Merck / Johnson & Johnson/ Lilly-Zyprexa: $690 Million settlement / a Flowering of Diabetes Drugs

Merck / Johnson & Johnson/ Lilly-Zyprexa: $690 Million settlement / a Flowering of Diabetes Drugs

Fri, 10 Jun 2005

A cluster of news reports about three pillars of the pharmaceutical industry– Merck, Eli Lilly, and Johnson & Johnson–leave no doubt that this industry has shown its disregard for the welfare of the public, and through its influence has corrupted the practice of medicine. The evidence demonstrates that the drugs these companies have been aggressively marketing as "safe and effective"– are mislabeled. Thanks to the pecuniary interests of the pharmaceutical industry and the inaction of the FDA, these drugs have killed and disabled thousands of people, triggering severe chronic conditions or fatal effects.

"At least 38,000 Americans are believed to have died from taking the pain pill Vioxx before it was withdrawn last year." If the defective product was an automobile, rather than a pill, and General Motors knowingly marketed defective cars resulting in 38,000 deaths, would GM have gotten away with it? Merck’s actions to suppress those who criticized Vioxx was the subject of a a two-part National Public Radio (NPR) program. NPR revealed the content of documents showing that critics who raised concerns about Vioxx’ lethal cardiovascular effects were subjected to a "surveillance system" that included physicians, and advocates with financial ties to Merck, who reported critics to the company. Furthermore, the documents show that Merck officials, headed by Dr. Lou Sherwood, who was then vice president at Merck, used their influence at academic institutions to threaten critics: "Dr. Louis Sherwood’s campaign to “fix” Vioxx critic Gurkirpal Singh began with a series of phone calls to Singh’s bosses at Stanford University." Read NPR Transcript

The subject of a front page report in The New York Times, is Johnson & Johnson’s unethical (some would say, criminal) marketing of its lethal heartburn drug, Propulsid‹and the FDA’s five- year failure to warn physicians about the drug’s ineffectiveness and its lethal danger. Propulsid was approved for adult heartburn, but was marketed aggressively for use in babies for whom it was never approved. Even as reports mounted about drug induced serious arrhythmias and "a growing number of cardiac problems in infants and children" leading the FDA to suggest "that pediatric patients may be at greater risk," Johnson & Johnson hired Dr. Paul Hyman, a pediatric gastroenterologist to convince other physicians that Propulsid was safe for children and could be used for "happy spitters"‹that is, healthy infants who spit up. J & J pulled the drug only after it had earned $1 billion a year for five years, then paid a mere $90 million to settle lawsuits for some of those it killed. See:Gardiner Harris and Erik Koli. Lucrative Drug, Danger Signals and the F.D.A. THE NEW YORK TIMES, June 10, 2005, front page

The Wall Street Journal and The Times report that Eli Lilly is prepared to settle lawsuits by 8,000 people who charged the company had concealed (from 1996-2003) the fact that its antipsychotic drug, Zyprexa, induced diabetes and hyperglycemia. Though approved in 1996 only for schizophrenia, then bipolar disorder, Zyprexa is Lilly’s best selling drug, accounting for a third of Lilly’s $13.86 billion in sales in 2004. Zyprexa was at the center of the debate over safety issues‹including a still undisclosed number of suicides in Zyprexa clinical trials. In 2003, the FDA ruled that manufacturers of all atypical antipsychotics must add warnings about the diabetes risk to their drugs’ labels.

