Mass Tort Litigation Blog

South Carolina Settles Zyprexa Off-Label Marketing Case for $45 Million

Hat tip to the TortProf blog on this one.  You can see their post here.

ADL

Thomas Main on The Procedural Foundation of Substantive Law

Professor Thomas Main (Univ. of Pacific) has posted to SSRN his article, The Procedural Foundation of Substantive Law, 87 Wash. Univ. L. Rev. (forthcoming 2009).  Here's the abstract:

The substance-procedure dichotomy is a popular target of scholarly criticism because procedural law is inherently substantive. This article argues that substantive law is also inherently procedural. I suggest that the construction of substantive law entails assumptions about the procedures that will apply when that substantive law is ultimately enforced. Those procedures are embedded in the substantive law and, if not applied, will lead to over- or under-enforcement of the substantive mandate. Yet the substance-procedure dichotomy encourages us to treat procedural systems as essentially fungible—leading to a problem of mismatches between substantive law and unanticipated procedures. I locate this argument about the procedural foundation of substantive law within a broader discussion of the origin and status of the substance-procedure dichotomy.

BGS

Weinstein: Some Pessimism About Aggregate Litigation

Judge Weinstein has published a short essay on the administration of complex litigations in a new on-line publication of the Cardozo Law Review called De Novo.  The essay, entitled "Preliminary Reflections on the Administration of Complex Litigations" describes a few litigations in which the Judge acted as architecht of a large-scale settlement (what has been described as a quasi-administrative agency).

Judge Weinstein closes on a pessimistic note, arguing that the appellate courts have been so inhospitable to class actions and aggregations that it will now fall to regulators to prevent mass claims rather than the courts to adjudicate them.  He writes: "There is a general hostility, I believe, particularly at the appellate level, to class actions and other devices for efficient administration of mass litigation."  And he ends by writing "In the end, I must reluctantly conclude that the law—and certainly I—have failed to rise sufficiently to meet the challenges of modern litigation.  We have not served the people as well as we should have."

The model for adjudication of mass torts was initially individual litigation, which gave way in the 1980's and 1990's to an administrative model.  (For a great article making this argument see Richard Negareda, From Tort to Adminsitration in the Michigan Law Review - which for some reason the author has not put on SSRN, but when he does I shall link to it).   Today the adminsitrative model still has some traction, but it seems that things are shifting.  Zyprexia and Vioxx are far different than Agent Orange was.  We're seeing a different type of judicial involvement which is geared more towards information gathering than actual adjudication, more private control over settlements, the total failure of the class action device to offer closer and the mechanism for an administrative regime.  So what is next for mass torts?  Can the current developments still be described as an "administrative" regime or is this something closer to an insurance model?

ADL

5th Circuit Permits "Learned Intermediary" Defense in Zyprexa

Alison Frankel, of the American Lawyer, reports that the Fifth Circuit has given the green light to the "learned intermediary defense" in the Zyprexa product liability suits.  The defense is based on the doctor (the learned intermediary) warning the patient of prescription drug side effects.  Here's a link to the Fifth Circuit opinion and an excerpt of the article:

The facts in the Zyprexa case are heartbreaking. The victim, Philip Ebel, suffered from crushing headaches, for which he tried no fewer than 47 different treatments. His doctor in Texas, in consultation with a neurologist from a headache clinic in Michigan, finally prescribed Zyprexa -- an anti-psychotic prescribed off-label for headaches. Ebel took Zyprexa for four months before killing himself in 2002.

His doctor testified at a deposition that he was aware of Zyprexa's side effects, including an increased risk of suicide, and that he told Ebel about them. The 5th Circuit, in agreement with the lower court, ruled that because Ebel and his doctor were aware of the risks, Lilly's alleged failure to warn could not be "a producing cause" of Ebel's death.

