CHARLESTON – Eli Lilly and Company has filed a notice of removal to have a lawsuit filed against it by the state Attorney General's office moved to Federal Court.

Attorney General Darrell McGraw's office, however, says the case still belongs in the state Circuit Court system.

In the suit, filed Feb. 28 in Mason Circuit Court, the AG's office claims Eli Lilly and Company committed fraud on the people of West Virginia in selling the drug Zyprexa. McGraw seeks to stop Eli Lilly's deceptive practices, collect damages, and create a fund for those who will develop diabetes and other diseases from taking Zyprexa.

On April 21, attorneys for Eli Lilly filed the notice of removal in U.S. District Court for the Southern District of West Virginia, Huntington Division.

In the notice, attorney Raymond S. Franks II of the Charleston law firm of Goodwin & Goodwin notes that similar litigation is pending in U.S. District Court in New York and in Louisiana.

The notice also refers to a 1986 U.S. Supreme Court decision that holds that "federal question" jurisdiction did not require the plaintiff to have asserted a violation of a federal statute providing a private parallel right of action.

"This is a product that is heavily regulated by the federal government," Franks said. "So there are some questions in the lawsuit that can only be resolved by referring to federal law."

Chief Deputy AG Fran Hughes says Eli Lilly's motion is unnecessary.

"We have that tactic used for literally every case," she said. "I don't think there is a basis of federal jurisdiction."

Hughes said the AG's office plans to file a motion of remand to keep the case in Circuit Court.

"We have yet to lose a remand motion," Hughes said. "We're hopeful it will be sent back to state court."

Franks has a different point of view.

"The legal landscape evolves and changes," he said. "Every once in a while, the court has to look at these decisions again. So it's up to the court to listen to the sides and decide what to do."

McGraw's complaint states that the FDA approved Zyprexa for schizophrenia and bipolar mania but doctors prescribe it for other uses.

The complaint states that Zyprexa is the largest selling atypical antipsychotic in the world and the most widely prescribed antipsychotic in the United States.

"West Virginia's Department of Health and Human Services has paid at least $70 million for Zyprexa in its Medicaid program since 1996," the complaint states.

It says studies have linked Zyprexa to diabetes since 1998. It alleges that sales representatives misled and deceived doctors about the safety and the efficacy of Zyprexa.

The complaint also alleges that advertisements deceptively understated risks and overstated benefits. And it alleges that Lilly promoted "off label" prescriptions for anxiety, sleep disruption, mood swings, attention deficit hyperactivity and dementia.

As a result of these actions, according to McGraw, Lilly sold more Zyprexa than it would have sold if it had disclosed the risk of diabetes and other diseases.

"Lilly benefited from its misrepresentations and fraudulent conduct by gaining sales of Zyprexa at the expense of other, safe, effective drugs," the complaint states.

"The money paid by the State would not have been paid to Lilly except for its fraudulent conduct," it states.

McGraw seeks three times the amount of the alleged overpayments plus civil penalties, restitution, reimbursement and creation of a fund to pay for future medical care.

He also seeks reasonable attorney fees along with other costs and fees.

Case number: 3:06-cv-00298

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