Zyprexa burns Lilly for another $500 million

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Lilly settles Zyprexa suits, takes charge

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January 04, 2007

Reuters

http://www.thestar.com/Business/article/167837

CHICAGO – Eli Lilly and Co. (NYSE: LLY) said Thursday it entered into

settlement agreements with 14 groups involved in Zyprexa liability

suits and will take a fourth-quarter charge of up to $500 million

(all figures U.S.) related to the litigation.

The settlements resolve the vast majority of remaining product

liability claims against Lilly relating to the medication, which is

indicated in the United States for schizophrenia and bipolar disorder.

The legal challenges related mainly to claims that Zyprexa caused

weight gain that led to diabetes.

Plaintiffs claimed that before September 2003, when the U.S. Food and

Drug Administration required label changes for Zyprexa and other

atypical anti-psychotics related to weight gain, information about

the potential risk of diabetes was not made sufficiently clear.

These settlements include federal and state product liability

lawsuits that have been brought against Lilly, claims that were the

subject of " tolling agreements " that extended the deadline for

potential claimants to file a lawsuit, and other unfiled claims.

The agreements will result in the dismissal of claims against health

care professionals named as co-defendants in cases relating to the

prescription of Zyprexa covered by the settlement.

Lilly said it was not sure how many claimants were covered by the

settlement but it estimated the number at more than 18,000,

representing the vast majority of existing Zyprexa product liability

litigation.

About 1,200 claims that have been identified to Lilly are not

included in this settlement.

The agreements follow a master settlement agreement Lilly entered in

June 2005 that covered some 8,000 claimants in the United States, as

well as additional settlements of about 2,500 claims.

Indianapolis-based Lilly, a maker of drugs to treat depression,

sexual dysfunction, diabetes and cancer, said it is not disclosing

the terms of the settlement agreements. But it said the amount to be

paid for more than 18,000 claims in these settlements is

substantially less than the $700 million paid for more than 8,000

claims in the June 2005 settlement.

The company, which recorded $11.4 billion in sales for the first 9

months of 2006, said it will continue to vigorously defend Zyprexa in

remaining product liability cases, third-party payer and state cases.

Introduced in 1996, Zyprexa has been prescribed to 20 million people

worldwide.