The Zyprexa Chronicles: Eli Lilly Shareholders Sue Eli Lilly

Well, you had to kind of know this was coming: A Pennsylvania law firm announced yesterday that it had filed a complaint against Eli Lilly as part of a class-action suit against the company. A press release states:

"The Complaint charges Lilly and certain of its officers and directors with violations of the Securities Exchange Act of 1934 for disseminating false and misleading statements concerning Zyprexa, the Company's best-selling product. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (a) that they were aware of the clear link between Zyprexa and diabetes; and yet failed to warn the public at large of the serious and material risks associated with Zyprexa use; (b) that they had engaged in an illicit scheme to offset a drop in sales that was certain to occur (and, in fact, did occur) when reports of Zyprexa's side effects surfaced, by creating a marketing plan for Zyprexa which included, as a primary component, the evaluation and pursuit of sales opportunities for the drug based on "off-label" uses; (c) that the growth rate in Zyprexa sales would not be sustainable once information about the health risks of Zyprexa and Lilly's illegal marketing plan were disclosed publicly; (d) that they disregarded data that undermined the "safety and effectiveness" of the drug; (e) that their "quality-assurance procedures relating to the quality and integrity of scientific information and production" as it pertained to Zyprexa were woefully inadequate; (f) that, by engaging in an illicit "off-label" marketing" program as to Zyprexa, they had not "enhance[d]" its policies and procedures designed to assure that its marketing and promotional practices and physician communications "compl[ied] with promotional laws and regulations;" (g) that they failed to warn the public of the serious health risks associated with Zyprexa use and that its illicit "off-label" marketing program was a direct violation of its own code of conduct as set forth in "The Red Book;" and (h) that their illicit scheme of concealing the side effects of Zyprexa and engaging in a massive illegal off-label marketing campaign potentially subjected Lilly to substantial regulatory fines, penalties and other legal action, thereby compromising the Company's overall financial condition and prospects."

I have not seen this so-called Red Book but methinks it has nothing to do with Chairman Mao.

Shareholders must be pissed at Lilly, especially now that the company faces lawsuits by seven states, a Congressional investigation and 1,000 or more remaining individual lawsuits (some of which go to trial this month)--and this is after having settled about $1.2 billion in class action lawsuits in the last 20 months related to Zyprexa.

Of course with such shareholder allegations, it makes you wonder if the SEC is far behind with its own investigation of Lilly as I pointed out back in February.

You just have to wonder when the other shoe--or shoes--might drop since, to date, the FDA and Congress have taken no substantive actions against the company over Zyprexa. And, for all the bloggers out there who like to bitch about the mainstream media (and pimp the whole Web 2.0 paradigm in the process), you'd be wise to remember that much of this wouldn't have happened without the work of the New York Times, which a judge was later dumb enough to call reprehensible, and a couple of people who leaked out the secret Zyprexa documents.

I'm sure the folks at Drug Wonks will find a way to spin this so they can claim that shareholders are trying to scare patients off their meds. Or do the claims of fellow free-marketers mean more to them than those of aggrieved patients?