Lilly, Internet and Corporate Secrecy
 
Date: Fri, 25 May 2007 14:30:07 -0500 (CDT)


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http://www.pharmalive.com/magazines/medad/view.cfm?articleID=4726
*

*New world, new dangers

Lilly's troubles stemming from a series of leaked documents about
Zyprexa offer a cautionary tale to pharmaceutical executives about
the perils of a digital world.

by Joshua Slatko*

*

The atypical antipsychotic Zyprexa is Eli Lilly and Co.'s best-selling
product and one of the 10 top-selling prescription medicines
worldwide, but with success has come controversy. Lilly agreed in
January to pay $500 million to 18,000 claimants who allege a failure
to warn that the drug could cause diabetes, bringing the total paid
out by Lilly for such claims to $1.2 billion. The company's image
suffered a more serious trauma in December 2006 when a series of
articles in the /New York Times/ accused Lilly of marketing Zyprexa
off-label and downplaying the drug's potential side effects to
doctors. The /Times/ articles were based on internal Lilly documents
that had been leaked from the civil litigation around Zyprexa and
quickly found their way onto the Internet. Legal and marketing
experts agree that the story behind the leaked Zyprexa documents
is reflective of a new environment for pharmaceutical companies,
in which executives must face the realities of potentially damaging
internal communications being rapidly distributed on a large scale.

Lilly's difficulties began when the company released more than 11
million pages of documents to the plaintiffs during the discovery
process of the Zyprexa failure-to-warn litigation. As is common in
such cases, the documents were placed under a protective order by
the court that strictly limited their use and to whom they could
be released. According to the order, all materials produced and
designated as confidential by Lilly could only be used for the
prosecution or defense of the litigation, and not for any other
purpose. Individuals to whom the documents could be released for
purposes of the litigation were required to sign an endorsement of
the order, in effect a non-disclosure agreement.

In August 2006, the Lanier Law Firm, one of the firms representing
plaintiffs in the Zyprexa litigation, began consulting with David
Egilman, M.D., a professor at Brown University Medical School with
experience in medical-liability cases. Dr. Egilman signed an
endorsement of the document protective order in November 2006 and
was given access to the Lilly internal documents.

According to later court findings, Dr. Egilman then conferred with
Alex Berenson, a /New York Times/ reporter, about finding a way to
get the documents into Mr. Berenson's hands. Since the protective
order contained an exception allowing for access to the documents
through subpoena of other courts or agencies if certain procedures
were followed, Dr. Egilman and Mr. Berenson decided to contact James
Gottstein, an Alaska-based attorney for the Law Project for Psychiatric
Rights <http://psychrights.org/index.htm>.

Mr. Gottstein and the Law Project for Psychiatric Rights are involved
in a strategic litigation campaign against forced psychiatric
drugging. Hospitals or mental-health authorities have the ability
to go to court and try to get the courts to order people to take
certain drugs. Mr. Gottstein contends that in the case of Zyprexa,
judges are making a decision about who should be taking the drug
when critical information about the safety of the drug has been
hidden. As a result, any documents that might cast Zyprexa or similar
drugs in a bad light would be of significant value to Mr.

Gottstein and his case.

At Mr. Gottstein's request, the superior court in Alaska issued a
subpoena to Dr. Egilman for the Zyprexa documents Dec. 6. As required
by the protective order, Dr. Egilman sent a copy of this subpoena
to Lilly, offering the company an opportunity to object.

In the section on subpoena by other courts, the Zyprexa protective
order states, "In no event shall confidential documents be produced
prior to the receipt of written notice by the designating party and
a reasonable opportunity to object." No specific amount of time is
given. This was a crucial oversight by Lilly, according to William
Childs, assistant professor of law, Western New England College.
Mr.

Childs is a tort law expert whose research focuses on the problems
of document leaks in the Internet age.

"One lesson that a pharmaceutical executive should take away from
this is to make sure that protective orders are written clearly,"

Mr. Childs says. "That way you do not have a fight about what a
reasonable time is."

