“Eli Lilly and the Case for the Corporate Death Penalty”

Bruce E. Levine, Ph.D., a clinical psychologist and author of "Surviving America’s Depression Epidemic: How to Find Morale, Energy, and Community in a World Gone  Crazy" (2007), makes the case that Eli Lilly's documented, egregious corporate practices pose "a public menace."  And that under existing law, the company's record of recidivist corporate criminal behavior more than meets the standard for revoking its charter to do business.

Indeed, In March, 2005, the Federal Trade Commission shut down three consumer debt companies accused of violating the Do-Not-Call-Registry and cheating poor customers out of $100 million by promising debt relief that didn’t work and instead worsening their personal debts — in many cases forcing them to file for bankruptcy. The FTC's ex parte temporary restraining order issued in August 2004, which forced the companies into receivership "for the purpose of taking the necessary steps to wind down the businesses of the Corporate Defendants, liquidate their assets," and use any net assets to pay over $11 million in fines to be used to compensate the victims. http://www.corporatepolicy.org/issues/crime.htm

The Center for Corporate Policy recommends: "The corporate death penalty may be appropriate in cases involving recidivist violators, corporations that are deemed to be incapable of reform (i.e. inherently criminogenic), or companies whose crimes are considered to be a serious breach of the public trust. The corporation can be forced to go out of business by forced revocation of its business licenses or charter (i.e. articles of incorporation).  

In 1890 the highest court in New York State did just that: it revoked the charter of the North River Sugar Refining Corporation in this unanimous decision: "The judgment sought against the defendant is one of corporate death … the defendant corporation has violated its charter, and failed in the performance of its corporate duties, and that in respects so material and important as to justify a judgment of dissolution."

Lilly's criminal marketing of the antipsychotic, Zyprexa, was acknowledged by Eli Lilly when the company pled guilty to criminal marketing of Zyprexa on Jan. 15, 2009, settling the case for $1.4 billion, the largest criminal fine ever imposed on a corporation–until Pfizer was fined  $2.3 billion, less than two weeks later, for its illegal marketing of the pain killer, Bextra.   

But Lilly's criminal marketing of a toxic drug that triggers obesity, diabetes, and other life-shortening biological dysfunction, is but the latest example of Eli Lilly corrupt practices. Among these:

1982: Lilly's anti-inflammatory drug Oraflex was taken off the market after three months when a U.S. Justice Department investigation linked Oraflex to the deaths of more than one hundred patients, and concluded that Lilly had misled the FDA. Lilly was charged with 25 criminal counts related to mislabeling side effects and plead guilty.

1991 Lilly stacked the FDA advisory panel to prevent a Prozac label warning about the risk of induced violence and suicides–a warning that was included included in the German label.

The most cinematic of all Lilly scandals began in 1989 and culminated in1997. One month after Joseph Wesbecker began taking Lilly's antidepressant Prozac, he opened fire with his AK-47 at his former place of employment in Louisville, Kentucky, killing eight people and wounding twelve before taking his own life. Victims of Joseph

Wesbecker sued Lilly, claiming that Prozac had pushed Wesbecker over the edge. The trial took place in 1994 but received little attention as America was obsessed at the time by the O.J. Simpson spectacle. Lilly had been quietly settling many Prozac violence suits while publicly claiming the drug was not involved.

To keep the evidence of Lilly's misconduct in the marketing of Oraflex out of the Wesbecker jury's hearing, Lilly cut a secret deal with victims' attorneys, paying them millions of dollars not to introduce the Oraflex evidence. The jury's verdict of "not guilty" was quietly overturned in 1997 to "settled" after a three year investigation initiated by
the judge in the case.

Several books have been written about Lilly's corrupt marketing practices that catapulted Prozac beyond the boundaries of medicine: British journalist John Cornwell covered the 1994 trial for the London Sunday Times Magazine, ultimately wrote a book about it: "The Power to Harm" (1997) which is about Lilly's power to corrupt a judicial system. Two other books about the sordid saga: "Prozac Backlash" by psychiatrist Joseph Glenmullen (2000); "Let Them Eat Prozac" by psychiatrist, David Healy, MD, (2004)

2002:  soon after George W. Bush signed the Homeland Security Act, New York Times columnist Bob Herbert discovered that: "Buried in this massive bill, snuck into it in the dark of night by persons unknown . . . was a provision that – incredibly – will protect Eli Lilly and a few other big pharmaceutical outfits from lawsuits by parents who believe their children were harmed by thimerosal."