Ebel's lawyer, Andy Vickery of Houston's Vickery, Waldner & Mallia, told the Litigation Daily that the 5th Circuit is behind the times when it comes to the learned intermediary defense. He said that courts in West Virginia, Oregon and New Mexico have all recently rejected it. "It's a travesty of justice when we cede the case to prescribing physicians who inevitably have an agenda of their own," said Vickery, who is also the plaintiffs lawyer in the Paxil case recently decided by the 5th Circuit. "Their rulings are a complete anachronism, a complete miscarriage of justice."

ECB

Today's $1.4 billion Zyprexa deal

As expected, the Justice Department and Eli Lilly today announced that Lilly will pay $1.4 billion in a criminal plea deal and civil settlement.  The deal includes $615 million as a criminal penalty and $800 million to settle civil claims by the United States and over 30 states.  Speculation about the negotiations goes back nearly a year.

Here are some details from today's report on Bloomberg:

Eli Lilly & Co. will plead guilty to a criminal charge of promoting its antipsychotic drug Zyprexa for unapproved uses, pay $1.42 billion in fines and submit to U.S. monitoring against future lawbreaking.   ...

Lilly resolved federal and state probes into how it marketed the drug and will plead guilty in U.S. District Court in Philadelphia in the next few weeks, the Indianapolis-based drugmaker said in a statement. Lilly said it promoted Zyprexa in elderly people to treat dementia, a use not approved by the Food and Drug Administration, between September 1999 and March 2001, a criminal violation of the Food, Drug and Cosmetic Act. ...

As part of the settlement, Lilly agrees to operate under a federal monitor’s review for five years.

Twelve states' claims remain unresolved.

Two things strike me about the deal.  First, it is huge, and it had to be.  From the perspective of the Department of Justice, the U.S. Attorney's Office, and the state attorneys general, anything less than a billion would have seemed an ineffective deterrent given the revenues that Zyprexa generated.  In an era of multi-billion dollar revenues for blockbuster drugs, we are bound to see more 10-figure resolutions.

Second, today's deal drives home how multi-faceted mass tort litigation has become.  I used to think of "mass tort litigation" as, well, litigation involving massive numbers of tort claims.  The Zyprexa litigation is mass tort litigation, but "the Zyprexa litigation" includes wrongful death claims, personal injury claims, consumer fraud claims, securities claims, third-party payor claims, federal and state government civil claims, and federal criminal charges.

When Eli Lilly settled the bulk of the tort claims, it wasn't nearly done with the Zyprexa litigation.  Lilly settled tens of thousands of individual claims through mass aggregate settlements -- 8000 plaintiffs for about $700 million in 2006 and 18,000 plaintiffs for about $500 million in 2007.  Judge Jack Weinstein in the MDL treated the litigation and settlement as a "quasi-class action."  At the time, one might have thought that those gargantuan settlements resolved the bulk of the Zyprexa dispute.  With today's deal, we are reminded that the personal injury and wrongful death claims were only one piece of the Zyprexa litigation.

Over a billion dollars in tort settlements.  Tens of millions more for state consumer protection claims.  Over a billion dollars today for the government criminal and civil claims.  A billion here, a billion there, and pretty soon we're talking about real money. 

HME

Zyprexa -- Possible Settlement of Criminal and Civil Claims

Eli Lilly Co. is expected to pay $1.4 billion to settle the government's criminal and civil claims against the company in connection with its marketing of Zyprexa, according to this article in the New York Times, which notes the record-breaking size of the deal:

Eli Lilly, the drug company, is expected to agree as soon as Thursday to pay $1.4 billion to settle criminal and civil charges that it illegally marketed its blockbuster antipsychotic drug Zyprexa for unauthorized use in patients particularly vulnerable to its risky side effects.  The amount of the settlement is a record sum for so-called corporate whistle-blower cases, which are federal lawsuits prompted by tips from company employees or former employees.

