for diseases in which the Food and Drug Administration has found the medicines to be safe and effective, although doctors may prescribe drugs in any way they see fit.

In response to questions about the information in the documents, Lilly has denied any wrongdoing and said it provided all relevant information to doctors and the F.D.A. Lilly has also said it did not promote Zyprexa for conditions other than schizophrenia or bipolar disorder.

In 2004, a panel of the American Diabetes Association found that Zyprexa caused diabetes more than other widely used antipsychotic drugs in part because it tends to cause much more weight gain. But the F.D.A. has never made a similar finding. Instead, the F.D.A. added a warning in 2003 to the label of Zyprexa and other new antipsychotic drugs about their tendency to cause high blood sugar.

The settlement follows an additional $700 million agreement in 2005 covering 8,000 patients, as well as 2,500 individual settlements whose total value has not been disclosed, Lilly said. The 2005 settlement valued each claim at nearly $90,000 per plaintiff, while todays agreement values claims at more than $27,000 per plaintiff.

The lower value for the new claims comes in part because of the F.D.A. label change, which has allowed Lilly to contend that it adequately warned doctors of Zyprexas risks after 2003. The label change may also help to protect Lilly from other lawsuits going forward, drug industry analysts and lawyers say.

In its statement, Lilly said the settlement did not change its views that Zyprexa is a safe and effective treatment for mental illness. “We wanted to reduce significant uncertainties involved in litigating such complex cases,” Sidney Taurel, Lillys chief executive, said in the statement. Richard Meadow, one of the lead lawyers for plaintiffs, said the deal was fair to both sides. “Prolonging this litigation further is in no ones best interest,” he said.

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