Atypical Nation: Arkansas Plans Suit Against Eli Lilly, AstraZeneca And Janssen

Late last week, Arkansas' Attorney General, Dustin McDaniel, informed legislators that his office is on the verge of suing the makers of Zyprexa, Seroquel, and Risperdal over off-label marketing schemes involving the use of their drugs in the state's Medicaid program. The lawsuit has not been filed yet, so specific accusations will have to wait an expected three to four weeks, according to this report in the Arkansas Democrat Gazette. If it follows the pattern of nine other states which have sued Lilly, most prominently, and the other companies, then it should relate to use of the drug in schizophrenia, bipolar disorder, dementia, depression, ADHD and include accusations of drug safety violations. The suit would also likely include accusations surrounding use of the drugs in children. Pharmalot has some thoughts here.

From the article:

"McDaniel told reporters after the meeting that researchers have known since the 1950 s that anti-psychotic drugs had serious side effects, including weight gain, hypoglycemia and Type II diabetes.

“'What [the three companies] did was intentionally hide that and downplayed the efficacy of alternatives,' he said.

"McDaniel said the companies engaged in a 'marketing scheme that was very effective to where a drug that was never approved by the [federal Food and Drug Administration] for children... the elderly... or run of the mill behavioral disorders like depression, all of a sudden was touted to America’s doctors, Arkansas ’ doctors, as a miracle drug. So, a child that has [attention deficit disorder] is taking a drug that was never authorized for that child, causing serious complications... that could last a lifetime.'"

Arkansas was mulling joining an expected multi-state lawsuit against the companies, but decided to go it alone. Apparently, the AG felt his smaller state would get lost in the shuffle as much larger states joined forces to go after the three principle makers of atypical antipsychotics.

The state plans to use its anti-fraud statutes against the companies. Reportedly, the state has spent $200 million on the three drugs over the past eight years and could collect as much as $600 million in damages. It's difficult to estimate how much the companies could be liable for in a multi-state action, but it's safe to say that, counting in the other states lawsuits, that the three companies could be on the hook for from $25 billion to $50 billion. That's my own estimate.

If the companies were to settle their claims, the payout would be perhaps half of that amount. It is not clear what effect this would have on the companies' stock prices.

Eli Lilly has already settled approximately 30,000 suits against it brought in three separate class action lawsuits for about $1.3 billion. To date, suits against Janssen/J&J and AstraZeneca have not resulted in any awards or settlements, but cases against the companies are ongoing in state and federal courts. At last report, one lawsuit against Lilly over accusations involving Zyprexa was set to go to trial in federal court in New York in October.

As I reported last week, Zyprexa and Risperdal have been linked to the deaths of 2,098 people, according to the FDA's adverse events database. The two drugs have also been linked to 7,145 reported non-fatal adverse events. The FDA's adverse events database is considered by experts to represent only a fraction of adverse events related to a drug in a particular year. Numbers for Seroquel were not available.

More on this story as it develops.