2002: Lilly sales representatives in Florida gained access to patient information records, and, unsolicited, mailed out free samples of Prozac Weekly. Prozac is a controlled drug requiring a physician's prescription. It is a crime to distribute prescription drugs without a physician's prescription.

2003: Lilly-Medicaid-Zyprexa scandal erupted when Kentucky attempted to exclude Zyprexa — its single largest drug expense — from its list of preferred medications. Lilly recruited the National Alliance for the Mentally Ill (NAMI), to lobby against excluding Zyprexa. Lilly bankrolled the NAMI "consumer" lobbying campaign to prevent Kentucky Medicaid cost-saving effort. –including full-page ads in newspapers, faxes to state officials, and busing protesters to the hearings. What NAMI did not say at the time was that the full page newspaper ads, the faxes to state officials and the buses that brought NAMI protesters to the hearings, were paid for by Lilly. [1]

2005: Eli Lilly pled guilty to a criminal count for the illegal marketing of Evista for off-label uses, and paid $36 million

The public's right to revoke corporate charters is recognized by the courts, but state attorneys general today rarely exercise this option. Dr. Levine cites Loyola Law School Professor Robert Benson, who in 1998 petitioned California's attorney general to revoke the corporate charter of Union Oil of California (Unocal), who noted that state attorneys general "don't hesitate to draw this particular arrow from their quivers when the target is some small, unpopular or socially marginal enterprise." But when it comes to egregious large multinationals, Benson concludes, "They don't even want you to know about it because they don't want to appear to be soft on corporate crime."

When Eliot Spitzer was campaigning for New York Attorney General (1998) he declared: "when a corporation is convicted of repeated felonies that harm or endanger the lives of human beings or destroy our environment, the corporation should be put to death, its corporate existence ended, and its assets taken and sold at public auction."

The record, however, confirms Professor Benson's observation: "In March, 2005, the FTC shut down three consumer debt companies accused of violating the Do-Not-Call-Registry and cheating poor customers out of $100 million by promising debt relief that didn’t work and instead worsening their personal debts — in many cases forcing them to file for bankruptcy."

The reason giant corporations are shielded from the "corporate death penalty"–or even lesser, but meaningful punishment–such as prison terms–is their entrenched political relationships.

The major media has refrained from reporting the long-standing close ties between the Bush family and Eli Lilly, but the evidence is indisputable:

Sidney Taurel, former Lilly CEO was a George W. Bush appointee to the Homeland Security Advisory Council–which helps explain the "dark of night" provision of immunity… However he is not the only Bush family-Lilly connection. George Herbert Walker Bush once sat on the Eli Lilly board of directors, as did Ken Lay, a Bush crony ho served as Enron chief until he was convicted of fraud before his death. And Mitch Daniels, George W. Bush's first-term Director of Management and Budget, had actually been a Lilly vice president who, in 1991, had co-chaired a Bush-Quayle fundraiser that collected $600,000. This is the same Mitch Daniels who is now governor of Indiana, Lilly's home state."
 
"If Americans want to take on Lilly, they might want to do it during a time when the Bush family is out of power."

Note 1. [ NAMI is an influential mental health nonprofit organization whose "grassroots" claim is watered by pharmaceutical millions–as documented by Mother Jones (1999);  A Philadelphia Inquirer investigative report (2006) revealed that far beyond mere corporate "donations"– Gerald Radke, Eli Lilly's marketing manager actually ran NAMI–a fact that was concealed  until it was uncovered during court procedures.; Eli Lilly's Grant Office disclosure documents show that in first quarter of  2007 Lilly provided NAMI with a grant of $450,000.]

Posted by Vera Hassner Sharav

AlterNet
Eli Lilly and the Case for the Corporate Death Penalty
By Bruce E. Levine

March 3, 2009.

At this point, the pharmaceutical company Eli Lilly is basically a public menace.

Eli Lilly & Company's rap sheet as a public menace is so long that for Lilly watchers to overcome the "banality-of-Lilly-sleaziness" phenomenon, the drug company must break some type of record measuring egregiousness. Lilly obliged earlier this year, receiving the largest criminal fine ever imposed on a corporation.

If Americans are ever going to revoke the publicly granted charters of reckless, giant corporations — well within our rights — we might want to get the ball rolling with Lilly, hose recent actions appalled even the mainstream media. And with Lilly's chums, the Bush family, out of power, now might be the right time.

On January 15, 2009, Lilly pled guilty to charges that it had illegally marketed its blockbuster drug Zyprexa for unapproved uses to children and the elderly, two populations  specially vulnerable to its dangerous side effect. Lilly plead guilty to a misdemeanor charge and agreed to pay $1.42 billion, which included $615 million to end the criminal nvestigation and approximately $800 million to settle the civil case.

