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Lilly in lawyers' cross hairs again

Lawsuits suggest vaccine may be linked to autism

By Jeff Swiatek

E-mail: jeff.swiatek@indystar.com

July 14, 2002

http://www.autismlawyer.net/Indianapolis%20Star.htm

No one knows for sure why autism is spreading among young children, but that hasn't stopped some trial lawyers from targeting a prime suspect in their eyes:

Eli Lilly and Co.

The Indianapolis drugmaker faces at least 45 lawsuits over its role in developing and selling for more than 40 years a mercury-based preservative used in childhood vaccines and now suspected of causing autism.

Though the first case won't come to trial before next year, the lawsuits pose a potential costly threat to Lilly and a handful of vaccine makers also named as defendants.

In an era when product-liability suits against big companies can result in jury awards in the millions or even billions of dollars, few cases can compare in jury-awakening pathos to toddlers stricken with autism. A puzzling neurological condition, autism can trigger profound mental problems in a healthy child within months and wreak havoc with families.

Since the alarm was sounded in 1999 that mercury-based preservatives in vaccines might be linked to autism, trial lawyers have met regularly to plan their legal assaults on behalf of autistic children and their parents.

"I think the damages are catastrophic. One case certainly could be worth millions," said Michael J. Miller, senior partner for Miller & Associates, an Alexandria, Va., law firm that's filed three lawsuits against vaccine makers and Lilly.

Nationally, more than 60 lawsuits have been filed against vaccine makers, including such big firms as Aventis, GlaxoSmithKline, Merck, and Johnson & Johnson. The litigation has the potential to sign on thousands of plaintiffs, said attorney C. Andrew Waters, whose Dallas firm Waters & Kraus has taken a leading role in autism cases with more than 50 filed.

Waters thinks juries will sympathize with plaintiffs who can show that drugmakers knowingly sold vaccines containing mercury in doses much higher than allowed under federal guidelines. "It just boggles the mind (how) you inject someone, much less an 8-pound baby, with one of the most toxic substances known to man."

Mercury is a notoriously toxic metal that accumulates in the body and can cause severe brain damage.

Bad timing

Getting caught up in the autism litigation could hardly come at a worse time for Lilly.

It already faces the loss of more than $2 billion a year in revenue from Prozac, its former best-selling drug that lost patent protection last year. And it's spending millions of dollars and redeployed hundreds of workers to respond to tougher Food and Drug Administration scrutiny that has delayed approvals of at least three key upcoming drugs and forced an overhaul of manufacturing quality-control procedures.

To defend itself in the autism cases, Lilly has turned to the same Kansas City law firm, Shook, Hardy & Bacon, it has used in Prozac wrongful-death lawsuits nationally and in a flurry of drug-tampering cases in Missouri.

Lilly's lawyers will fight the charge that thimerosal, the scientific name for the mercury-based preservative, can cause autism, said Lilly spokeswoman Joan S. Todd.

"No causal link has been established between thimerosal and adverse reactions in vaccines," she said. She criticized trial lawyers in the autism cases for "putting up these Web sites and trying to drum up business."

Lilly scientists developed thimerosal (pronounced thigh-MARE-uh-sol) in the late 1920s and early 1930s and began selling it as a preservative in vaccines in the 1940s. Marketed for some uses under the brand name Merthiolate, thimerosal also has been used as a skin disinfectant and a preservative in blood, cosmetics and cleansers.

Lilly stopped selling thimerosal in 1991 "because it was not a significant source of revenue," Todd said. Lilly hasn't sold childhood vaccines since the 1970s.

Trial lawyers believe Lilly still is liable for damages arising from thimerosal, despite not having sold any for the past 11 years.

"You can't design a product that's lethal and then just step away from it. They made an enormous amount of money on it over the years," Miller said.

Waters, whose firm took the first depositions in the autism cases and may bring the first case to trial early next year, said Lilly also is open to fraud and conspiracy charges, based on evidence he dug up from the 1930s.

Waters charges that Lilly "flim-flammed scientists" for years with a 1931 study that concluded thimerosal wasn't harmful to humans.

The study, published in the American Journal of Hygiene, reported that Merthiolate has "a very low order of toxicity . . . for man."

Digging further, Waters found out the study's toxicity data came from experimental use of thimerosal by doctors from Lilly and Indianapolis City Hospital on meningitis patients during a severe outbreak in 1929-30.

The 1931 study on severely ill people ended up being "quoted in Lilly brochures into the 1980s," Waters said. "It very clearly demonstrates an effort to do an unethical study and then paint the results in a certain way that help them sell this product."

Lilly ignored or covered up later evidence that thimerosal, which contains 50 percent mercury by weight, can be dangerous to humans, Waters said.

Lilly's Todd said the drug firm knows of "two doctors mentioning using this (thimerosal on an experimental basis) in a study in 1929. They were not our doctors."

