Lilly will establish a fund "not to exceed" $690 mil. to settle three-quarters of the personal injury claims filed against the company regarding its atypical antipsychotic Zyprexa (olanzapine).

The majority of the lawsuits claim that Zyprexa caused diabetes and elevated blood glucose level, and that Lilly did not sufficiently warn about the potential side effects.

While the exact number of claims covered by the settlement is not known, it is estimated to be 8,000, or about 75% of the total claims filed against the company, Lilly announced June 9.

The settlement covers claims filed in both state and federal court; the uncertified nationwide class action lawsuits; and the majority of approximately 5,000 "tolling agreements" that extended the statute of limitations for potential claimants to file lawsuits while lawyers review the claims.

"Lilly is prepared to continue its vigorous defense of Zyprexa in the remaining cases," the company said.

The lawsuits allege that Lilly inadequately tested for and warned about the diabetes and hyperglycemia risk and did not prominently display the risk prior to a re-labeling.

FDA requested class labeling for the atypical antipsychotics (including olanzapine) in September 2003, to warn about diabetes risk and recommend continued physician monitoring for signs of the side effect.

The warning followed a large Veterans Affairs trial that showed an increased risk with Zyprexa, Bristol-Myers Squibb's/Otsuka's Abilify (aripiprazole) and AstraZeneca's Seroquel (quetiapine) compared to typical antipsychotics.

Lilly issued a "Dear Doctor" letter in March 2004 alerting physicians to the added warning (¹ Also see "Lilly Zyprexa "Dear Doctor" Letter Warns Of Diabetes Risk" - Pink Sheet, 23 March, 2004.).

The company said it is expecting to take a pretax charge of at least $700 mil. in the second quarter to cover the settlement, as well as any other claims not covered by the settlement.

The settlement comes in a year when sales of the Zyprexa franchise are expected to post a "slight decline" compared to 2004, with international growth offsetting steeper declines in the U.S.

First quarter Zyprexa sales were down 17% (6% on a sequential basis), reflecting competition in the category and safety concerns in the U.S (² Also see ""Black Box" Will Not Deter Off-Label Zyprexa Use In Dementia Patients, Lilly Says" - Pink Sheet, 18 April, 2005.).

Lilly also recently added a class "black box" warning for increased mortality risk associated with off-label use to treat dementia-related behavioral disorders (³ Also see "Antipsychotic "Black Box" Warning Will Caution Against Off-Label Use In Dementia" - Pink Sheet, 11 April, 2005.).

- Lee Kalowski

Lilly To Pay Up To $690 Mil. To Settle Majority Of Zyprexa Injury Claims

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