One of the eight whistle-blowers in this case, former Lilly sales representative Robert Rudolph, says the settlement will not completely change Lilly's business practices, and he wants jail time for executives. "You have to remember, with Zyprexa," said Rudolph, "people lost their lives."

Rudolph is not exaggerating. Zyprexa, marketed as an "atypical" antipsychotic drug, has been promoted as having less dangerous adverse effects than "typical" ntipsychotic drugs such as Thorazine and Haldol. However, on February 25, 2009, the Journal of the American Medical Association reported that the rate of sudden cardiac death in patients taking either typical or atypical antipsychotic drugs is double the death rate of a control group of patients not taking these drugs.

Zyprexa — though not nearly as well known as Lilly's previous blockbuster Prozac — is today one of the biggest-selling drugs in the world. Zyprexa has grossed more than $39 billion since its approval in 1996, with $4.8 billion of that in 2007 (and it was projected to equal or surpass that gross in 2008 when earnings are reported).

Lilly has had other Zyprexa scandals, but in this current one, Lilly executives matched Charles Dickens scoundrels. Zyprexa is approved by the Food and Drug and Administration (FDA) for schizophrenia and bipolar disorder, but Lilly illegally marketed it for sleep difficulties, aggression, and other unapproved uses. Lilly sales reps  aggressively pushed Zyprexa as a wonderful drug to chill out disruptive children and the elderly who were not schizophrenic or bipolar. The lawsuit against Lilly stated, "In truth, this was Lilly's thinly veiled marketing of Zyprexa as an effective chemical restraint for demanding, vulnerable and needy patients."

Doctors can prescribe drugs for unapproved uses (called "off-label prescribing"), but drug companies are not allowed to market drugs for unapproved uses. Many drug ompanies break this rule, but Lilly broke it with gusto. “The company made hundreds of millions of dollars by trying to convince health care providers that Zyprexa was safe or unapproved uses," said Laurie Magid, acting U.S. Attorney for the Eastern District of Pennsylvania where the case was prosecuted. Magid said that Lilly was responsible for "putting thousands and thousands of patients at risk."

One marketing effort consisted of the Lilly sales force urging geriatricians to use Zyprexa to sedate unruly nursing home and assisted-living facilities patients. Lilly sales reps istributed a study claiming that elderly patients taking Zyprexa required fewer skilled nursing staff hours than were necessary for patients taking competing  medications.

Magid stated that Lilly sales reps were "trained to use the slogan five at five, meaning five milligrams at 5 o'clock at night will keep these elderly patients quiet." Illegally arketing Zyprexa for elderly patients was especially troubling for prosecutors because Zyprexa increases the risks of heart failure and life-threatening infections such as pneumonia in older patients.

In addition to targeting the misbehaving elderly, Lilly also targeted annoying kids. New York Times reporters Gardiner Harris and Alex Berenson, who have been covering Eli Lilly and Zyprexa for several years, reported on January 14, 2009, "The company also pressed doctors to treat disruptive children with Zyprexa, court documents show, even though the medicine's tendency to cause severe weight gain and metabolic disorders is particularly pronounced in children … The children receiving Zyprexa gained so much weight during the study that a safety monitoring panel ordered that they be taken off the drug."

Mainstream reporters were so appalled by Lilly's recent actions that some voiced caustic commentaries about the relatively small price Lilly paid for its transgressions. CBS eporter Sharyl Attkisson (January 15, 2009) noted, "Eli Lilly has pled guilty to marketing the sometimes dangerous drug Zyprexa in ways never proven safe or effective …  Lilly has agreed to pay $1.4 billion, including the largest criminal fine ever imposed on a corporation. Ironically, that's about as much as the company's Zyprexa sales in the first quarter last year." However, the mainstream media failed to provide the context of Lilly's horrendous history which goes back decades.

The New York Times 2009 article did at least go back as far as 2006, reminding readers of the Times exclusive on another Zyprexa scandal. In December 2006, a whistle blower handed over to the Times hundreds of internal Lilly documents and e-mail messages among top company managers that showed how Lilly had downplayed Zyprexa's association with weight gain and metabolic disorders such as diabetes.

A Rolling Stone piece earlier this year ("Marketing Lilly's Zyprexa, a Phony ‘Miracle' Drug") details how Lilly minimized Zyprexa's relationship with dramatic weight gain. In 1995, prior to FDA approval of Zypexa , Lilly's own panel of experts concluded that Zyprexa produced an average weight gain of 24 pounds in a single year (one in six patients gained more than 66 pounds); that kind of weight gain can elevate blood-sugar levels and cause diabetes. This data, however, was not submitted by Lilly to the FDA.