Zyprexa is approved for schizophrenia and bipolar disorder.  Lilly is charged with pushing doctors to prescribe the drug for unruly children and nursing home patients, despite the increased risks attendant to use of the drug by the young and the elderly.  The Times article points out that a $1.4 billion fine, while substantial, may represent as little as one year's worth of off-label-use Zyprexa revenues, as Zyprexa has generated over $39 billion in revenues since 1996.

According to the article, more information may come out Thursday:

The government’s case will remain sealed until at least Thursday, when a judge is expected to approve the settlement. People involved in the negotiations say that prosecutors pressed for a resolution in the waning days of the Bush administration to avoid having to get another set of approvals from new bosses at the Justice Department in Washington.

While the settlement is intended to resolve all pending government claims, it is unclear whether all states, which are parties to the case through the federal-state Medicaid program, have agreed to terms.

HME

One Take on the Worst Decisions of 2008

at Drug & Device Law blog.

BGS

Lilly Settles Zyprexa Marketing Claims with States for $62 Million

Article in the New York Times -- 33 States to Get $62 Million in Zyprexa Case Settlement, by Alex Berenson.  Here's an excerpt:

Eli Lilly has agreed to pay $62 million to 33 states to settle claims that it improperly marketed Zyprexa, its top-selling drug, to patients who did not have schizophrenia or bipolar disorder, its only approved uses.

The settlement, to be announced Tuesday, ends an 18-month investigation led by the offices of the attorneys general of Illinois and Oregon, which contended that Lilly had violated consumer protection laws by urging doctors to prescribe Zyprexa to patients who did not need it.

It is the largest settlement paid by a drug company in a state consumer protection case, topping the $58 million that Merck paid to settle similar allegations about Vioxx, lawyers for the states said.

The agreement may also be a sign that a much larger deal is near in a separate but related civil and criminal investigation led by federal prosecutors in Philadelphia. In that case, Lilly is expected to pay more than $1 billion in fines and restitution to states and the federal government and may also plead guilty to a misdemeanor criminal charge related to off-label marketing of Zyprexa.

BGS

Judge Weinstein Unseals Zyprexa Documents

Noting that "Lilly's legitimate interest in confidentiality does not outweigh the public interest in disclosure," Judge Jack B. Weinstein unsealed formerly confidential documents on links between Zyprexa, obesity, and high blood sugar.  Both the New York Law Journal and the New York Times have articles on the topic.  As I've written in the past, transparency in matters affecting the public is crucial to judicial institutional legitimacy and public education.  Consequently, this is a big step in that direction.  Here's an excerpt from the New York Times piece by Mary Williams Walsh:

The publication of sealed information led Judge Weinstein to issue a sharply worded ruling last year, stating that Mr. Berenson had engaged in a conspiracy with a doctor and a lawyer and that they had used others “as their agents in crime.”

The judge said the sealed documents belonged to Lilly and ordered the doctor, David S. Egilman, and the lawyer, James B. Gottstein, to return them. Dr. Egilman had been serving as an expert consultant for the plaintiffs at the time, and Mr. Gottstein was working on Zyprexa litigation in Alaska.

Since then, insurance companies, unions, medical researchers and other publications have filed formal requests for copies of the documents. Many of the papers were entered into open court proceedings in Alaska, and copies of some have been posted on the Internet.

In his ruling on Friday, Judge Weinstein repeated that the information had been “obtained illegally” by The Times but also cited “this country’s general policy of accessibility of court records.”

The 295 page opinion is available here and the case is In re Zyprexa Products Liability Litigation, 04-MD-1596.

ECB

Lilly Settles with the State of Alaska over Zyprexa Claims

Rather than proceed with trial, Eli Lilly has entered into a $15 million settlement with the State of Alaska in the State’s Medicaid lawsuit over Zyprexa. The State’s suit involved claims that it had to pay for treatment of Zyprexa-related health problems such as diabetes and weight gain. The Wall Street Journal reports some remarks by the Alaska judge:

Anchorage Superior Court Judge Mark Rindner said on the bench, without jurors present, that without lawsuits like the one the state of Alaska brought, claims that drugs cause health problems "might well go unaddressed."

