January 4, 2007
Zyprexa Settlements: Round Two
Eli Lilly announced today that it is settling 18,000 Zyprexa claims. In 2005, the company settled about 8000 claims in a mass settlement in the MDL before Judge Jack Weinstein. Here's an excerpt from a Bloomberg report by Joe Schneider and Margaret Cronin Fisk -- Eli Lilly Settles Zyprexa Suits With 18,000 Patients:
Eli Lilly & Co. settled 18,000 claims by patients who sued over diabetes and other side effects of the top-selling antipsychotic drug Zyprexa, an accord that will reduce fourth-quarter profit by as much as $500 million.
The agreements don't resolve 1,200 patient claims or four state-government lawsuits seeking hundreds of millions of dollars in damages. The accords follow a June 2005 settlement of 8,000 U.S. claims that cost Lilly $700 million to resolve -- about $87,500 per patient. Payments for the new settlements, a confidential amount, will be ``substantially less'' than the 2005 figure, Indianapolis-based Lilly said.
Lilly's announcement notes that the company reached the settlement with fourteen plaintiffs' firms or groups of firms, and that "the exact number of claimants covered by this settlement cannot be determined, but is estimated to be more than 18,000, representing the vast majority of existing Zyprexa product liability litigation."
The series of non-class aggregate settlements distinguishes the Zyprexa litigation from cases in which parties have negotiated settlements on a class action basis. This blog has noted previously Judge Weinstein's treatment of the earlier Zyprexa MDL settlement as a "quasi-class action."
To me, one of the most interesting aspects of the Zyprexa litigation is Lilly's decision to settle claims wholesale without a history of verdicts, in sharp contrast to Merck's strategy in the Vioxx litigation. Zyprexa, an antipsychotic drug, differs from Vioxx in that it remains on the market. Therefore, the potential cost to Lilly of adverse trial publicity includes not only its effect on the course of the litigation, but also its effect on patients and physicians. Zyprexa offers a powerful example of the significance of non-litigation factors on a mass tort defendant's settlement strategy.