Dec. 13, Lilly contacted the Lanier Law Firm to inform them that
the company intended to file a motion to quash Mr. Gottstein's
subpoena.

The following day, Lilly sent a letter to Dr. Egilman asking him
to refrain from producing the documents and another to Mr. Gottstein
asking him to refrain from seeking production of the documents until
the superior court in Alaska could rule on the company's motion.
By then Dr. Egilman, having judged that Lilly had been given more
than sufficient time to respond and had not done so, and having
received a second, amended subpoena from Mr. Gottstein requesting
production of the documents by Dec. 12, had already begun transferring
the documents to Mr. Gottstein. According to later court findings,
Lilly was never informed of or given an opportunity to respond to
this second subpoena.

Dec. 15, having learned that Dr. Egilman had transferred the
documents, Lilly's attorneys wrote another letter to Mr. Gottstein,
asking him to return any protected materials to the company, request
return of the materials from any individuals to whom he had sent
them, and refrain from any further publishing or publicizing of the
materials. When the Lanier Law Firm learned that Dr. Egilman had
disclosed the documents, the firm demanded that he return all of
the documents and ended his consultancy on the litigation.

By this time, however, Mr. Gottstein had already distributed the
documents to a number of individuals, including Mr. Berenson, Steve
Cha of the House of Representatives Committee on Government Reform
staff, and Snighda Prakash, a reporter for National Public Radio.

Mr. Gottstein insists that he did nothing wrong, since the original
protective order did not apply to him. "Lilly didn't object in
time," he says. "They had a reasonable opportunity to object, and
then didn't. Once I received the documents, they had lost all
protection. I don't feel like I had any obligation under the
protective order. But I was very clear with Dr. Egilman that he
did, and that he was supposed to follow the protective order. The
whole point of my subpoenaing the documents was to follow the
protective order, not violate it, because if Dr. Egilman had wanted
to violate it, he could have just surreptitiously given those
documents to the /New York Times/."

Lilly's attorneys, and eventually the courts, saw the case differently.
Lilly's motion for a temporary injunction against further distribution
of the documents was granted Dec. 19, with the judge finding that,
"Mr. Gottstein has deliberately and knowingly aided and abetted Dr.
David Egilman's breach" of the protective order. A permanent
injunction was granted Feb. 13 by Senior U.S.

District Judge Jack B. Weinstein against further distribution of
the documents by Mr. Gottstein and most of the other individuals
to whom he had distributed the documents. Mr. Gottstein filed a
notice of appeal in mid-March, and litigation is continuing as of
early April.

Media attack

*

The court's intervention was too late to save Lilly from taking a
beating in one of the world's most widely read newspapers. Between
Dec. 17 and Dec. 21, a series of three articles appeared in the
/New York Times/ under Mr. Berenson's byline, all based on the
Zyprexa documents, and all attacking Lilly for behavior allegedly
described in them. The first, on Dec. 17, accused the company of
playing down Zyprexa's risks in communications with doctors, in
particular the drug's links to obesity and tendency to raise blood
sugar, both known risk factors for diabetes. The second, published
the following day, charged the company with marketing Zyprexa
off-label for dementia --- a particularly damaging accusation, since
Zyprexa's labeling includes a specific warning against use for
dementia-related psychosis. The third, appearing Dec. 21, claimed
that for at least a year Lilly had provided information to doctors
about the blood-sugar risks of Zyprexa that did not match data that
the company circulated internally when the company first reviewed
its clinical-trial results.

Lilly's responses to the /Times/ articles were immediate and emphatic.
The company cited numerous studies that failed to find causal links
between Zyprexa and diabetes, noted that the drug's label had always
included information about potentially clinically significant weight
gain, and categorically denied any off-label marketing.

In all responses, the company emphasizes that the documents leaked
to Mr. Berenson were only a small number of the total and did not
represent actual company strategies or actions.