Judge Rindner was reacting to an assertion by Lilly lawyer George Lehner that drug regulation is up to the federal Food and Drug Administration, not any state. He argued that Alaska's Unfair Trade Practices and Consumer Protection Act shouldn't apply to drugs.

But Judge Rindner said evidence presented by the state had established that the FDA "isn't capable of policing this matter."

The Wall Street Journal’s Health Blog adds:

The settlement means the end of an Anchorage jury trial that people were watching as a bellwether, to get a read on how Lilly might fare in negotiations with other states and with the feds, which have leveled similar allegations.

The outcome looks pretty good for the company. Before the jury trial started, the WSJ reported that Lilly floated a settlement offer of about $2 million, while Alaska was looking for something closer to $200 million.

ECB

Zyprexa Hearings Broadcasted

A short order by Judge Weinstein in the Zyprexa MDL on March 11, 2008, permitted cameras and recording equipment during the upcoming March 20 hearing. Here’s a brief excerpt of Judge Weinstein’s order:

Video broadcasts assist in opening the courts to the public. Since tens of thousands of individuals, organizations and governmental entities all over the United States are parties to, or affected by, the instant litigation, approval of the application is in the public interest. No reason has been suggested to depart from the policy that, in general, the public should be permitted and encouraged to observe the operation of its courts in the most convenient manner possible, so long as there is no interference with the due process, the dignity of litigants, jurors and witnesses, or with other appropriate aspects of the administration of justice.

3/11/2008 N.Y.L.J. 32, (col. 3) (MDL Case No. 04-MD-1596).
As I’ve noted in previous articles (see here and here), transparency in matters affecting the public (such as large scale pharmaceutical cases) is vital for deterrence, public education, marketplace and social accountability, and judicial legitimacy. This transparency traditionally comes through published written opinions, but it’s certainly interesting to observe the rise of these new developments. It’s not clear from the text of the order which hearing will be broadcasted. There are a few significant hearings scheduled in March. Notably, there’s a hearing on motions to dismiss and motions for summary judgment in the securities lawsuits, shareholder derivative lawsuit, and a class certification motion on the third-party payors lawsuit scheduled for March 27 and March 28 (info available at 2008 WL 619172 (E.D.N.Y.)).

ECB

FDA Says Long-Acting Form of Zyprexa Effective, But Sedating

Article in the Wall Street Journal -- Lilly Gets Support for Version Of Schizophrenia Treatment, by Jennifer Corbett Dooren.  Here's an excerpt:

A Food and Drug Administration official said that a long-acting, injectable form of Eli Lilly & Co.'s top-selling drug Zyprexa was effective at treating schizophrenia, but caused "profound sedation" in certain patients.

A memo written by Thomas P. Laughren, the FDA's psychiatry products division director, and posted on the agency's Web site, said clinical studies of the drug showed 24 out of 1,915 patients exposed to the long-acting form of Zyprexa suffered from profound sedation after receiving the injection. The FDA said the sedation typically lasted about one to three hours.

The long-acting form of Zyprexa faces a review by an FDA panel of outside medical experts tomorrow. The panel will be asked if that form of Zyprexa has been shown to be "acceptably safe" and effective for the treatment of schizophrenia. The panel's decision will amount to a recommendation about whether the FDA should approve the product. The FDA usually follows its panel's advice but isn't required to.

BGS

Reports of Lilly Reaching Settlement with Federal Prosecutors

With all of the attention Merck’s been receiving lately, it’s nice (in an abstract sense) to see some headlines about Zyprexa. The New York Times reported today that Eli Lilly is discussing the possibility of settling civil and criminal investigations by federal prosecutors, with Lilly paying more than $1 billion to federal and state governments. Here’s a bit of the New York Times piece, Lilly in Settlement Talks with U.S.:

Zyprexa has serious side effects and is approved only to treat people with schizophrenia and severe bipolar disorder. But documents from Lilly show that between 2000 and 2003, Lilly encouraged doctors to prescribe Zyprexa to people with age-related dementia, as well as people with mild bipolar disorder who had previously been diagnosed only as depressed.

