Lilly wins appeal in Zyprexa case

Eli Lilly & Co. yesterday won reversal of a ruling that granted class-action status to a suit by pension funds, unions and insurers who alleged that improper marketing of the schizophrenia drug Zyprexa raised their costs.

A U.S. appeals court in New York threw out a September 2008 ruling by U.S. District Judge Jack Weinstein in Brooklyn. He had said the plaintiffs could pursue as a group claims that Lilly’s Zyprexa marketing caused them to pay more for the drug than what it was worth. The plaintiffs were seeking $6.8 billion in damages.

Weinstein had ruled in favor of the unions, pension funds and insurance companies, known as third-party payors, rejecting Lilly’s argument that their claims were too different to be tried together. The appeals court reversed, finding that the link between marketing Zyprexa to doctors and the injury claimed by the payors was “attenuated.”

“Crucially, the third-party payors do not allege that they relied on Lilly’s misrepresentations–the misrepresentations at issue were ‘directed through mailings and otherwise at doctors,’” the appeals court said.

The appeals court ruled that plaintiffs’ claims about overpricing should not go forward, Lilly said in an e-mailed statement. Weinstein previously rejected Lilly’s request for summary judgment, or a ruling before trial. The appeals court sent the case back to Weinstein for reconsideration.

“We are very pleased with today’s ruling from the Court of Appeals,” Robert A. Armitage, Eli Lilly’s general counsel, said in an e-mailed statement. “We were confident that the suit filed by third-party payors was without merit and believed that the earlier decision would be overturned.”

A lawyer for the plaintiffs said they hadn’t decided if they would appeal the decision by the three-judge panel who issued the ruling or ask for a review by the entire appeals court bench.

“We just got the decision and our legal team is in the process of evaluating the decision to see what the next step is,” said James Dugan, a lawyer at the Murray Law Firm in New Orleans, who is co-lead counsel for the plaintiffs.