Feb 08, 2007 03:00 AM

Original news story link.

When legal settlements allow companies to hide their mistakes, what we don’t know can hurt us.

DRUG GIANT Eli Lilly & Co. recently settled 18,000 lawsuits brought by people claiming they were injured by the side effects of its biggest-selling drug, Zyprexa, which is used to treat schizophrenia and bipolar disorder. But the $500 million in settlements says less about the dangers of the drug than the dangers of secrecy.

About 18 months earlier, Lilly had settled 8,000 other Zyprexa cases for $700 million. But those settlements required the plaintiffs to return all sensitive documents obtained through the legal discovery process to Lilly — a requirement that kept the strongest smoking-gun evidence out of public view. The plaintiffs also had to agree “not to communicate, publish or cause to be published, in any public or business forum or context, any statement, whether written or oral, concerning the specific events, facts or circumstances giving rise to [their] claims.”

Lilly had strong motivation to settle. The documents contained evidence that Zyprexa caused large, often enormous, weight gain in many patients, significantly increasing the risk of dangerously high blood-sugar levels and diabetes. They also showed that Lilly knew about the problems in 1999, largely through its own research. Other documents outlined a marketing scheme to encourage physicians to prescribe Zyprexa for elderly patients with early signs of dementia. This strategy not only had no clinical evidence to support it, it promoted an “off-label” use not approved by the Food and Drug Administration, a violation of federal law.

Lilly gave the original 8,000 plaintiffs ample incentive to settle. Those plaintiffs received substantial compensation, and by agreeing to secrecy, they surely avoided years of scorched-earth litigation, extremely costly in terms of time, money and emotion.

When secrecy is the price of a legal settlement, wrongdoers hide their mistakes as if they never happened and continue with business as usual. That’s what happened in the Lilly case. The thousands of plaintiffs and dozens of lawyers involved in the 2005 settlements kept their part of the bargain, while Lilly continued to sell Zyprexa in huge quantities — a reported $4.2 billion in sales in 2005 — without warning either patients or doctors about the drug’s dangers.

Part of the problem was that those plaintiffs had little control over their cases. They were consolidated — as these matters often are — in one huge federal case in which a committee of plaintiffs’ lawyers has much more say over a settlement than in typical civil suits. In exchange for access to key Zyprexa data in the Lilly case, the committee agreed to a “protective order” that kept the information secret. That may have expedited things for their clients, but it was a public disservice.

Courts have the power to grant protective orders only to limit the disclosure of highly personal information and legitimate trade secrets. But when all the lawyers in a case agree, judges often grant protection even if the trade secrets in question show how the product does not work, not how it does. Neither lawyers nor judges should ever be party to such agreements. It is simply unacceptable as a matter of public policy to permit secret deals that conceal evidence of dangers to the public.

In the Zyprexa cases, the documents eventually were exposed when Alaska attorney James B. Gottstein, working on an entirely unrelated case, subpoenaed the records of one of the plaintiffs’ expert witnesses. Gottstein not only used the documents in his lawsuit but, to his great credit, disclosed them to the New York Times and several healthcare groups. Gottstein was almost immediately ordered to return all the documents he had, but the train had left the station: The New York Times published articles about the dangers of Zyprexa, and excerpts from the documents began appearing on the Internet. Within two weeks, with much of the Zyprexa evidence now out in the open, Lilly settled the additional 18,000 cases. Negotiated secrecy, Lilly’s primary goal, had become moot.

Some intrepid plaintiffs and their lawyers refuse to play the secrecy game. In Northern California, plaintiffs in dozens of Catholic Church sexual abuse cases have banded together and refused to keep the names and whereabouts of molesters secret. And recently, Eva Rowe, who lost her parents as the result of an explosion at a Texas oil refinery in 2005, refused to settle with BP unless the oil company agreed to release the millions of documents obtained as evidence. Rowe and her lawyer hope that the documents, which they say show how BP’s under-funding and lackadaisical attitude created significant safety problems, will serve as an industry blueprint on how refinery safety should, and shouldn’t, be handled.

Unfortunately, disclosure is still the exception. But we should have learned our lesson by now. From Zomax and Halcion in the 1980s to shredding Firestone tires and GM gas-tank fires in the 1990s, to Vioxx and Zyprexa today, when lawyers cut secret deals behind the public’s back, what we don’t know can and does hurt us. The civil justice system belongs to all of us, and no one should be allowed to use it to keep the public in the dark.

RICHARD ZITRIN practices law in San Francisco and teaches at UCHastings College of the Law. He is also the founder of the Center forApplied Legal Ethics at the University of San Francisco.