BusinessWeek reports (below), "In the treatment of diabetes, no U.S. corporation has had a longer or more important role than Eli Lilly. The Indianapolis-based drugmaker was the first to market insulin, in 1923. Sixty years later, it introduced the first bioengineered insulin derived from humans. Even today, 4 of its top 10 drugs are diabetes products, with Humulin and Humalog — its two lab-synthesized human insulins — each on track to top $1 billion in annual sales." Sidney Taurel, Lilly CEO, insists that the company’s "commitment to diabetes has been there all along." Inasmuch as diabetes is Lilly’s most profitable disease, the disease about which Lilly prides itself–"We’re seen in the world of diabetes as, if not the top experts, one of the top two or three"–Lilly has been in the best possible position to detect a diabetes risk in Zyprexa (and for that matter, in any of its drugs). Yet, Lilly failed to disclose the risk in its US labels–until 2003. Indeed, Lilly continues to deny the risks, but has agreed to pay $690 million in settlement: “We continue to remain steadfast that there is no causal link between the atypicals and diabetes.”

The only avenue for victims of defective medicines to get any (even minimal) compensation is through litigation. However, sealed settlements, such as the Lilly-Zyprexa settlement, do not render a public service‹and absolve doctors from prescribing harm producing drugs. Closed settlements allow a company to continue to conceal evidence about its product’s worst hazards to protect sales‹thereby resulting in new patients being harmed. The Times reports that lawyers in the Zyprexa case‹who themselves have more than $250 million to gain from the settlement‹have agreed not to disclose the documents they received from the company during the pretrial discovery process. Christopher Seeger, a lawyer representing 900 of the 8,000 plaintiffs, acknowledged: "It was very important and material to Lilly that these documents not be made public. “

Evidence in the public domain:

1. Until the introduction of the atypical antipsychotics, clozapine (Clozaril) and olanzapine (Zyprexa), diabetes was rare in children and adolescents. “Diabetes affects virtually every tissue of the body. Life expectancy for people with diabetes averages 10-15 years less than that of the general population.” See: Diabetes Research Working Group. 1999. Diabetes mortality rapidly on the rise. Report. Jocelyn Diabetes Center. online at: http://www.joslin.harvard.edu/news/dcongress.shtml

2. At the August 2001 meeting of American Psychiatric Association, Dr. Frank J. Ayd, an internationally renowned psychopharmacology expert, and editor of the International Drug Therapy Newsletter, presented findings of his review of the literature for atypical antipsychotics. He found a “startling” association between initiation of treatment with olanzapine [Zyprexa] and new-onset diabetes in adolescents:

“New-onset diabetes after antipsychotic treatment initiation is startling, since the use of atypical antipsychotics has become the first line of treatment for schizophrenia. Twenty-six case reports were analyzed, of which 14 reports of diabetes, diabetic ketoacidosis (DKA) or worsening diabetic blood glucose control after initiation of olanzapine were found. Five (36%) of these patients developed DKA. Seventy-nine percent of the patients were compelled to discontinue their antipsychotic. Eighteen percent of the patients who discontinued their medications required long-term insulin; 18% required long-term oral hyperglycemic treatment.” See: Ayd, FJ. 2001. Research Presented at Annual Meeting. Psychiatric Times (August ) Vol. 18. online at: http://www.psychiatrictimes.com/p010823.html

3. See, Liebzeit K, Markowitz J, Caley C. 2001. New onset diabetes and atypical antipsychotics. European Neuropsychopharmacology,11:25­32.

4. Melkersson K, Hulting A-L, Brismar K. 2000. Elevated levels of insulin, leptin, and blood lipids in olanzapine-treated patients with schizophrenia or related psychoses. Journal of Clinical Psychiatry, 61:742­749.

5. On November 28, 2001, the Journal of the American Medical Association published a letter written by Dr. Elizabeth Koller, an FDA medical officer, Dr. P. Murali Doraiswamy, a Duke University psychiatrist warning that according to FDA’s MedWatch data, patients taking either olanzapine or clozapine were 10 times more likely to become diabetic than the general population. See: Koller, E., Malozowski S, Doraiswamy PM. 2001. Letter. Atypical Antipsychotic Drugs and Hyperglycemia in Adolescents. JAMA Vol. 286 No. 20, November 28, 2001. http://jama.ama-assn.org/issues/current/ffull/jlt1128-4.html

6. Caro JJ, Ward A, Levinton C, Robinson K. 2002. The risk of diabetes during olanzapine use compared with risperidone use: a retrospective database analysis. Journal of Clinical Psychiatry. 63:1135-9.