Waters and other trial lawyers concede that the lawsuits they've filed outpace the state of science on the key question of whether thimerosal causes autism.

"It is uncertain. It is controversial. It's conceivable we won't be able to establish that to the satisfaction of a judge or a jury," Waters said.

He said his firm is carefully picking clients to include only children who suffered autism soon after getting injected with mercury-containing vaccines. The firm also looks for clients who have medical records showing high mercury levels in the child's body.

Experts remain far from convinced thimerosal can cause brain disorders.

"The evidence is inadequate to accept or reject a causal relationship between thimerosal exposures from childhood vaccines and the neurodevelopmental disorders of autism, ADHD and speech or language delay," concluded the Immunization Safety Review Committee of the National Academy of Sciences last year.

As a precaution, the committee recommended the use of thimerosal-free vaccines. It also called for further study of the issue.

The Autism Society of America, the nation's largest autism group for patients and their families, is following the lawsuits but hasn't publicly supported them because the science is unclear that thimerosal causes autism, said Lee Grossman, the society's president.

"If there is a connection . . . why are there millions of children being vaccinated that have not gotten autism?" he asked.

"We just don't know why there's this huge explosion of children being diagnosed (with autism). Vaccines may be part of the issue, but that doesn't seem to explain the tremendous growth in numbers we're seeing. The evidence is still out."

Autism affects 500,000 to 1.5 million Americans and has grown at an annual rate of 10 percent to 17 percent since the late 1980s. That span coincides with the addition of new government-required childhood vaccinations that increased the levels of mercury that children were exposed to, according to lawsuits.

In Indiana, where vaccinations are now required against up to eight diseases before a child may start school, the number of autistic children registered in schools has grown from 116 in 1989 to 3,789 last year.

Burton takes interest

"We have an epidemic on our hands," said Rep. Dan Burton, R-Ind., in a hearing he held on the issue in April as chairman of the Committee on Government Reform.

Burton has publicly suggested thimerosal might be to blame.

The Indiana congressman said his own grandson Christian became autistic shortly after getting a round of childhood vaccinations in his second year of life.

"Shortly after receiving his mandated vaccinations, he became a different child," Burton said at the hearing.

"He no longer spoke. He would not look anyone in the eye. He cried endlessly, banging his head. He began running around flapping his hands. We now know he was suffering from an adverse reaction to his vaccines. We also know that he may have received more mercury in his vaccines than is considered safe by federal standards."

Since 1999, when the FDA and other government agencies warned of potential harm from thimerosal in vaccines, manufacturers have begun supplying doctors with thimerosal-free vaccines, which are now widely used.

Even so, the long use of mercury-containing vaccines left a legacy that could be costly and tragic, said Dr. James J. Bradstreet, director of research at the International Autism Research Center in Palm Bay, Fla., in a report to Burton's committee.

"We must deal with the reality that our vaccine policy exposed a generation of newborns to a neurotoxin -- thimerosal."

Press Release, Waters & Kraus, LLP

March 17, 2002

Claire M. Bothwell
Waters & Kraus, LLP
http://www.waters-kraus.com/
200 Oceangate, Suite 520
Long Beach, California 90802
Tel: (562) 436-8833
Fax: (562) 590-7296

http://www.safeminds.org/recent/waters/waters.html

      The Dallas-based law firm of Waters & Kraus announced today that it has received documents as a result of the discovery process in the case of ounter v. Eli Lilly & Company, et al, currently pending in Brazoria County, Texas that come from the archives of Eli Lilly & Company.  The documents clearly demonstrate that Lilly's thimerosal product, the mercury-based vaccine preservative implicated in a number of recent law suits as causing neurological injury to infants, was known as early as April 1930 to be dangerous.

      In its apparent eagerness to promote and market the product, in September, 1930, Eli Lilly secretly sponsored a "human toxicity" study on patients already known to be dying of meningococcal meningitis. Senior partner Andrew Waters stated that, "Lilly then cited this study repeatedly for decades as proof that thimerosal was of low toxicity and harmless to humans.  They never revealed to the scientific community or the public the highly questionable nature of the original research."

      While Eli Lilly made every effort to corrupt the medical and scientific literature, the process of arranging to publish the results of its questionable secret study, other researchers have provided Lilly with numerous articles since the 1930's indicating concerns about thimerosal and its potential hazard to humans who might be exposed or injected with the substance.  The evidence clearly demonstrates that Eli Lilly was advised repeatedly that their conclusions of low toxicity were not warranted and that they failed to pass the information on to appropriate federal and public health authorities.  The following time line illustrates some, but by no means all, of the documentary evidence on this point from Lilly's  internal files:

Waters & Kraus is litigating a growing number of individual cases across the country involving infants that sustained serious neurological injuries from the thimerosal contained in their pediatric vaccines. Waters & Kraus is leading the following coalition of firms in bringing these cases to trial:

Pat Oliphant, Universal Press Syndicate, 11/19/02

Finding The Answer To Washington's Hottest Whodunit

Filed December 4, 2002

http://www.ariannaonline.com/columns/files/120402.html

ARIANNA ONLINE
1158 26th Street, P.O. Box 428
Santa Monica, CA 90403
email: arianna@ariannaonline.com

Quick, somebody call Sherlock Holmes. Or at least the Hardy Boys. Or maybe even newly-designated Homeland Security Secretary Tom Ridge. There's a Washington mystery that needs solving.

