Eli Lilly: W.Va's claim for civil penalties inappropriate, greedy

John O'Brien Jun. 8, 2009, 3:00pm


NEW YORK (Legal Newsline) - Pharmaceuticals manufacturer Eli Lilly & Co. had more harsh words for West Virginia Attorney General Darrell McGraw Friday.

Attorneys for the company wrote in a motion that McGraw has no authority to penalize it for alleged mislabeling violations, terming his lawsuit as "a novel idea," and criticized the State's $2 billion asking price as unreasonable, overreaching and unconstitutional.

McGraw, through outside counsel, is seeking civil penalties under the state's Consumer Credit and Protection Act. He dropped his claim for alleged damages done to the state's Medicaid program by the marketing of prescription antipsychotic Zyprexa in June after Eli Lilly requested records concerning the program.

Eli Lilly's attorneys say McGraw's claim for civil penalties is indistinguishable from a common law failure-to-warn claim and twists the CCPA in an "impermissible" way.

"The State's claim for civil penalties related to Zyprexa's FDA-approved label is premised on the notion that Lilly should never have disseminated the allegedly inadequate label and should now be punished for doing so," Friday's motion for partial summary judgment says.

"The State is, in effect, stepping into the shoes of the FDA and attempting to penalize Lilly for mislabeling violations..."

Lilly's motion notes a recent West Virginia Supreme Court decision in a suit brought by McGraw, through outside counsel, against Janssen Pharmaceutica over its antipsychotic Risperdal, also blamed for causing the health risks associated with weight gain, such as diabetes and hypertension.

In that decision, the justices ruled that Janssen's letter to physicians contradicting an FDA-approved label was in violation of the Federal Food, Drug and Cosmetic Act, putting it in violation of the state CCPA, too.

"Janssen's first letter to physicians violated the CCPA in large part because it contradicted an FDA-approved label. Conversely, the State is now trying to base a CCPA claim upon a label approved by the FDA," the motion says.

"The State should not be permitted to seek penalties under the CCPA for a pharmaceutical manufacturer's deviation from an FDA-approved label (as it did in Johnson & Johnson), and at the same time seek penalties under the CCPA for a pharmaceutical manufacturer's use of an FDA-approved label (as it does here)."

The motion also says that penalizing Lilly $5,000 for each Zyprexa prescription distributed from Feb. 28, 2002-Oct. 2007 would "lead to a grossly disproportionate punishment" under the Excessive Fines Clause of the Eighth Amendment of the U.S. Constitution.

There were approximately 400,000 Zyprexa prescriptions filled with the allegedly improper warning.

"At $5,000 per violation, therefore, the State is attempting to fine Lilly approximately $2 billion for use of a product label that was approved by the FDA," the motion says.

"Such a penalty is not only grossly excessive in light of the fact that the State will not demonstrate actual harm, but a penalty of this magnitude would interfere with the FDA's regulatory scheme with respect to the labeling of prescription medications in ways similar to the fraud-on-the-FDA claims rejected by the U.S. Supreme Court."

In January, Eli Lilly agreed to pay $1.4 billion to settle federal civil and criminal claims. The payment also benefited the Medicaid programs of more than 30 states that collectively received approximately $362 million.

Consumer protection claims by 33 attorneys general were settled for $62 million last year, and 12 states still have claims pending against the company.

West Virginia is seeking only civil penalties for any unlawful activities occurring after 2002 because that's all the four-year statute of limitations allows. It filed suit in 2006.

In October, U.S. District Judge Jack Weinstein told the parties to take 30 days off from the case to try to work out a settlement. It did not work.

"While most states have settled their cases against Lilly for a few million dollars each, the states with cases now pending in this court -- Connecticut, Louisiana, Mississippi, Montana, New Mexico and West Virginia -- are seeking, on essentially the same theories and evidence, many billions of dollars in damages in fines," Weinstein wrote.

Eli Lilly has also paid $1.2 billion to settle more than 30,000 individual lawsuits..

The company recently took one of McGraw's attorneys to task for sending a letter to Weinstein regarding contingency fee issues but not forwarding it to Lilly's attorneys too.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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