7. IMS News. 2001. Global Diabetes Market Growing. January. http://www.ims-global.com/insight/news_story/0101/news_story

Contact: Vera Hassner Sharav
212-595-8974

THE WALL STREET JOURNAL
Lilly Plans Charge For Zyprexa Accord
By ROBERT MCGOUGH and LEILA ABBOUD
June 10, 2005; Page A3

Eli Lilly & Co. said it had reached an agreement in principle to settle about 8,000, or 75%, of the legal claims against it over its antipsychotic drug Zyprexa.

Lilly, Indianapolis, said it would set up a fund not to exceed $690 million for plaintiffs who agree to settle their claims. Lilly said it would take a pretax second-quarter charge of $700 million to cover the settlement and other product-liability claims not included in it.

Zyprexa, which is used to treat schizophrenia and bipolar disorder, is Lilly’s top-selling drug. Lilly says about 17 million patients have taken the drug world-wide since it was launched in the U.S. in late 1996. Most of the lawsuits alleged that Zyprexa had given the patients diabetes or diabetes-related health problems.

Sales of the antipsychotic medication have been flagging in the past year in part over concerns that the drug caused weight gain and increased risk of diabetes. Lilly has launched an aggressive sales effort to counteract the slide of Zyprexa prescriptions but continues to lose market share to other drugs, including Bristol-Myers Squibb Co.’s Abilify and AstraZeneca PLC’s Seroquel.

Lilly Chairman, President and Chief Executive Sidney Taurel said in a statement, “While we believe the claims are without merit, we took this difficult step because we believe it is in the best interest of the company, the patients who depend on this medication, and their doctors.” Lilly said the settlement will dismiss claims against physicians and other health-care professionals named in the suits. A spokeswoman didn’t have a number of how many physicians were named.

Concerns that the newer generation of antipsychotic drugs, known as atypical antipsychotics, caused weight gain emerged about five years ago. Drug companies had marketed them as having milder side effects than older schizophrenia drugs. As use of them expanded, doctors saw pronounced weight gain and worsening cholesterol levels in certain patients.

Although Zyprexa was at the center of the debate over safety, the Food and Drug Administration ruled in 2003 that the whole class of atypical antipsychotics carried the risk and ordered companies to add warnings to their drug labels. Many of the lawsuits involved in the settlement claimed that Lilly hadn’t given prominent-enough warnings about Zyprexa’s risks before the FDA-requested label change.

Lilly said that when finalized, the settlement would resolve the majority of pending claims in federal and state courts. Lilly said no nationwide class-action lawsuit has been certified by a judge.

Lilly said it will “continue its vigorous defense of Zyprexa” in the remaining cases. “We continue to remain steadfast that there is no causal link between the atypicals and diabetes,” said John Lechleiter, executive vice president of pharmaceutical operations at Lilly.

June 10, 2005
Lilly to Pay $690 Million in Drug Suits
By ALEX BERENSON

Eli Lilly & Company said last night that it had agreed to pay $690 million to settle about 8,000 lawsuits filed by people who claimed they developed diabetes and other diseases after taking Zyprexa, a medication for schizophrenia and bipolar disorder that is Lilly’s biggest-selling drug.

The settlement will cover 75 percent of all the Zyprexa-related suits against Lilly in the United States, according to the company, which said it would continue to defend the other cases. After lawyers’ fees and costs, which will probably total more than $250 million, the average plaintiff will receive about $50,000 in the settlement. The settlement covers both state and federal cases.

Zyprexa will remain on the market, the company said. Sales of Zyprexa fell 8 percent in the United States last year, mainly because of concerns that the drug causes weight gain and increases the risk of diabetes.