Everyone in D.C., it seems, is utterly baffled as to how an ugly little provision shielding pharmaceutical behemoth Eli Lilly from billions in lawsuits filed by the parents of autistic children made its way, in the 12th hour, into, of all things, the 475-page Homeland Security bill.

"It's a mystery to us," shrugged Eli Lilly spokesman Rob Smith.

It's a mystery to us, too, echoed spokesmen for the White House, the Department of Health and Human Services, and physician-turned-senator-turned-drug-company-shill Bill Frist, who had originally penned the Lilly-friendly provision for a different bill.

The haphazard lawmaking also proved baffling for pharmaceutical industry lobbyists, and for White House budget director Mitch Daniels, a former Lilly executive, who made a very public show of disavowing any knowledge of the amendment's mystifying genesis. Gosh, maybe the little provision just flew down from heaven. Or was immaculately conceived. Or maybe Osama bin Laden snuck over and planted the little public policy bomb himself.

The outrageous rider stuck onto the end of the Homeland Security bill provides security for Lilly from suits filed by the families of autistic children who believe that their kids' condition is linked to Thimerosal, a mercury-based preservative made by Lilly that used to be a common ingredient in childhood vaccines.

But in a town where knowledge is power, and where there is no shortage of people willing to take credit for even the most minute accomplishment, there has been a sudden outbreak of people playing dumb. Official Washington is observing a code of omerta that makes the Sopranos look like the loose-lipped gals on "The View." In other words: nobody's seen nothin'.

Here are the clues we have to work with: over the Veteran’s Day weekend, GOP negotiators from the House and Senate hunkered down to finalize the details of the elephantine security bill. At some point -- no one is willing to say when -- someone -- no one is willing to say who -- inserted the Lilly provision -- though no one is willing to say why.

It's vital that we solve the mystery -- even if you believe that the custom-made legislation is justified. We need to find out because this kind of behind-closed-doors monkey business is an affront to our democracy -- the very democracy this bill was theoretically designed to protect. Perhaps it should have been called "The Homeland and Lilly Protection Act."

"The ability," Rep. Dennis Kucinich, D-Ohio, told me "of a special interest group to secretly insert provisions into law for its own narrow benefit and to the detriment of the public interest raises fundamental questions about the integrity of our government."

Kucinich has vowed to lead a challenge to congressional rules that permit our representatives to do the bidding of their deep-pocket donors away from the prying eyes of the public. At the most crucial part of the bill-drafting process -- when the language of the law is being finalized -- Washington’s corporate alchemists work their black magic to turn legislative gold into self-preserving lead.

"It's a defect in the system," explains Kucinich. "When a bill goes into a conference committee, it gets yanked out of the sunlight and into the shadows. The conference process is a closed one, so you can go into a conference committee and basically add anything or take out anything you want and no one really knows. It transforms the legislature into a secret cabal."

So this fight is about a lot more than pushing for the repeal of the Lilly provision, something Sens. Debbie Stabenow, D-Mich., and John McCain, R-Ariz., have promised to do when the 108th Congress convenes in January. It's about putting an end to the gaming of the system that is turning the legislative process into a prize-a-minute carnival for big contributors. “Inserting such favors for special interests in a bill is a directive that can only come from some very high places,” Stabenow told me.

Intriguingly, Stabenow, McCain, and Kucinich may have found an unlikely ally in their battle -- one with a very personal stake in the issue. It turns out that Rep. Dan Burton, R-Ind., the chairman of the Government Reform and Oversight Committee, has a grandson who first began showing symptoms of autism within days of receiving vaccinations containing Thimerosal. "He became radically different," says Burton, "banging his head against the wall, running around flapping his arms. Twenty years ago we had one in 10,000 children that they thought was autistic. Now, it's more than one out of 250."

This is clearly not a left-right issue. Any politician who has waxed lyrical about "accountability" and "transparency" -- that includes you, Mr. President -- owes it to the public to demand that Congress get to the bottom of just whose directive it was to insert into the homeland security bill a provision that has absolutely nothing to do with homeland security. And to find out whether the $1.6 million that Lilly contributed in the last election cycle -- 79 percent of which went to Republicans -- had anything to do with the inclusion of this designer provision. And, come to think of it, whether these donations had anything to do with the Bush administration asking a federal claims court to block public access to documents unearthed in over a thousand Thimerosal-related lawsuits.

For anyone remotely familiar with the ways of Washington -- and Sherlock Holmes -- the answer should be "elementary."

