Lilly Zyprexa Claims Losses in Alaska May Climb to $1.83/Share

Bloomberg News

By Margaret Cronin Fisk

An adverse jury decision in Alaska may be the first step in tripling to more than $3 billion Eli Lilly & Co.’s costs of resolving lawsuits over Zyprexa, which generates more than one-fourth of the company’s revenue.

Lilly, the largest maker of psychiatric medicines, is accused of failing to warn the schizophrenia treatment may cause diabetes, costing Alaska’s Medicaid program millions of dollars by increasing the incidence of that disease. The state seeks as much as $270 million in an Anchorage trial that started March 5, the first over such claims.

A defeat would weaken Indianapolis-based Lilly’s position in nine other states’ suits and separate consumer-protection investigations in about 30 states. The company resolved about 31,000 patients’ claims for $1.2 billion. Total exposure in the rest may reach $2 billion, said David Stallard, a lawyer for Utah, which sued last year. That’s equivalent to $1.83 a share.

“We’ll feel like we have a stronger hand if Lilly loses,” Stallard, 55, said from Salt Lake City. “Even if Lilly was willing to pay $1 billion, it isn’t enough to satisfy all the parties at the table.”…

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