Because the cases are being settled individually, rather than collectively as part of a class action, the settlement does not require judicial approval, according to Christopher Seeger, a lawyer whose firm represents 900 plaintiffs. But Mr. Seeger said he expected that Jack Weinstein, the federal district court judge in New York who is overseeing the federal cases, would examine the settlement for fairness.

The settlement is reasonable, Mr. Seeger said. Because diabetes is common in schizophrenics, plaintiffs might have had difficulty proving Zyprexa was responsible, he said. And many schizophrenics are unemployed, so they can claim only limited economic damages.

Sidney Taurel, Lilly’s chief executive, said in a statement that the company had decided to settle the cases in part because the suits “interfered with the process of physicians making treatment decisions.”

Some doctors have been reluctant to prescribe Zyprexa because they feared they would be sued, Mr. Seeger said. As part of the settlement, the plaintiffs agreed to dismiss claims against doctors and other health care workers named as co-defendants. In addition, Lilly will require that the lawyers not disclose the documents they received from the company during the pretrial discovery process, Mr. Seeger said.

“It was very important and material to Lilly that these documents not be made public,” he said. Zyprexa was introduced in 1996 and had worldwide sales of $4.4 billion last year, including $2.4 billion in the United States. It is the best-selling of a class of drugs called atypical antipsychotics, used to treat schizophrenia and bipolar disorder.

Many psychiatrists say that Zyprexa is the most effective of all the new drugs. But in September 2003, after a study that linked atypical antipsychotics to diabetes, the Food and Drug Administration required Lilly and other drug makers to change the drugs’ labels to warn prominently about the risk that the drugs caused the disease.

The Zyprexa suits contended that from 1996 to 2003, Lilly did not adequately disclose the drug’s risks.The settlement does not prevent the lawyers involved in the cases from bringing additional suits. But Mr. Seeger said he did not expect a second wave of suits, because the label change protects Lilly from people who claim they developed diabetes from taking the drug after 2003.

Lilly said it would take a pretax charge of at least $700 million this quarter to cover the settlement and other unrelated product liability cases. The charge will essentially wipe out Lilly’s profits for the quarter, according to analysts’ estimates. Mr. Seeger said his firm would encourage its clients to set up “special needs trusts” with the money they received. The trusts would require that clients spend their settlements on necessities like rent. But plaintiffs have the final decision, he said.

BusinessWeek
JUNE 9, 2005
Lilly: A Flowering of Diabetes Drugs

CEO Sidney Taurel says its productivity has risen, and it’s an “attractive” partner for biotechs, which are strong in treatment discovery

In the treatment of diabetes, no U.S. corporation has had a longer or more important role than Eli Lilly. The Indianapolis-based drugmaker was the first to market insulin, in 1923. Sixty years later, it introduced the first bioengineered insulin derived from humans. Even today, 4 of its top 10 drugs are diabetes products, with Humulin and Humalog — its two lab-synthesized human insulins — each on track to top $1 billion in annual sales.

Yet, since its launch of Prozac in 1988, Lilly has a acquired a reputation for making drugs to treat depression and other mental illnesses. Indeed, Zyprexa, a pill for schizophrenia and bipolar disorder, accounted for a third of Lilly’s $13.86 billion in sales in 2004.

GROWING RANKS OF DIABETICS. But as more than 13,500 researchers and doctors get ready for the start of the American Diabetes Assn.’s annual scientific sessions on June 10 in San Diego, Lilly may again raise its profile in the diabetes arena. In April, it and partner Amylin Pharmaceuticals received U.S. Food & Drug Administration approval to begin marketing Byetta, a twice-a-day shot to control blood-sugar levels.

Later this year, Lilly expects to seek FDA permission to introduce another first in a new class of drugs, Arxxant. The medication alleviates complications arising from diabetes, including severe pain. At the four-day ADA meetings, Lilly researchers will report on a pilot study showing that Arxxant also appears to work in treating diabetic kidney disease. In addition, the drug is being tested for diabetes-related blindness.