We're used to having pounds of fatty pork stirred into almost every recipe Congress dishes up. But the abuse of a bill about homeland security is especially distasteful. Washington's greedy corporate masters may finally have overreached. Their continued influence constitutes a clear and present danger to our security and if the president is serious about protecting the homeland, he should speak up.

US Senate Votes to Keep Vaccine Language in Homeland Security Bill

By Julie Rovner

http://www.medscape.com/viewarticle/444830

WASHINGTON, DC (Reuters Health) Nov 19 - The US Senate on Tuesday turned back efforts to strike provisions from the homeland security bill that Democrats said benefited special interests, including one that would apparently block lawsuits against the drugmaker Eli Lilly for a preservative it used to include in its vaccines.

The 52-47 vote to defeat the amendment to remove the contentious provisions came only after House and Senate Republican leaders promised to revisit the vaccine provision and two other provisions immediately after Congress returns in January.

Maine Republican Senators Olympia Snowe and Susan Collins flatly refused to vote down the amendment -- which would have struck a half dozen different sections of the bill -- until they received that assurance not only from their own leaders, but also from House Speaker Dennis Hastert, R-Ill., who was finally reached by phone while traveling in Turkey.

The House last week completed its work and tentatively adjourned for the year. House leaders had said that if the Senate changed the Homeland Security Bill, House members would not be able to return to consider the changes until December. The bill is designed to create a Department of Homeland Security.

A spokesman for Snowe said his boss was assured that when Congress considers an omnibus spending bill in early January, the vaccine language will be changed to clarify that it would not block lawsuits already filed against Lilly charging that the mercury-based preservative Thimerosal caused autism in some children.

"I was deeply concerned about the egregious, eleventh-hour addition of special interest provisions to the Homeland Security legislation, and spoke against inclusion of these provisions during a meeting of Senators before the vote, because I didn't believe we could afford to let them stand," said Snowe.

Added Collins, "I am pleased that my Senate colleagues and I were able to ensure that a bill creating the department will reach the President's desk this year [and] at the same time, that three troubling provisions hastily added to the bill without the benefit of debate or committee review will be corrected as soon as possible."

The language in question redefines "vaccine" to include any ingredient listed on the label approved by the US Food and Drug Administration, thus apparently requiring families of children allegedly injured by Thimerosal to submit claims through the Vaccine Injury Compensation Trust Fund.

But aides to Senate Finance Committee Chairman Max Baucus, D-Mont., said the language in the bill would actually preclude families from collecting compensation from that fund, because it does not change the Internal Revenue Code to allow the fund to pay for such injuries.

"It appears that the effect of the provision is to preclude court lawsuits over vaccine ingredients or components, but it also precludes compensation from the Fund, because the bill does not change the disbursement purposes for the Fund," the aides wrote in a memo.

A Capitol Hill Mystery: Who Aided Drug Maker?

By SHERYL GAY STOLBERG

November 29, 2002

http://www.nytimes.com/2002/11/29/politics/29VACC.html

ASHINGTON, Nov. 28 — Lobbyists for Eli Lilly & Company, the pharmaceutical giant, did not have much luck when they made the rounds on Capitol Hill earlier this year, seeking protection from lawsuits over a preservative in vaccines. Senator Bill Frist, Republican of Tennessee, tucked a provision into a bill that went nowhere. When lawmakers rebuffed a request to slip language into domestic security legislation, a Lilly spokesman said, the company gave up.

Now, in a Washington whodunit worthy of Agatha Christie, the provision has been resurrected and become law, as part of the domestic security legislation signed on Monday by President Bush. Yet in a city where politicians have perfected the art of claiming credit for deeds large and small, not a single member of Congress — or the Bush administration — will admit to being the author of the Lilly rider.

"It's turning into one of Washington's most interesting parlor games," said Dave Lemmon, spokesman for Senator Debbie Stabenow, Democrat of Michigan, who has promised to introduce legislation to repeal the provision. "There's a lot of guessing, a lot of speculation as to who did this."

The provision forces lawsuits over the preservative, developed by Eli Lilly and called thimerosal, into a special "vaccine court." It may result in the dismissal of thousands of cases filed by parents who contend that mercury in thimerosal has poisoned their children, causing autism and other neurological ailments. Among them are Joseph and Theresa Counter of Plano, Tex., devoted Republicans whose party allegiance has run smack into family ties.

The Counters' 6-year-old son, Joseph Alexander, was normal and healthy until he was 2, they say. Then he took an unexplained downward slide. Today, the boy struggles with words. He cannot zip his pants, snap buttons or tie his shoes. His parents say tests eventually showed that he had mercury poisoning, which they attribute to vaccines. They sued last year.

"I know that our legislative system can be very, very messy at times," said Mr. Counter, a political consultant, who with his wife has spent many thousands of dollars on medical care and therapy for their son. "But for them to attempt this, in the dead of night? It disgusts me. This morning, I am ashamed to be a Republican."

