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Well, this doesn't look good for Lilly (NYSE:LLY). A huge pile of court documents has been unsealed in the ongoing lawsuits about Zyprexa's off-label promotion. The company has already paid some serious fines, and is now fighting it out with insurance companies and other plaintiffs who are seeking to recover their costs. Several states are suing them as well; those cases are still on their way.

Bloomberg News was given a lengthy list of internal company statements that will surely be difficult to explain in court. These were provided by one of the plaintiff's attorneys, Hagens Berman Sobol Shapiro LLP, so it's hardly a neutral selection (as Lilly is saying in response). But it's going to be interesting to see what sorts of explanations the company has for these. On the one hand, you have this:

In 1998, Lilly went back to the FDA seeking approval to market Zyprexa to those battling Alzheimer’s, the most common form of dementia, the company said in its 2003 request for a meeting on a proposed label change. Lilly withdrew its bid to promote Zyprexa for Alzheimer’s cases in 1999, according to the document.

In a November 2000 memo to Lilly salespeople, company executives said the dementia marketing initiative was abandoned because the FDA questioned Zyprexa’s effectiveness in treating the ailment.

“It was withdrawn due to vagueness on the FDA’s part regarding a definition of efficacy,” Lilly officials said in the document.

In a 2003 memo to FDA regulators citing the clinical studies, Lilly researchers acknowledged the death rates among older dementia patients on Zyprexa in the reviews were two times higher than their counterparts taking placebos.

Deaths among the patients taking Zyprexa in the studies were “significantly greater than placebo-treated patients (3.5 percent v. 1.5 percent, respectively),” Lilly officials said, according to the unsealed documents.

The studies didn’t find Zyprexa was effective in treating dementia, the company acknowledged in this document.

Lilly recognized this earlier, according to a 2002 document entitled “Zyprexa in serious mental illness (65 plus years) -- A Strategy Review.”

“The treatment of serious mental illness for people over the age of 65 has been identified as a growing opportunity for Zyprexa,” the authors wrote. “Unfortunately, attempts to gain the data to support an application for an indication in the treatment of dementia have to date been unsuccessful.”

But on the other hand, we have:

Lilly’s long-term care unit also saw Zyprexa sales rise 2.9 percent in the second quarter of 2002 as sales of Risperdal, Johnson & Johnson’s (NYSE:JNJ) rival antipsychotic, fell, according to the 2002 marketing plan.

At that time, long-term care sales made up about 20 percent of Zyprexa prescriptions, according to the summary. Of that number, 65 percent were written for nursing-home patients.

Overall, prescriptions for older patients were the “2nd biggest money-producing segment” for Zyprexa in the U.S., according to a Feb. 15, 2002, e-mail from Lilly researcher Peter Feldman to Denice Torres, the company’s global marketing director.

In that e-mail, Feldman said company officials were saying in internal memos that they were going to stop studying Zyprexa’s potential health benefits for elderly consumers.

That would risk “killing the goose that lays the golden eggs to save on poultry feed costs,” Feldman said in the unsealed messages.

Torres assured him older consumers would continue to be a prime target for Zyprexa sales, according to the e-mail.

“Elderly remains an important aspect of target PT and affiliate focus,” she said in the message.

Increased Zyprexa sales to elderly patients also won Lilly’s long-term care unit praise in a 2003 newsletter unsealed as part of the documents.

“For two consecutive years, you have been on top and have turned in above-plan performance,” Grady Grant, Lilly’s national sales director, wrote in the newsletter. “I look forward to working with you as we set our sights on overtaking Risperdal as the number one antipsychotic in the marketplace!”

Lilly says these are cherry-picked quotes taken out of context. I'll await seeing what context they can be put in that will make them look less like. . .what they look like now.

Source: Lilly's Alzheimer Drug Lawsuits Just Got Messier