Along with Cambridge (Mass.) drug-delivery outfit Alkermes, Lilly has also started early-stage research on an inhaled insulin. The product could appear on the market by the end of the decade. Lilly’s new efforts in diabetes treatment could hardly come at better time. An estimated 18 million people in the U.S. — or 1 out of 16 — have diabetes. And their adult ranks are growing by 1.3 million a year, due in part to the nation’s obesity epidemic. As he prepared to send Lilly’s team to the ADA conference, Chairman and Chief Executive Sidney Taurel spoke with BusinessWeek Senior Correspondent Michael Arndt. Edited excerpts follows:

Q: Please update me on your latest diabetes drugs.
A: Type II diabetes is caused by two drivers. One is insulin resistance. Actos, a drug we introduced in 1999 with Takeda Pharmaceutical, works on that. The other cause is beta-cell dysfunction. Byetta addresses this.

What makes Byetta exciting is that it’s what I would call a smart drug. It’s in a new class of products called “incretin mimetics.” It helps to reduce blood glucose and helps the body produce more insulin in the presence of high blood glucose. In other words, it works only when needed.

Q: What about Arxxant?
A: The first indications we’re working on are the symptoms of diabetic nerve disease. It can be a debilitating condition that manifests itself in sharp pain in the hands and feet. We’re working with Arxxant on all of the complications of diabetes. We’re testing it, for instance, for diabetic retinopathy, which is the leading cause of blindness in adults. It’s one of the worst consequences of diabetes.

Q: How does the drug work?
A: The drug is called a PKC inhibitor, and it works like some of these newer therapies for the treatment of cancer by anti-angiogenesis. It basically starves the tissue. Retinopathy is the multiplication of small blood vessels in the retina, which can hemorrhage and cause blindness. We’re basically preventing blood from going to the small vessels that cause retinopathy.

Q: Lilly has had some big-selling diabetes products in the past. Are these new ones likely to be as big?
A: I don’t want to make sales forecasts, but, for Byetta, we’re talking about a very important drug. Diabetes is a progressive disease. Eventually, a lot of people end up having to take insulin. We see Byetta as being used prior to getting to insulin.

Of the people getting treated for diabetes today, 6 million are taking oral products. We know that two-thirds of patients on oral therapy fail to meet the target level for good control of blood glucose. So, two-thirds of those 6 million are the target patients for Byetta. And in the future, we think we’re going to be able to show also that it works with another 2 million to 3 million patients. As for Arxxant, a lot of people who have diabetes end up with complications. This is 60% to 70% of the total cost of the disease. That product, if it fulfills its promise in terms of efficacy and safety in all these long-term complications, has blockbuster potential.

Q: Lilly has an 80-year history with diabetes. But lately Lilly’s focus has seemed elsewhere.
A: We’re heard of less in diabetes because there were not a lot of spectacular new product launches. But our commitment to diabetes has been there all along. We’re seen in the world of diabetes as, if not the top experts, one of the top two or three. Therefore, we’re very attractive to companies that want a partner. That’s what brought Amylin and Takeda to us.

Q: Still, Lilly’s recent products in diabetes have been drugs developed via joint ventures with other companies, rather than products that came out of Lilly’s own labs. Does this speak to the discovery power of biotech firms? Or does it speak to the weakness of Lilly and Big Pharma?
A: A little bit of both. But look at our total record of new product launches. Since 2001, we’ve had approval for nine drugs in the U.S. or Europe. Of those, only Byetta and Cialis, for erectile dysfunction, were not from Lilly’s own research. We probably have more coming from the inside than our competitors.

We also have enjoyed an increase in our productivity. We had seven products in the whole decade before this. And we had seven products also in the 1980s. For the industry as a whole, there has been a 40% decline in new drug approval in the last five years vs. the previous five years. And we continue to have a very good pipeline.

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