Eli Lilly says it has settled an additional 900 product liability lawsuits, four of which were scheduled to go to trial in July, which alleged that the firm did not adequately warn patients that its best-selling antipsychotic Zyprexa® (olanzapine) increased the risk of diabetes.
Under terms of the agreement, Lilly did not disclose the amount of the settlements and did not admit any wrongdoing over its handling of data relating to Zyprexa. Michael Harrington, the firm’s deputy general counsel, said in a statement that “while we continue to believe we would have prevailed had we gone to trial, resolving these claims will help Lilly return its focus to addressing unmet medical needs for patients and physicians”.
Although the US-based company was coy about how much it is paying to settle the suits, a spokeswoman did reveal that it would have no material effect on earnings. This suggests Lilly is shelling out substantially less than in a June 2005 settlement when it agreed to pay $700m to resolve more than 8,000 similar lawsuits, while in January this year another 18,000 claims were sorted out for which the company took a charge of about $500m.
Lilly has now settled some 28,500 liability claims in the past two years, leaving about 750 outstanding, and it also faces lawsuits from several states in the USA which seek to recoup Medicaid money spent on Zyprexa patients.
The settlements came days after Lilly responded to two court rulings by the Canadian Federal Court and the German Patent Court that could result in the entry of generic olanzapine into those respective markets.
The firm said the decisions, which will both be appealed, “are deeply flawed and are inconsistent with both the evidence presented at trial and with the legal principles that the company believes apply”. While the courts’ decisions may result in generic Zyprexa being marketed in Canada (by Teva’s Novopharm unit) and Germany (by Hungary’s EGIS and the UK’s Neolabs) should Lilly prevail on appeal, it would be entitled to damages.
Robert Armitage, Lilly’s senior vice-president and general counsel, said the decisions, “if not overturned, undermine intellectual property protection in Canada and Germany and erode the incentives of pharmaceutical and biotech companies to make the high-risk investments necessary to discover and develop breakthrough medicines”. He added that “we must take a strong stand on behalf of innovators and intend to take every possible step to protect what we continue to believe are intellectual property rights regarding the validity of the Zyprexa patents in Canada and Germany through 2011”.
Mr Armitage noted that these rulings have no bearing on Lilly’s Zyprexa patents in other international markets, nor on the US patent, which had been upheld on appeal in December 2006 and will remain in effect until 2011. The court decisions are not expected to have a material impact on Lilly’s finances.