With lawmakers now scattered across the country, Washington is rife with speculation about who is responsible for aiding Lilly, a major Republican donor. During the 2002 election cycle, the company gave more money to political candidates, $1.6 million, than any other pharmaceutical company, with 79 percent of it going to Republicans, according to the Center for Responsive Politics, a nonprofit research group that monitors campaign finances.

Critics of the provision, mainly Democrats and trial lawyers, are quick to point out that the White House has close ties to Lilly. The first president Bush sat on the Lilly board in the late 1970's. The White House budget director, Mitchell E. Daniels Jr., is a former Lilly executive. The company's chairman and chief executive, Sidney Taurel, was appointed in June by President Bush to serve on a presidential council that will advise Mr. Bush on domestic security.

The White House, however, has said that it did not ask Congress for the provision. Rob Smith, a spokesman for Lilly, said that the company's lobbyists "made absolutely no contact with Mitch or anyone in his office about this," and that Mr. Taurel "did not at any time ask" for any favors.

"It's a mystery to us how it got in there," Mr. Smith said of the provision.

Senator Frist has said it is a mystery to him as well. As the Senate's only doctor, he sought to include the provision in legislation that would promote the availability of vaccines. But the vaccine bill is stalled; Senator Edward M. Kennedy, the Massachusetts Democrat who is chairman of the Senate health committee, opposes it. Mr. Frist's spokesman said he did not seek to have the provision included in the domestic security bill.

On Capitol Hill, Congressional aides-turned-detectives have traced the emergence of the provision to the Veterans Day weekend. Flush from their party's victories on Election Day, and with a mandate from President Bush to pass a domestic security bill, Republican negotiators in the House and Senate holed up for three days in the Capitol to hammer out the details, said Richard Diamond, spokesman for the retiring House majority leader, Representative Dick Armey of Texas.

One aide said the language mysteriously appeared in the House version of the bill in entirely different type than the rest of the measure, as though someone had clipped it out of Mr. Frist's legislation and simply pasted it in. Mr. Diamond said all the negotiators supported the move, but would not say who was responsible.

"If you want to give somebody credit for it," he said, "Mr. Armey takes ultimate credit. It's his bill. We are happy to wrap ourselves around it, but Mr. Armey is not a doctor, like Senator Frist. He's the source of the language."

Whether thimerosal is truly harmful is the subject of intense scientific controversy. Earlier this year, the National Academy of Sciences issued a report saying there was no scientific evidence either to prove or disprove a link between thimerosal and brain disorders like autism. But the academy did find that such a link was "biologically plausible," and so it urged pharmaceutical companies to eliminate thimerosal, which has already been removed from many vaccines, as quickly as possible.

The Lilly rider closes a loophole in a 1986 law that requires victims to file claims with the vaccine court, which awards payments from a taxpayer-financed compensation fund, before going to civil court. But the law covered only vaccines themselves, not their ingredients, which meant people like the Counters could sue ingredient manufacturers like Lilly directly.

While Washington debates the origins of the provision, families are fuming. Some say the government fund will do them no good, because they have missed the statute of limitations — three years from the date symptoms first appear — for filing claims. Scott and Laura Bono of Durham, N.C., say that while their son Jackson, now 13, showed symptoms similar to autism six or seven years ago, it was not until August 2000 that they learned he had mercury poisoning. They filed suit just the other day.

Aware of the controversy, lawmakers in both parties have pledged to alter the thimerosal rider, but are arguing about how to do so. While many Democrats want it repealed, Republicans have suggested that they may simply alter the language to apply to future cases only.

"I'll believe it when I see it," said Mr. Waters, the Counters' lawyer.

In the meantime, Mr. Smith, the Lilly spokesman, said his company would soon go to court to seek dismissal of the suits.

That news made Theresa Counter cry.

"It just makes me sick," she said. "I cannot tell you how devastating it is to think that we might have to start all over."

The Man Behind The Vaccine Mystery

WASHINGTON, Dec. 12, 2002

http://www.cbsnews.com/stories/2002/12/12/eveningnews/main532886.shtml

http://www.cbsnews.com/stories/2002/12/12/eveningnews/printable532886.shtml

Rep. Dick Armey, R-Texas, says he's behind a provision in the homeland security bill that protects Eli Lilly and Co. (CBS/AP)

"It's a matter of national security. We need their vaccines if the country is attacked with germ weapons."

House Majority Leader Dick Armey

(CBS) It's been a mystery in Washington for weeks. Just before President Bush signed the homeland security bill into law an unknown member of Congress inserted a provision into the legislation that blocks lawsuits against the maker of a controversial vaccine preservative called "thimerosal," used in vaccines that are given to children.

Drug giant Eli Lilly and Company makes thimerosal. It's the mercury in the preservative that many parents say causes autism in thousands of children – like Mary Kate Kilpatrick.

