Lilly wins appeal in class-action Zyprexa case

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Eli Lilly won an important legal victory Friday. A federal appeals court tossed out class-action certification for unions and insurers suing the drugmaker over Zyprexa. Furthermore, a lower court judge had improperly refused Lilly's request to throw out the litigation completely, the court determined. The case was sent back to District Judge Jack Weinstein for reconsideration. The plaintiffs had been seeking $6.8 billion in damages.

The unions and insurance companies had accused Lilly of violating the Racketeer Influenced and Corrupt Organizations Act, which was designed to help prosecutors go after organized crime, but has since been used against businesses, too. The plaintiffs in Lilly's case had accused the drugmaker of misrepresenting Zyprexa's risks and benefits, causing them to overpay for the drug and finance prescriptions that wouldn't have been written if the truth were known.

The appeals court took issue with the suit's class status because the unions and insurers weren't the ones prescribing the drugs, only footing the bill. "Crucially, the (plaintiffs) do not allege that they relied on Lilly's misrepresentations--the misrepresentations at issue were directed through mailings and otherwise at doctors," Circuit Judge Gerard Lynch wrote for the court.

Lilly says it's happy with the court's decision. "We are very pleased with today's ruling from the Court of Appeals," Robert Armitage, SVP and general counsel, says in a statement. "We were confident that the suit filed by third-party payors was without merit and believed that the earlier decision would be overturned."

- check out the Lilly release
- see the court's ruling
- read the Reuters news
- get more from Bloomberg

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