"The /Times/ failed to mention that these leaked documents are a
tiny fraction of the more than 11 million pages of documents provided
by Lilly as part of the litigation process," says Steven Paul, M.D.,
executive VP of science and technology at Lilly (lilly.com). "They
do not accurately portray Lilly's conduct. As part of Lilly's
commitment to patients and health-care professionals, many high-level
Lilly physicians and researchers, along with researchers from outside
Lilly, were engaged for a number of years to study the issue of
Zyprexa and diabetes. Leaked documents involving these discussions
do not represent an accurate view of company strategy."

Company management acknowledges, though, that the contents of the
leaked documents look bad. In response to questions from //Med Ad
News//, Marni Lemons, a Lilly spokesperson, agreed that the documents
taken by themselves give the appearance of inappropriate behavior.
Ms. Lemons insists that this appearance is inaccurate.

"Judge Weinstein's order acknowledges the undeserved reputational
harm Lilly has suffered as a result of the selective, out-of-context
delivery of these documents," Ms. Lemmons says.

Mr. Gottstein disagrees. "The fact that these documents are only a
small number of the total is no excuse for hiding them," he says.

"Lilly released millions of pages of documents to the plaintiffs,
and so of course you want to go through and find the relevant ones.

If they've got other information that rebuts these documents, then
they can bring that up, and the public will benefit by a public
discussion of all the facts. They have every right to release any
of the documents they want to."

Lilly may have such a right, but releasing more documents would
only hurt the company in a different way, according to Ms. Lemons.
"The protective order affords protection for our trade secrets and
other confidential information," she says. "Lilly has no intention
of waiving these protections by disclosing additional confidential
information."

The company is faced with this impossible choice --- either letting
the leaked documents stand on their own in the public eye even
though the company admits that they look bad, or revealing even
more confidential information and trade secrets in order to rebut
them --- because the documents have found their way onto the Internet.

When filing for the permanent injunction against further distribution
of the documents, Lilly's attorneys included five Websites in their
list of parties to be enjoined. But Judge Weinstein refused to
enjoin any of the sites. His reasons for doing so are reflective
of the new environment of communications in which pharmaceutical
companies must learn to operate.

"A perplexing issue is presented by Lilly's request for an injunction
against Websites to which the conspirators sent the documents or
which might have been used for further dissemination by those to
whom the documents were originally sent," Judge Weinstein says in
his ruling. "The Internet, with its almost infinitely complex
worldwide web of strands and nodes, is a major modern tool of free
speech and freedom both here and abroad. Its reach extends as far
as, and perhaps exceeds, that of newspapers and other traditional
media. The law is rightly hesitant about allowing government ---
including the courts --- to inhibit and restrict the use of such
modern instruments of communication."

Later in his ruling, Judge Weinstein notes that enjoining Websites
would be a useless exercise. "Prohibiting five of the Internet's
millions of Websites from posting the documents will not substantially
lower the risk of harm posed to Lilly," he says.

"Websites are primarily fora for speech. Limiting the fora available
to would-be disseminators by such an infinitesimal percentage would
be a fruitless exercise of the court's equitable power."

The ruling also notes that the court would be unable to effectively
enforce an injunction against the Internet at large and that
attempting to do so would constitute a dubious manifestation of
public policy.

Mr. Childs believes that the exemption of the Websites from Judge
Weinstein's injunction may be the most critical lesson for
pharmaceutical companies to learn from Lilly's experience.

"Historically, at least in most of these cases, the documents get
out and that has not made that big of a difference, because there
has not been the quick and widespread distribution," he says. "We
are in a different practical world now. But it's still the same
legal world, which is one of the things that makes this case
interesting --- the obvious frustration of the court in trying to
use the old legal system in a new practical world."

Lilly is still dealing with the repercussions of the distribution
of the Zyprexa documents and may be doing so for some time. March
1, the company received a letter from the House Committee on
Government Reform requesting access to all of the documents leaked
to Mr.

Gottstein, as well as an enormous range of additional materials
related to Zyprexa. In the letter, committee chairman Henry Waxman,
D-Calif., cites the /New York Times/ articles as a major reason for
the committee's request.