Lilly-Zyprexa scandals didn't just start in 2006. A 2003 Lilly-Zyprexa scandal involved Medicaid and the National Alliance for the Mentally Ill (NAMI), ostensibly a consumer organization. That year, Zyprexa grossed $2.63 billion in the United States, 70 percent of that attributable to government agencies, mostly Medicaid. Zyprexa cost approximately twice as much as similar drugs, and state Medicaid programs, going in the red in part because of Zyprexa, were attempting to exclude it in favor of similar, less expensive drugs. When Kentucky's Medicaid program attempted to exclude Zyprexa — its single largest drug expense — from its list of preferred medications, NAMI used protesters to hearings, placed full-page ads in newspapers, and sent faxes to state officials. What NAMI did not say at the time was that the buses, ads, and faxes were paid for by Lilly.

The Lilly-NAMI financial connection had already been exposed by Ken Silverstein in Mother Jones in 1999. Silverstein reported that NAMI took $11.7 million from drug companies over a three-and-a-half-year period from 1996 through 1999, with the largest donor being Lilly, which provided $2.87 million. Lilly's funding also included loaning NAMI a Lilly executive, who worked at NAMI headquarters but whose salary was paid for by Lilly.

Beyond Zyprexa, in 2002 fingers were pointed at Lilly for tampering with the Homeland Security Act. On November 25, 2002, soon after George W. Bush signed the Act, New York Times columnist Bob Herbert discovered what had been slipped into it at the last minute, "Buried in this massive bill, snuck into it in the dark of night by persons  unknown . . . was a provision that – incredibly – will protect Eli Lilly and a few other big pharmaceutical outfits from lawsuits by parents who believe their children were armed by thimerosal."

While it was recently revealed that research published in 1998 that linked vaccine use to autism was fraudulent, in 2002 the harmfulness of thimerosal (a preservative that contains mercury and used by Lilly and other drug companies in vaccines) was not clear. Specifically, in 1999 the American Academy of Pediatrics and the Public Health Service had urged vaccine makers to stop using thimerosal, and in 2001 the Institute of Medicine concluded that the link between autism and thimerosal was "biologically plausible." So in 2002, drug companies such as Lilly which had used thimerosal in vaccines were nervous about what scientists and the courts would ultimately determine.

How then did a drug-company protection provision get inserted in the Homeland Security Act? Here's my bet for one of Herbert's "persons unknown." In June 2002, then president George W. Bush had appointed Lilly's CEO, Sidney Taurel, to a seat on his Homeland Security Advisory Council. Ultimately even some Republican senators became embarrassed by the drug-company protection provision, and by early 2003, moderate Republicans and Democrats agreed to repeal that particular provision from the Act.

The year 2002 was a banner one for "Lillygates," with "60 Minutes II" ultimately airing another juicy Lilly scandal. Lilly's patent for Prozac had run out, and the drug company began marketing a new drug, Prozac Weekly. Lilly sales representatives in Florida gained access to patient information records, and, unsolicited, mailed out free samples of Prozac Weekly. Though they primarily targeted patients diagnosed with depression who were receiving competitor antidepressants, at least one such Prozac Weekly sample was mailed to a sixteen-year-old boy with no history of depression or antidepressant use. Law suits followed.

The most cinematic of all Lilly scandals began in 1989 and culminated in1997. One month after Joseph Wesbecker began taking Lilly's antidepressant Prozac, he opened fire with his AK-47 at his former place of employment in Louisville, Kentucky, killing eight people and wounding twelve before taking his own life. British journalist John Cornwell covered the trial for the London Sunday Times Magazine and ultimately wrote a book about it. Cornwell's The Power to Harm is not simply about a disgruntled employee becoming violent after taking Prozac; the book is about Lilly's power to corrupt a judicial system.

Victims of Joseph Wesbecker sued Lilly, claiming that Prozac had pushed Wesbecker over the edge. The trial took place in 1994 but received little attention as America as obsessed at the time by the O.J. Simpson spectacle. While Lilly had been quietly settling many Prozac violence suits, the drug company was looking for a showcase trial that it could actually win. Although a 1991 FDA "Blue Ribbon Panel" investigating the association between Prozac and violence had voted not to require Prozac to have a violence warning label, by 1994 word was getting around that five of the nine FDA panel doctors had ties to drug companies — two of them serving as lead investigators for Lilly-funded Prozac studies. Thus with the FDA panel now known to be tainted, Lilly wanted a Prozac trial it could win, and it believed that Wesbecker's history was such that Prozac would not be seen as the cause of his mayhem.

