Eli Lilly 2011 Annual Report Download - page 44

FORM 10-K
results of operations, liquidity, and financial position. We expect a loss of exclusivity for Alimta would result in a rapid
and severe decline in future revenues in the relevant market.
• Strattera: Actavis Elizabeth LLC (Actavis), Apotex Inc. (Apotex), Aurobindo Pharma Ltd. (Aurobindo), Mylan
Pharmaceuticals Inc. (Mylan), Sandoz Inc. (Sandoz), Sun Pharmaceutical Industries Limited (Sun Ltd.), and Teva
Pharmaceuticals USA, Inc. (Teva USA) each submitted an ANDA seeking permission to market generic versions
of Strattera prior to the expiration of our relevant U.S. patent and data-based pediatric exclusivity period
(expiring in 2017), and alleging that this patent is invalid. In 2007, we brought a lawsuit against Actavis, Apotex,
Aurobindo, Mylan, Sandoz, Sun Ltd., and Teva USA in the U.S. District Court for the District of New Jersey. In
August 2010, the court ruled that our patent was invalid; however, in July 2011, the Court of Appeals for the
Federal Circuit overturned that decision, upholding the patent. The Federal Circuit Court of Appeals denied the
generic manufacturers’ petition for rehearing en banc in October 2011, and the deadline for any further appeal
has passed. Zydus Pharmaceuticals (Zydus) filed an action in the New Jersey district court in October 2010
seeking a declaratory judgment that it has the right to launch a generic atomoxetine product, based on the
district court ruling. We believe that Zydus is subject to the injunction issued by the court of appeals in the
Actavis case.
Zyprexa Litigation
We are a defendant in approximately 40 Zyprexa product liability lawsuits in the U.S. covering approximately 120
plaintiffs. The lawsuits allege a variety of injuries from the use of Zyprexa, with the majority alleging that the product
caused or contributed to diabetes or high blood-glucose levels. The claims seek substantial compensatory and
punitive damages and typically accuse us of inadequately testing for and warning about side effects of Zyprexa. Many
of the claims also allege that we improperly promoted the drug. Approximately 25 of the lawsuits, covering about 30
plaintiffs, are part of a Multi-District Litigation (MDL) proceeding before The Honorable Jack Weinstein in the Federal
District Court for the Eastern District of New York (EDNY) (MDL No. 1596). In October 2011, a jury trial in a California
state court was decided in our favor. We are prepared to continue our vigorous defense of Zyprexa in all these
lawsuits and claims.
We were served with lawsuits filed by 13 states alleging that Zyprexa caused or contributed to diabetes or high
blood-glucose levels, and that we improperly promoted the drug. We settled the Zyprexa-related claims of all of
these states, incurring pretax charges of $230.0 million in 2009 and $15.0 million in 2008.
In 2005 and 2006, four lawsuits were filed in the EDNY purporting to be nationwide class actions on behalf of all
consumers and third-party payors, excluding governmental entities, which made or will make payments for their
members or insured patients being prescribed Zyprexa. These actions were consolidated into a single lawsuit,
brought under certain state consumer-protection statutes, the federal civil Racketeer Influenced and Corrupt
Organizations Act, and common law theories, seeking a refund of the cost of Zyprexa, treble damages, punitive
damages, and attorneys’ fees. As with the product liability suits, these lawsuits allege that we inadequately tested for
and warned about side effects of Zyprexa and improperly promoted the drug. In September 2008, Judge Weinstein
certified a class consisting of third-party payors, excluding governmental entities and individual consumers, and
denied our motion for summary judgment. In September 2010, both decisions were reversed by the Second Circuit
Court of Appeals, which found that the case cannot proceed as a class action and entered a judgment in our favor on
plaintiffs’ overpricing claim. The U.S. Supreme Court denied plaintiffs’ petition for certiorari. All remaining claims at
issue in these cases have now been resolved.
Byetta Litigation
We have been named as a defendant in approximately 120 lawsuits involving approximately 480 plaintiffs, primarily
seeking to recover damages for pancreatitis experienced by patients prescribed Byetta. We are aware of
approximately 530 additional claimants who have not yet filed suit. Approximately 100 of these lawsuits are filed in
California and coordinated in a Los Angeles Superior Court.
Other Product Liability Litigation
We have been named as a defendant in numerous other product liability lawsuits involving primarily
diethylstilbestrol. These claims are covered by insurance, subject to deductibles and coverage limits.
Product Liability Insurance
Because of the nature of pharmaceutical products, it is possible that we could become subject to large numbers of
product liability and related claims for other products in the future. In the past several years, we have been unable to
obtain product liability insurance due to a very restrictive insurance market. Therefore, for substantially all of our
currently marketed products, we have been and expect that we will continue to be completely self-insured for future
product liability losses. In addition, there is no assurance that we will be able to fully collect from our insurance
carriers in the future.
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