The Zyprexa Chronicles: Alaska V. Lilly Trial Begins This Week

A civil trial brought by the State of Alaska against Eli Lilly over accusations involving its atypical antipsychotic Zyprexa is expected to begin in Anchorage tomorrow with jury selection. Last week, the trial judge tossed out a portion of the state's case when he ruled that its claim that Lilly had marketed the drug off-label for use in dementia and other unapproved indications could not be heard. It's not clear to me what the basis was for that move by the judge, as media coverage of the pre-trial moves is pretty scant.

The remaining accusation that the judge is allowing to go to trial is whether Lilly failed to warn doctors, consumers and the state about dangers associated with the drug. I would say that, based upon the leaked Zyprexa documents I've reviewed, Lilly is going to have an uphill fight in court on that front. All the same, the company claims it properly warned involved parties. That's for a jury to decide, of course.

This case is the first Zyprexa lawsuit to go to trial in the US and, excepting a last minute deal, will be closely watched by legal observers. Reportedly, Lilly was working to settle other states' and federal claims involving Zyprexa for $1 billion before the Alaska suit went to trial, but it's been all quiet on that front in recent weeks. The company is already being sued by eight other states over Zyprexa, and another 25 or so states and the feds are contemplating legal action still. What's more, there are about 1,200 lawsuits by individuals still outstanding against Lilly and those are expected to go to trial in June. To date, Lilly has settled about 30,000 cases for about $1.3 billion.

The outcome of this case could be crucial for the company's negotiations with the feds and others states.

It will be interesting to see if Lilly tries to settle the Alaska case right before trial begins, or if it wants to risk even more evidence of its alleged misbehavior from entering the public realm by way of evidence in the case and court testimony.

Late last week, Lilly filed an appeal with the Alaska State Supreme Court asking that trial be delayed until the Supreme Court could hear its appeal of the judge's ruling letting the trial proceed on the failure to warn claim. The Supreme Court declined to take up Lilly's appeal over the weekend.

On Wall Street, financial analysts could reportedly care less about the trial's outcome:

"Analysts say these trials don't raise a lot of concern on Wall Street, where many view them as a normal part of business for drug companies.

"'We've seen multiple drug companies in the past year or two paying big chunks to states to reimburse them,' said Dr. Jon LeCroy, an analyst who follows Lilly for Natixis Bleichroeder Inc. 'It's just expected.'"

We've sure come to a pretty pass in this country when drug companies are expected to payoff plaintiffs as a normal course of the life cycle of a drug. That attitude is beyond sad and reflects an odd sloth in our thinking and behavior as a culture that was simply unimaginable 10 years ago.

Obviously, I plan to be watching this trial as closely as possible and letting readers know what I know as soon as I can. Stay tuned.