Legal Actions Resulting from the Use of Zyprexa

Legal Actions Resulting from the Use of Zyprexa

            In April of 2007, the news couldn't have been much worse for drug manufacturer Eli Lilly.  That's when a group of its very own share holders filed a class-action lawsuit against directors of the company.  The share holders are alleging that Eli Lilly engaged in fraud and violated the Securities Exchange Act of 1934.  All this supposedly occurred when Eli Lilly allegedly mislead consumers and investors, during their promotional campaign for their psychiatric drug known as Zyprexa. 

In essence, the lawsuit alleges that Eli Lilly intentionally failed to disclose key material facts regarding the use of the drug.  One of these key facts is that the share holders believe Eli Lilly intentionally hid the link between Zyprexa and the onset of diabetes and weight gain. Attorneys for the share holders also allege Eli Lilly engaged in a scheme to offset a drop in the sales of Zyprexa; after the drug's side effects were disclosed to the public.  Another allegation is that Eli Lilly knew that the growth rate in sales would not and could not be sustained, if and when the public became aware of the adverse health issues associated with Zyprexa. 

Sales of Zyprexa soared, between the years 2002 and 2004.  Many prudent investors rode this gravy train into the station; cashing in at just the right time.  However, other investors would not be so lucky.  That's because in 2004, it was publicly disclosed that Zyprexa (among other things) was linked to diabetes and weight gain.  As a devastating consequence of this revelation—between May 7^th, 2004 and October 25^th, 2004—share holders of Eli Lilly stock lost some 30 billion dollars.  This was the direct result of a declination in th! e value of the company's stock (as well as the basis for this current class-action lawsuit).