Although doctors can prescribe drugs for any use once they are on the market, it is illegal for drug makers to promote their medicines any uses not formally approved by the Food and Drug Administration.

Lilly may also plead guilty to a misdemeanor criminal charge as part of the agreement, the people involved with the investigation said. But the company would be allowed to keep selling Zyprexa to Medicare and Medicaid, the government programs that are the biggest customers for the drug. Zyprexa is Lilly’s most profitable product and among the world’s best-selling medicines, with 2007 sales of $4.8 billion, about half in the United States.

Lilly would neither confirm nor deny the settlement talks.

"We have been and are continuing to cooperate in state and federal investigations related to Zyprexa, including providing a broad range of documents and information," Lilly said in a statement Wednesday afternoon. "As part of that cooperation we regularly have discussions with the government. However, we have no intention of sharing those discussions with the news media and it would be speculative and irresponsible for anyone to do so."

Lilly also said that it had always followed state and federal laws when promoting Zyprexa.

The Lilly fine would be distributed among federal and state governments, which spend about $1.5 billion on Zyprexa each year through Medicare and Medicaid.

The fine would be in addition to $1.2 billion that Lilly has already paid to settle 30,000 lawsuits from people who claim that Zyprexa caused them to suffer diabetes or other diseases. Zyprexa can cause severe weight gain in many patients and has been linked to diabetes by the American Diabetes Association.

Stay tuned.

ECB

Blog Roundup

Drug and Device Law Blog has posts on Tort Reform Works in Texas; Notes from the Scientific Underground; Preemption Scorecards; The Vanishing Trial; and Riegel Survives.

Food Law Prof Blog has posts on Cargill meat recall based on e.coli; Bush signs FDA Amendments Act of 2007; More on the Recall Process; CRS Report on Recall Authority; Roberts on Role of Regulation in Minimizing; Thinking About Recalls; and  Yet another meat recall -- this one enough for one picnic.

Point of Law has posts on Refik Kozic v. Merck; Absurd RI lead abatement plan developed; 
"Defendants See a Case of Diagnosing for Dollars"; and Zyprexa protective order enforcement VI: Egilman settlement.

Torts Prof Blog has posts on Topps Meat Recall: Let the Filing Begin; 9/11 Opt-Outers Settle; Lead Everywhere; Stent Safety and Patents;  USSC Denies Cert In Engle (Tobacco) Case; FDA Warns Against Use of Cold Meds by Toddlers; and Sebok's Part II on NJ Supreme Court's Vioxx Ruling.

BGS

Blog Roundup

Drug and Device Law Blog has an interesting post on causation in failure-to-warn cases, and another post elaborating after reader comment.

TortsProf Blog flags another story on Zyprexa from Alex Berenson of the New York Times.

Products Liability Prof Blog posts a link to a story on a meager punitive verdict in a Ford rollover case, delivered after Ford noted its layoffs and losses.

Civil Procedure Prof Blog has a post on the 2007 U.S. Chamber of Commerce rankings of states for tort law climate.

Point of Law has a post celebrating a California opinion questioning the oursourcing of government lawsuits to plaintiffs lawyers.

BGS

Congressional Panel Examines Off-Label Use of Drugs and Medical Devices

Article in the Wall Street Journal -- Congressional Panel to Study Off-Label Use of Stents, Drugs, by Keith J. Winstein.  Here's an excerpt:

A congressional committee is looking into the "off label" use of drugs and heart stents, examining the widespread practice in which doctors prescribe medical products to patients outside the boundaries approved by the Food and Drug Administration.