A similar letter has been sent to Lilly by Senator Charles Grassley,
R-Iowa. According to published reports, federal prosecutors and at
least five states are investigating Lilly's marketing of Zyprexa.

In addition, having finally settled the majority of the failure to
warn claims against Zyprexa, Lilly is now faced with additional
lawsuits for allegedly misleading its shareholders about the drug.

April 2, a class-action lawsuit was filed in the U.S. District Court
for the Eastern District of New York on behalf of all purchasers
of Lilly stock between March 28, 2002, and Dec. 22, 2006. The
complaint charges the company with violations of the Securities
Exchange Act of 1934 for misrepresenting to investors known adverse
side effects associated with the use of Zyprexa, and failure to
disclose a systematic and illegal campaign to increase Zyprexa sales
by marketing the drug for unapproved off-label uses. The suit cites
a loss of more than $30 billion in equity value during the period
in question due to this alleged fraud as its cause for damages. The
stock market certainly responded poorly to the /Times/ articles,
with Lilly shares falling 5.8% during the week of Dec. 18 to Dec.
22.

The new practical world

*

Lilly could have avoided many of these traumas to the company's
image if Lilly's marketers had not pushed the envelope quite so
hard, according to some marketing experts. "This sounds like what
Eli Lilly was doing was de-emphasizing a piece of the puzzle because
it might change doctors' perspective on the use of Zyprexa," says
Bretton Holmes, president, Holmes World Media, a media-relations
and image-development company (holmesworldmedia.com). "But discretion
might have been the better part of valor in this instance, and it
doesn't look like they realized that."

Mr. Holmes criticizes Lilly's argument that the leaked documents
are not representative of company policies and actions. "If it looks
like a duck and walks like a duck, it's probably a duck," he says.

"The leaked documents may not provide a complete picture from Lilly's
perspective, and obviously they're going to say that. That's damage
control. But if this small portion of the whole speaks to actual
negative end results with actual people, it's going to carry more
weight than it would as a part of the whole."

At this point, according to Mr. Holmes, Lilly's options are limited.

"Now that they're in this mess, the only choice they've got is to
apologize," he says. "Their concern is that they'd be admitting
that they were wrong. But once your foot is stuck in the mud pit,
it's time to start thinking in different ways."

An apology is in order even if the leaked documents are in fact
unrepresentative of the whole, Mr. Holmes says, because the appearance
is bad, and much of a company's image is about appearances.

A perception of corrective steps being taken is also critical.

"Lilly is going to have to be proactive about coming out and saying
that new standards will be put in place to prevent future problems,"

Mr. Holmes says.

According to Mr. Childs, Lilly's most costly error from a legal
perspective, and the most important lesson learned for other
pharmaceutical executives, may have been the seven-day wait to
respond to Mr. Gottstein's initial subpoena. "If there is something
that could have been handled better, it was probably what I consider
a fairly slight delay in responding to the notice of the subpoena
that went to the general counsel's office," Mr. Childs says. "If
Lilly had done a quicker job of getting that passed through the
system, there wouldn't have been any argument about whether it was
done within a reasonable time."

Mr. Childs believes that pharmaceutical executives need to be aware
of another key element of the new practical world that helped
exacerbate Lilly's problem. "The new practical world does not stem
only from the speed of communication on the Internet," he says.

"This has a lot to do with a fairly lively anti-pharmaceutical, and
in particular anti-psychiatric pharmaceutical community. The speed
with which these documents were distributed was largely attributable
to that. It's not something pharmaceutical executives have any
ability to control. But I suspect that they wish it wasn't there."

According to Mr. Childs, Lilly's effort through the courts to get
the documents back under wraps once they had already appeared on
the Internet was a futile gesture. "Pretty early on in the process,
it seemed that the effort to get the documents back was almost
certainly going to be a failure," he says. "And sure enough, the
effort was, largely speaking, a failure."

