Eli Lilly settles Zyprexa cases on diabetes claims
> 6/14/2005 7:41:11 PM

Lilly agrees to pay nearly $700 million to settle Zyprexa label claims

By DEANNA WRENN Associated Press Writer

(AP) - INDIANAPOLIS-Eli Lilly & Co. has agreed to pay nearly $700million (€571.94 million) to settle a majority of legal claims thatlabels on its anti-psychosis drug Zyprexa had failed to provideadequate warning that the drug could put patients more at risk ofdeveloping diabetes.

Lilly said late Thursday it hadagreed in principle with plaintiffs' attorneys involved in the Zyprexaclaims. The settlement, when finalized, will resolve about 75 percentof the Zyprexa claims pending in the United States, according to aLilly news release.

"Whilewe believe the claims are without merit, we took this difficult stepbecause we believe it is in the best interest of the company, thepatients who depend on this medication, and their doctors," LillyChairman and CEO Sidney Taurel said in the statement.

Mostof the lawsuits claimed that before September 2003, the information onZyprexa labels regarding the risk of hyperglycemia and diabetes was notadequately displayed. Hyperglycemia is a condition in which the bloodhas elevated sugar levels, typical in diabetics.

InSeptember 2003, the Food and Drug Administration required label changesfor all atypical anti-psychotic drugs to warn against the risk.

TheIndianapolis-based company plans to establish the settlement fund,which will affect its second-quarter earnings. The company said itplans to take a pretax charge of at least $700 million for the fund andto cover other claims not in the agreement.

Theagreement only involves people who filed claims arguing that theydeveloped diabetes-related conditions from using Zyprexa, which is usedto treat schizophrenia and bipolar disorder. Lilly said it is preparedto continue its "vigorous defense" of the drug in the remaining cases.

Christopher Seeger, a member of the plaintiffs' steering committee, said the group was pleased with the agreement.

"Thepatient population to which this drug is given has difficult medicalhistories," Seeger said. "Protracted litigation was in no one'sinterest."

In April, Lilly said worldwide sales ofZyprexa fell 5 percent to $1.04 billion (€0.85 billion). Sales in theUnited States fell 17 percent to $517.4 million (€422.75 million)because competing drugs are reducing demand for Zyprexa, the companysaid. U.S. sales of the treatment for schizophrenia and other disordersbrought in $2.4 billion for Lilly last year. The drug had worldwidesales of $4.4 billion in 2004.

However, Lilly preventedfurther erosion of the still lucrative U.S. franchise for the drug whena federal judge in April upheld its patent giving its exclusive U.S.rights until 2011. The case could still face appeals.

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