Boston Scientific Corp. and Johnson & Johnson's Cordis unit, the only makers of drug-coated stents sold in the U.S., were asked to submit marketing materials and clinical data to the House Committee on Oversight and Government Reform on Wednesday. About 60% of drug-coated stents, which prop open clogged arteries, are used off-label. For example, manufacturers haven't rigorously tested their stents in patients who have had heart attacks, but stents are commonly given to such patients. Doctors are allowed to prescribe stents to off-label patients, but manufacturers can't encourage off-label use.

The committee's chairman, California Democrat Henry Waxman, also asked for marketing materials from three drug companies that have come under scrutiny over whether they promoted their products for unapproved uses: Eli Lilly & Co., whose antipsychotic drug Zyprexa had $4.36 billion in sales last year and was the company's best seller; AstraZeneca PLC, which makes another depression drug, Seroquel; and Cephalon Inc., whose marketing of painkillers has been under investigation by the Connecticut attorney general.

BGS

Weinstein on Zyprexa Document Leak

Judge Jack Weinstein yesterday faulted the attorney, expert, and reporter involved in disseminating confidential documents that were covered by a protective order in the Zyprexa multidistrict litigation.  Here's a link to the court's order, and an excerpt from the story in today's New York Law Journal:

A federal judge Tuesday rebuked an attorney, an expert witness and a reporter for The New York Times for violating a protective order in a mass-tort action concerning the health risks of Zyprexa, an anti-psychotic drug manufactured by Eli Lilly.

Eastern District of New York Judge Jack B. Weinstein, said the men -- Alaska attorney James Gottstein; Dr. David Egilman, an expert hired by plaintiffs; and Alex Berenson, of the Times -- had "conspired to obtain and publish documents in knowing violation of a court order not to do so, and that they executed the conspiracy using other people as their agents in crime."

The documents in question were among millions of internal e-mails and files given to attorneys representing 30,000 plaintiffs who sued Eli Lilly over Zyprexa, a schizophrenia drug that patients alleged caused obesity and diabetes. Most of the suits involving Zyprexa have been settled for a total of $750 million, according to reports.

The documents were covered by a protective order, and Weinstein said all three men knew about the order.

The judge alleged, based on testimony from Gottstein, that Berenson and Egilman had devised a way to circumvent the order: Have Gottstein subpoena Egilman for a case in Alaska, and then send the documents to Berenson for an exclusive story.

Berenson relied on the documents for several articles he wrote in December alleging that Lilly played down data that found Zyprexa increased the risk of obesity and diabetes in patients.

Although the court called Berenson's conduct "reprehensible," it imposed its injunction against further dissemination only on Gottstein and Egilman.

HME

Zyprexa Reporter Declines Invitation

Yesterday, New York Times reporter Alex Berenson declined Judge Jack Weinstein's invitation to testify concerning the acquisition and disclosure of sealed documents in the Zyprexa litigation.  Torts Prof has a copy of the letter from the Times respectfully declining the invitation with an invocation of First Amendment principles and freedom of the press, and Point of Law comments.

HME

Zyprexa Documents: Judge Invites NYT Reporter to Appear

The fallout from the disclosure of Zyprexa documents continues and just gets more interesting.  Torts Prof has the story of Judge Jack Weinstein's "invitation" yesterday to New York Times reporter Alex Berenson, asking him to voluntarily appear on February 7 to explain how he obtained the sealed documents.  According to Judge Weinstein's order, a copy of which may be found on Torts Prof, "This invitation is intended to permit Alex Berenson to confront testimony received at a hearing in this court on January 16-17, 2007 implicating him in a conspiracy to obtain and publish confidential documents sealed by this court."  The order includes relevant excerpts from the hearing transcript referencing Alex Berenson, James Gottstein, and David Egilman, and instructs Lilly to "serve a copy of this invitation" on Berenson.

HME

Zyprexa Hearing Transcript

Torts Prof has highlights from the hearing on the disclosure of the Zyprexa documents.

HME