Asked if she thinks her daughter is a victim of thimerosal, Mary Kate's mother, Kathy Kilpatrick, says, "I think autism is mercury poisoning."

But nobody in Congress would admit to adding the provision, reports CBS News Correspondent Jim Acosta – until now.

House Majority Leader Dick Armey tells CBS News he did it to keep vaccine-makers from going out of business under the weight of mounting lawsuits.

"I did it and I'm proud of it," says Armey, R-Texas.

"It's a matter of national security," Armey says. "We need their vaccines if the country is attacked with germ weapons."

Rep. Dan Burton, R-Ind., isn't buying it. The grandfather of an autistic child, Burton says Armey slipped the provision in at the last minute, too late for debate.

"And I said, 'Who told you to put it in?'" He said, 'No, they asked me to do it at the White House.'"

Critics say the Bush family and the administration have too many ties to Eli Lilly. There's President Bush's father, who sat on the company's board in the 1970's; White House budget director Mitch Daniels, once an Eli Lilly executive; and Eli Lilly CEO Sidney Taurel, who serves on the president's homeland security advisory council.

Officials at the drug giant insist they did nothing wrong. "No one, not our CEO, not myself, not anyone who works with me asked the White House to insert this legislation," said Eli Lilly spokeswoman Debra Steelman.

But Kathy Kilpatrick and her husband Michael argue that the thimerosal provision is not designed to protect the nation, but rather to protect Eli Lilly.

Asked what he'd say to a congressman who came forward and admitted he was responsible for inserting the provision, Michael Kilpatrick says, "I would ask him if he knew he was protecting mercury being shot into our kids."

Kathy Kilpatrick asks, "Why would anyone want to save Eli Lilly on our children's backs?"

Because Armey is retiring at the end of the year, some say the outgoing majority leader is the perfect fall guy to take the heat and shield the White House from embarrassment.

It's a claim both the White house and Armey deny.

Lilly's Pipeline of Plenty

S&P says the giant drugmaker's heavy investment in R&D should yield several blockbuster products and accelerate earnings growth

By Herman Saftlas

DECEMBER 9, 2002

http://www.businessweek.com:/print/investor/content/dec2002/pi2002129_5751.htm?pi

When a blockbuster drug and major profit generator like Prozac goes off-patent, it usually signals anxious times ahead for company management and investors. But Eli Lilly (LLY ), which changed the shape of the antidepressant market with that breakthrough prescription compound, has strategically managed the 2001 loss of patent protection on its former $2.5 billion (annual sales) cash cow through heavy investments in research and development. Lilly's efforts should soon begin to pay off in the form of lucrative new products and accelerated earnings-per-share growth.

Lilly, whose new-product filings last year have already distinguished it from the Big Pharma pack, should lead its peers in terms of new drug launches and earnings growth over the 2003-07 period, thanks to the planned introduction of eight blockbuster products over the next two years. These new drugs could eventually add over $4 billion to Lilly's annual sales by 2007, of which 28% could be brought down to the bottom line (equal to over $1.00 a share).

PLEASANT SURPRISES.  The shares have been highly volatile during 2002, largely because of investor concerns over Food & Drug Administration-cited quality-control manufacturing problems at several plants. However, we at S&P believe these issues will be cleared up in 2003. Lilly carries S&P's highest investment ranking of 5 STARS (buy).

In a surprise move on Nov. 27, one that came months ahead of expectations, the FDA approved two important new Lilly drugs: Strattera (atomoxetine HCl) for attention-deficit/hyperactivity disorder (ADHD) in children, adolescents, and adults; and Forteo, a treatment for severe osteoporosis. These approvals relieved investor concerns that no new Lilly drugs would be approved until all of its manufacturing problems were resolved. Both Strattera and Forteo will be produced at facilities free of manufacturing issues.

Strattera has a unique competitive advantage over rival ADHD drugs: It's the first FDA-approved ADHD drug not classified as a stimulant under the Controlled Substances Act. That will enable Lilly to more effectively market the drug with samples and direct-to-consumer advertising, while parents and users will have the option of phone-in refills. These features are not allowed for controlled substances.

DISTINCT DIFFERENCES.  ADHD, which affects some 3%-5% of school-age children and 4% of adults, remains a very underprescribed market -- only about 37% of impacted children and less than 5% of adults are treated. Lilly hopes to significantly expand that market. We see Strattera sales of about $250 million in 2003, expanding to close to $1 billion by 2006.

Forteo also has a significant edge over competing osteoporosis therapies. Unlike conventional treatments that work to reduce bone loss, Forteo is an anabolic agent that increases skeletal mass, lowers fracture risks, and stimulates the body's own bone-making process. The drug's label will have a "black box" warning because of some incidence of osteosarcoma (bone cancer) in laboratory animals. However, no incidence of osteosarcoma was seen in humans taking Forteo. With premium pricing -- an annual cost per patient of over $6,000 -- we expect Forteo sales to exceed $500 million by mid-decade.

