Alaska Suit Against Lilly Is Settled

New York Times

By ALEX BERENSON

The prospect of a pending Supreme Court case that could sweep away many lawsuits against drug companies loomed over Alaska’s decision to settle the state’s suit against Eli Lilly over the schizophrenia drug Zyprexa, lawyers for Lilly and the state said Wednesday.

Alaska had sued to recoup medical bills it said were generated by Medicaid patients who developed diabetes while taking Zyprexa. But on Wednesday it agreed to settle for $15 million — a fraction of the hundreds of millions of dollars in damages that Ed Sniffen, Alaska’s senior assistant attorney general, had said the state was seeking when the trial opened three weeks ago.

On Wednesday, though, Mr. Sniffen said he was satisfied with the deal, in which Lilly did not admit wrongdoing.

“It’s a good settlement,” Mr. Sniffen said. “Probably not a great settlement, but I think it’s a good settlement.”

Good, at least, in light of that looming Supreme Court case. Mr. Sniffen noted that in October 2008, the Supreme Court is expected to hear Wyeth v. Levine, in which the drug maker Wyeth argues that federal laws bar, or “pre-empt,” most state court lawsuits filed by patients who say they were injured by drugs they have taken.

Based on last month’s 8-to-1 Supreme Court ruling in favor of pre-emption in a similar case about medical devices, the court is assumed to be leaning in favor of the drug industry in the Wyeth case. And so plaintiffs’ lawyers and state attorneys general are worried that they could have many of their pending claims dismissed when the court decides Wyeth…

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