Eli Lilly’s (LLY) Gift To The Funeral Industry

The National Funeral Directors Association must be sending “thank you” cards to Eli Lilly (LLY) and it partner Amylin (AMLN). Together, the companies developed and market diabetes drug Byetta. The firms had told the FDA that two people had died from the drug. That was bad enough. But, recently it added four more people to the list.

Lilly and its partner were a bit late with the news. They wanted to make sure it was not taken out of context. According to The Wall Street Journal, "We’re coming forward because of the high degree of confusion around the FDA alert," said Amylin President and Chief Executive Daniel Bradbury. "We want to avoid confusion in the future when that information [about the four additional deaths] becomes available."

Since being dead is a permanent state, it is hard to see who might be confused. The only suspects are the people at the FDA.

Investors in the two companies get the message. Eli Lilly shares are off ove5 15% this year. It is worse over at Amylin. Its stock is down 45% since the beginning of the year.

Most business school professors and litigation experts would say that the price of legal actions for “flawed” drugs is built into the pricing. A certain number of treatments will go wrong each year. It is simply a part of doing business.

In the case of the people who died, those calculations are not of much comfort

.Douglas A. McIntyre