The next big FDA approval for Lilly should be Cialis -- another drug that will not be produced at facilities associated with quality-control issues. A novel treatment for erectile dysfunction, it was developed in conjunction with ICOS Corp. Studies have shown Cialis to work faster and last longer than Pfizer's popular Viagra. Recently approved in Europe, Cialis should achieve peak sales in the $2 billion range.

A NEW APPROACH.  Another potential $2 billion product is antidepressant Cymbalta, a serotonin norepinephrine reuptake inhibitor (SNRI) that differs from conventional selective serotonin reuptake inhibitors (SSRI) such as Prozac, Zoloft, and Paxil. Believed to be more potent than the SSRIs, Cymbalta treats both mood and the painful physical symptoms associated with depression. Lilly is also studying Cymbalta for the treatment of stress incontinence. Produced at Lilly's Indianapolis plant, FDA approval hinges on resolution of manufacturing problems.

Unlike most of its peers, none of Lilly's principal drug products face any generic threat over the next five years. Even though the patent expires at the end of 2003 on the growth hormone Humatrope, no generic challenge is expected since that product is a biologic and, to date, no generic biologics have yet been approved.

Lilly's most important single drug, Zyprexa, a treatment for schizophrenia and bipolar disorder, accounts for about 31% of the U.S. antipsychotic prescription market. Although the number of prescriptions written over the near term may flatten somewhat due to the entry of Bristol-Myers' rival Abilify, we still see Zyprexa sales growing at a percentage rate in the low teens in 2003. One edge Zyprexa has over Abilify is that it can be prescribed for a broader range of conditions. Sales should also be helped by its proven record of efficacy, expansion into new markets, and anticipated FDA clearance of a new injectible formulation.

BLOCKBUSTER POTENTIAL.  Other key growth drugs include Humalog human insulin for type 1 diabetes, Actos for type 2 diabetes, Gemzar anticancer therapy, Evista for osteoporosis, and Xigris for sepsis. Despite recent sluggishness, Xigris should achieve blockbuster status over coming years, helped by regulatory approvals in Europe and new studies demonstrating its effectiveness in treating severe sepsis.

After four consecutive quarters of declining earnings due to generic erosion in the Prozac line that started in August, 2001, Lilly posted modestly higher EPS in the third quarter of 2002, excluding nonrecurring items. It had expected a stronger performance, but results have been hurt by those manufacturing quality-control issues, which were first cited by the FDA in 2001. With negative Prozac comparisons penalizing results for the first seven months of the year, total revenues for 2002 are expected to dip about 3%, to $11.1 billion, and diluted EPS will probably slip 1% to $2.55, from 2001's $2.58 (before nonrecurring items in both years).

Expenses associated with rectifying manufacturing problems and the heavy cost launching of new products are likely to restrict earnings growth to about 6%, to $2.70 a share, in 2003. However, sales growth should accelerate over the 2003-06 period, driven by rising contributions from a steady stream of new products. Coupled with rapidly growing equity income and cost efficiencies, pretax margins are expected to expand from 32% in 2002 to 36% in 2005. We project compound annual EPS growth of over 20% over the 2003-2007 period.

CRUNCHING THE NUMBERS.  Examining Lilly's 2001 results on an S&P Core Earnings basis, its use of stock-option grants as a form of employee compensation is roughly comparable with the overall drug-industry average on a percentage-of-earnings basis. Had Lilly expensed all options, EPS in 2001 would have been reduced by 7.3%, vs. an average decline of 7.5% for the overall Big Pharma sector. Expensing pension costs would have reduced EPS by an additional 7.8%, somewhat lower than the industry average hit of 8.8%.

We believe Lilly's premium multiple to the overall Big Pharma sector (24 times estimated 2003 EPS, based on a recent share price, vs. the group average of 20%) is justified in light of its extended patent-protected portfolio and unmatched pipeline potential. Our 12-month target for the stock is $78, or about 18% above the recent price, and is derived by applying the present multiple to our 2004 estimate of $3.25. Judged by the price-earnings ratio and three-year projected growth-rate basis, Lilly recently traded at a 20% discount to the industry average. And finally, LLY was selling at a 25% discount to its intrinsic value based on our discounted-cash-flow model.

Can a Company that Potentially Contributed to the Rise in Autism, Make Money Treating the Kids They Harmed?

What Medications are Available

No medication can correct the brain structures or impaired nerve connections that seem to underlie autism. Scientists have found, however, that drugs developed to treat other disorders with similar symptoms are sometimes effective in treating the symptoms and behaviors that make it hard for people with autism to function at home, school, or work. It is important to note that none of the medications described in this section has been approved for autism by the Food and Drug Administration (FDA). The FDA is the Federal agency that authorizes the use of drugs for specific disorders.

