Lilly to Settle Zyprexa Claims

Eli Lilly(LLY Quote) announced late Thursday that it will settle about three-quarters of the liability clams stemming from its Zyprexa schizophrenia drug.

Lilly will establish a fund not to exceed $690 million for plaintiffs who agree to settle their claims. The number of claimants covered by the settlement is estimated to be 8,000, comprising about 75% of the claims.

The Indianapolis drugmaker anticipates taking at least a $700 million pretax charge in the second quarter of 2005 to cover this settlement, as well as other product liability claims not covered by the settlement.

"While we believe the claims are without merit, we took this difficult step because we believe it is in the best interest of the company, the patients who depend on this medication, and their doctors," said Sidney Taurel, Lilly chairman and CEO, in a statement. "Our decision to resolve these claims does not change the fact that Zyprexa has and will continue to improve the lives of millions of patients around the world who are suffering from schizophrenia and bipolar disorder.

The settlement will resolve the majority of Zyprexa claims pending in the U.S. That includes federal and state lawsuits against Lilly, the filed nationwide class action lawsuits, and the majority of some 5,000 claims that were the subject of "tolling agreements" that extended the deadline for potential claimants to file a lawsuit, as well as other potential claims against Lilly.

"We believe that this settlement is in the best interest of our clients, as well as patients, physicians and caregivers," said Christopher Seeger, a member of the plaintiffs' steering committee, which had been directing the federal litigation for the claimants. "The patient population to which this drug is given has difficult medical histories. Protracted litigation was in no one's interest."