A crucial component of the victims' attorneys' strategy was for the jury to hear about Lilly's history of reckless disregard. Victims' attorneys especially wanted the jury to hear about Lilly's anti-inflamatory drug Oraflex, introduced in 1982 but taken off the market three months later. A U.S. Justice Department investigation linked Oraflex to the deaths of more than one hundred patients, and concluded that Lilly had misled the FDA. Lilly was charged with 25 counts related to mislabeling side effects and plead guilty.

In the Wesbecker trial, Lilly attorneys argued that Oraflex information would be prejudicial, and Judge John Potter initially agreed that the jury shouldn't hear it. However,  when Lilly attorneys used witnesses to make a case for Lilly's superb system of collecting and analyzing side effects, Judge Potter said that Lilly itself had opened the door to evidence to the contrary, and he ruled that Oraflex information would now be permitted. To Judge Potter's amazement, victims' attorneys never presented the Oraflex evidence, and Eli Lilly won the case.

Later it was discovered why victims' attorneys remained silent about Oraflex. In a manipulation Cornwell described as "unprecedented in any Western court," Lilly cut a secret deal with victims' attorneys to pay them and their clients not to introduce the Oraflex evidence. However, Judge Potter smelled a rat and fought for an investigation, and in 1997 Lilly quietly agreed to the verdict being changed from a Lilly victory to "dismissed as settled."

If Americans want to take on Lilly, they might want to do it during a time when the Bush family is out of power. Sidney Taurel, former Lilly CEO and George W. Bush appointee to the Homeland Security Advisory Council, is not the only Bush family-Lilly connection. George Herbert Walker Bush once sat on the Eli Lilly board of directors, as did Bush family crony Ken Lay, the Enron chief convicted of fraud before his death. Mitch Daniels, George W. Bush's first-term Director of Management and Budget, had actually been a Lilly vice president, and in 1991 he had co-chaired a Bush-Quayle fundraiser that collected $600,000. This is the same Mitch Daniels who is now governor of Indiana, Lilly's home state.

Currently, the public's right to revoke corporate charters is still recognized by the courts, but attorneys general today rarely exercise this option, and then only against small corporations. Loyola Law School Professor Robert Benson, who in 1998 petitioned California's attorney general to revoke the corporate charter of Union Oil of California (Unocal), notes that state attorneys general "don't hesitate to draw this particular arrow from their quivers when the target is some small, unpopular or socially marginal enterprise." But when it comes to egregious large multinationals, Benson concludes, "They don't even want you to know about it because they don't want to appear to be soft on corporate crime."

In his book When Corporations Rule the World, David Korten, former Harvard Business School Professor writes, "In the young American republic, there was little sense that corporations were either inevitable or always appropriate." Early in American history, Americans were very much concerned about any entity achieving too much power, and so in corporate charters there were clear limits placed on: years permitted to exist, borrowing, land ownership, extent of enterprise, and sometimes even on profits. Korten notes that in the first half of the nineteenth century, "Action by state legislators to amend, revoke, or simply fail to renew corporate charters was fairly common."

The Program on Corporations, Law & Democracy (POCLAD) was created in 1994, in part to inform Americans that they can in fact revoke corporate charters. In 1890, OCLAD explains, the highest court in New York State revoked the charter of the North River Sugar Refining Corporation in this unanimous decision: "The judgment sought against the defendant is one of corporate death … the defendant corporation has violated its charter, and failed in the performance of its corporate duties, and that in respects so material and important as to justify a judgment of dissolution."

Giant drug corporations — especially ones that make a killing selling dangerous drugs by hyper-pathologizing people who can't defend themselves — get my adrenaline going; and so my candidate to get the ball rolling is Lilly, which has now made themselves vulnerable by getting in so much damn trouble. But with Lilly's man Mitch Daniels currently governor of Lilly's home state, Lilly still has pull; and so I won't be upset if some other giant sleazebag corporation receives the death penalty before Lilly.

Given the fact that Americans already have a history of revoking corporate charters, why shouldn't this practice be continued? Yes we did, yes we still can, and so yes let's do it.

Bruce E. Levine, Ph.D., is a clinical psychologist and author of Surviving America’s Depression Epidemic: How to Find Morale, Energy, and Community in a World Gone Crazy (Chelsea Green Publishing, 2007).His Web site is www.brucelevine.net