Eli Lilly (LLY): The Drug Companies Never Learn

At least once a year, and probably more often, a big drug company makes a settlement or faces suits over not disclosing the bad effects of one or more of its products.

Lilly’s anti-psychotic drug Zyprexa can cause severe weight gain which can lead to diabetes. Investigators clearly think that someone at Lilly knew this. As The Wall Street Journal points out "the prospect of an indictment is daunting for a drug maker in light of the government’s huge role in health care, since a criminal finding could compromise a company’s access to government business."

Lilly may pay as much as $1 billion to settle with the feds and state governments. Then all of its Zyprexa problems will go away like bad dreams.

The settlement hardly gets to the heart of the matter which is that drug companies appear to be routinely prepared to be overly aggressive in marketing their products. Lawsuits are part of the cost of doing business. Lilly made over $1 billion last quarter. The charge for settling this matter will probably be spread over more than one year.

The drug company culture is deeply flawed and undermined by an acceptance of deception. Prosecutors and the FDA know that. But, they seem not to be willing to do much about it.

Douglas A. McIntyre