The answer will likely be debated for awhile. To some, Lilly was a winner because it agreed to pay only $15 million to a state that spent $40 million over five years on Zyprexa and the med regularly racks up annual sales in the billions of dollars. Others may argue that’s not small change because the deal works out to about $25 a head, based on Alaska’s population of about 600,000. Extend that to other states that have filed suits, or the nation as whole - there are settlement talks with the US Attorney in Philadelphia - the numbers may balloon. One person who takes that position is Patrick Burns of Taxpayers Against Fraud, a non-profit that chases corporate fraud and, yes, is funded by attorneys. Here’s an excerpt from our chat…

Pharmalot: So you think Lilly capitulated. Why is this a bad outcome for the drugmaker?
Burns: Anything short of a complete win for Lilly sets in motion the potential for more cases. There are nine states that have already filed lawsuits against Lilly over Zyprexa and more may now be tempted. More states will show up and ask Lilly to pay up.

Pharmalot: Yes, but $15 million isn’t a lot of change. Why is that a good number?
Burns: The math is fairly simple. People get confused about geography. It’s a really small state - Alaska only has about 600,000 people. So that works out to, what, $25? Multiply that times the national population and you get a huge number. Because Lilly is negotiating with the federal government. Look at it that way and this isn’t so small.

Pharmalot: So you’re trying to argue that, at the end of the day, Lilly may now face this much bigger liability with this one settlement?
Burns: Yes, and this was just a side effects case - remember, the judge in Alaska threw out the allegation about off-label marketing. But off-label marketing is the subject of the other lawsuits and settlement talks. And we have some knowledge about how big that’s going to get, because Lilly’s own lawyers were discussing a possible $1 billion settlement with the feds. Remember the story that leaked recently?

Pharmalot: But Zyprexa racks up billions in sales each year. It still sounds like the dollars you’re talking about are the cost of doing business.
Burns: Don’t forget there are other lawsuits. They’ve already paid $1.2 billion to settle many individual claims, and there are still more out there. Then there are shareholder lawsuits where they say they bought the stock and had no idea Lilly was engaged in massive off-label marketing and suppressed side effects. And then there are third-party payor suits, the health plans of the world. They want to be reimbursed for paying for a drug under these circumstances. What are these worth? We don’t know yet, except we know one number that will be wrong - zero.

Pharmalot: I’m thinking that Merck settled most of the US Vioxx cases for close to $5 billion, and Wall Street cheered. The company got its arms around much of the problem and isolated it. In the end, isn’t that what Lilly is doing, even if Zyprexa costs a few billion?
Burns: I agree that a deck-clearing move is needed by the drug companies. Because it will help refocus them and will be therapeutic. But fessing up and paying up has to be part of it. The longer these stories circulate out there, the worse it is for the industry. This litigation barrage has been building for 10 years. Every juror has come to court hearing stories about drugmakers and may have already formed their opinions. And maybe some of them believe that a $10 million settlement once in awhile isn’t enough. How is that good for that industry?