In fact, Mr. Childs will be using the Zyprexa documents case as a
primary example in "When the Bell Can't Be Unrung: Document Leaks
and Protective Orders in Mass Tort Litigation," a research article
examining the appropriate approach by courts to violation of
protective orders in the Internet age.

Mr. Holmes agrees. "If you've gotten to that point, you don't try
to put the genie back into the bottle," he says.

Zyprexa still shows vitality

*

Fortunately for Lilly, the Zyprexa brand remains strong in spite
of all the negative attention. According to a report released in
February 2007 by Decision Resources Inc., Zyprexa will remain the
gold standard for the treatment of schizophrenia through 2015. The
Decision Resources report credits this to Zyprexa's superiority in
efficacy to all other current therapies, particularly on measures
that are most important to prescribers such as impact on global
symptoms and responder rate.

The report, "Schizophrenia: Turning Physician Insight into Projected
Patient Share," is based on responses from more than 3,000 physicians
and compares a number of antipsychotics, including Invega, asenapine,
and bifeprunox.

Invega, comprising paliperidone, is marketed by Janssen LP (janssen.com)
and indicated for the treatment of schizophrenia and bipolar mania.
Asenapine is being developed by Organon USA Inc.

(organon-usa.com) and is in Phase III clinical trials for the
treatment of schizophrenia and acute mania in bipolar disorder.

Bifeprunox is being developed jointly by Solvay Pharmaceuticals
Inc.

(solvaypharmaceuticals-us.com) and Wyeth Pharmaceuticals (wyeth.com)
and is in Phase III clinical trials for the treatment of schizophrenia
and bipolar disorder.

"Invega is a metabolite of risperidone and is likely to have efficacy
similar to that of risperidone, which scored slightly lower than
Zyprexa overall," says Nitasha Manchanda, Ph.D., analyst, Decision
Resources (decisionresources.com). "Asenapine also lacks the
differentiation to replace Zyprexa as the gold standard because it
does not make as significant an impact on global symptoms, and
bifeprunox is significantly inferior to Zyprexa in all primary
efficacy measures and is not capable of surpassing Zyprexa."

Lilly as a whole remains in a strong position to bounce back from
its troubles. Even after the /Times/ articles, the fall in the
company's stock value, the latest costly settlement of Zyprexa
failure to warn litigation, and news of state and federal investigations
into the company's marketing methods, Lilly's financial reputation
remains solid.

Standard & Poor's analysts announced in January 2007 that its ratings
and outlook for Lilly (AA/Stable/A-1+) have been unaffected, citing
the shrinking number of remaining lawsuits, the declining average
dollar amount per lawsuit, the likelihood that there will be a
decreasing number of additional claims given Zyprexa's label change
in 2003 specifically warning of risks, and the company's continued
strong free cash flows. Standard & Poor's (standardandpoors.com)
analysts also note that Zyprexa's sales remain solid and Lilly has
launched several new drugs in recent years that are beginning to
generate meaningful earnings.

Lilly management is well aware that the controversy surrounding the
Zyprexa documents is far from over. Company executives hope to be
able to reframe the issue around the drug's considerable benefits,
rather than the side effects highlighted by the popular press.

"We know that this situation has not ended for Lilly or Zyprexa,"

Ms. Lemons says. "Our biggest concern about the series of articles
on Zyprexa in the /New York Times/ --- and much of the follow-on
coverage in other media --- is that it is completely focused on the
side effects of Zyprexa and virtually ignores any potential benefits
of the medication."

Ms. Lemons points out that the drug has been used by more than 20
million people worldwide and that doctors continue to prescribe
Zyprexa to treat two of the most terrible mental illnesses ---
schizophrenia and bipolar disorder.

"FDA has looked at the entire body of evidence that Lilly has
continued to provide over the years and has affirmed the benefit
that this medicine can give to patients when accompanied by appropriate
labeling regarding benefits and risks," Ms. Lemons says.

"Over the past 11 years, Zyprexa has helped millions of people with
serious mental illnesses like schizophrenia and bipolar disorder
regain control of their lives."

*

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*