Court tosses kickbacks case against Eli Lilly but allows plaintiffs another chance

Eli Lilly
A whistleblower lawsuit alleged Eli Lilly boosted prescriptions of its drugs by offering free nursing services. (Eli Lilly)

Diabetes drugmakers have faced a gamut of allegations and investigations over their products in recent years. Now, Eli Lilly has prevailed in one legal battle, at least for the time being.

Last year, whistleblowers with Health Choice Alliance, a research organization, filed a lawsuit alleging Eli Lilly and other companies ran a “multi-tiered kickback scheme” by offering free nursing services in exchange for prescriptions of diabetes drugs Humalog and Humulin, plus osteoporosis drug Forteo. A judge has ruled that facts stated in the lawsuit aren’t specific enough to support the allegations. He dismissed the case, but gave the whistleblowers a chance to restate their claims in an amended suit.  

The whistleblower suit targets Lilly, Healthstar Communications, VMS Biomarketing, Covance and a former unit of Express Scripts called United BioSource. They allege that nurses employed in the scheme supposedly offered “independent medical advice,” but instead acted as “undercover sales reps for Lilly.” Covance and UBC provided reimbursement services as part of the setup, according to the suit.  

RELATED: Lilly used nursing services as kickbacks to boost insulin prescriptions, lawsuit claims 

Last month, U.S. Magistrate Judge Caroline Craven recommended that the plaintiffs’ motions to dismiss be granted because the whistleblowers didn’t deliver facts sufficient enough to support their claims. She recommended that the plaintiffs be given 20 days to amend their lawsuit. Late last week, U.S. District Judge Robert Schroeder III in the Eastern District of Texas adopted the recommendations.

A representative for Eli Lilly declined to comment on the development.

The developments come after Novo Nordisk last year settled similar allegations dating back to 2006. In that suit, plaintiffs said the company used certified diabetes educators to induce prescribers to use Novo drugs by offering educational programs and materials worth thousands of dollars. The company denied the allegations.

RELATED: Novo Nordisk reaches whistleblower settlement in 'white-coat' sales scheme lawsuit 

The plaintiffs in the Lilly case are part of a national research organization, the National Healthcare Analysis Group, and alleged that the setup has resulted in "billions of dollars in improper reimbursements."

In another similar case, Allergan in July paid out $13 million in a 2009 whistleblower suit over claims the company illegally promoted eye drugs—including Restasis—by providing valuable consulting and other services to doctors.