Medications used to treat anxiety and depression are being explored as a way to relieve certain symptoms of autism. These drugs include fluoxetine (Prozac™), fluvoxamine (Luvox™), sertraline (Zoloft™), and clomipramine (Anafranil™). Some scientists believe that autism and these disorders may share a problem in the functioning of the neurotransmitter serotonin, which these medications apparently help.

One study found that about 60 percent of patients with autism who used fluoxetine became less distraught and aggressive. They became calmer and better able to handle changes in their routine or environment. However, fenfluramine, another medication that affects serotonin levels, has not proven to be helpful.

People with an anxiety disorder called obsessive-compulsive disorder (OCD), like people with autism, are plagued by repetitive actions they can't control. Based on the premise that the two disorders may be related, one NIMH research study found that clomipramine, a medication used to treat OCD, does appear to be effective in reducing obsessive, repetitive behavior in some people with autism. Children with autism who were given the medication also seemed less withdrawn, angry, and anxious. But more research needs to be done to see if the findings of this study can be repeated.

Some children with autism experience hyperactivity, the frenzied activity that is seen in people with attention deficit hyperactivity disorder (ADHD). Since stimulant drugs like Ritalin™ are helpful in treating many people with ADHD, doctors have tried them to reduce the hyperactivity sometimes seen in autism. The drugs seem to be most effective when given to higher-functioning children with autism who do not have seizures or other neurological problems.

Because many children with autism have sensory disturbances and often seem impervious to pain, scientists are also looking for medications that increase or decrease the transmission of physical sensations. Endorphins are natural painkillers produced by the body. But in certain people with autism, the endorphins seem to go too far in suppressing feeling. Scientists are exploring substances that block the effects of endorphins, to see if they can bring the sense of touch to a more normal range. Such drugs may be helpful to children who experience too little sensation. And once they can sense pain, such children could be less likely to bite themselves, bang their heads, or hurt themselves in other ways.

Chlorpromazine, theoridazine, and haloperidol have also been used. Although these powerful drugs are typically used to treat adults with severe psychiatric disorders, they are sometimes given to people with autism to temporarily reduce agitation, aggression, and repetitive behaviors. However, since major tranquilizers are powerful medications that can produce serious and sometimes permanent side effects, they should be prescribed and used with extreme caution.

Vitamin B6, taken with magnesium, is also being explored as a way to stimulate brain activity. Because vitamin B6 plays an important role in creating enzymes needed by the brain, some experts predict that large doses might foster greater brain activity in people with autism. However, clinical studies of the vitamin have been inconclusive and further study is needed.

Like drugs, vitamins change the balance of chemicals in the body and may cause unwanted side effects. For this reason, large doses of vitamins should only be given under the supervision of a doctor. This is true of all vitamins and medications.

For more information see:

Autism Medication Reference

Information taken from Appendix E of Autistic Spectrum Disorders: Finding a Diagnosis and Getting Help by Mitzi Waltz, copyright 2002 by O'Reilly & Associates, Inc.

FDA Approves Non-Stimulant ADHD Drug-- Strattera (Atomoxetine)

http://www.docguide.com/news/content.nsf/news/OpenDocument&id=8DDCFEA28458C7BB852569B60081A390

BETHESDA, MD -- December 2, 2002 -- The Food and Drug Administration has approved -- Strattera, (atomoxetine) -- the first new drug in three decades for treatment of symptoms of attention deficit hyperactivity disorder, or ADHD, which includes inattention, hyperactivity and impulsiveness. Strattera has a different mechanism of action from the stimulant-like drugs that have been used to treat ADHD. Because Strattera does not appear to have a potential for abuse, it will not be classified as a controlled substance, although it will be a prescription drug.

According to the American Psychiatric Association, about three to seven percent of children have attention deficit hyperactivity disorder. It is estimated that about four percent of adults have ADHD. People with ADHD may make careless mistakes, fidget, interrupt others, talk excessively and have problems paying attention. Symptoms must be persistent, that is, be present for at least six months, and must be more severe than is typically observed in individuals at a comparable level of development before a diagnosis can be made with certainty, according to the Diagnostic and Statistical Manual (DSM-IV), the diagnostic manual for psychiatric disorders, published by the American Psychiatric Association. Although the disorder is not as well defined in adults, symptoms in adults may include a lack of organization, daydreaming, irritability, and lack of motivation.

Strattera was studied in children, adolescents and adults. The drug's safety and effectiveness were established in six double-blind placebo-controlled studies in patients who met specific diagnostic criteria under DSM-IV. The clinical studies demonstrated that Strattera significantly improves patient's symptoms compared to placebo.

Side effects of the drug include decreased appetite, upset stomach, nausea or vomiting and tiredness. In addition to these adverse effects, some of the most common side effects in adults were problems sleeping, dry mouth, dizziness, and sexual side effects.

The drug will be marketed by Eli Lilly and Company, Indianapolis, Ind.

SOURCE: FDA