During golf games, a doctor agreed to start new patients on Zyprexa for each time a sales representative parred, or put the ball in a hole within a predetermined number of strokes. If the sales rep parred four holes, the doctor agreed to prescribe Zyprexa to four new patients.

The notes were made public in South Carolina’s lawsuit against Lilly over Zyprexa marketing practices. State officials contend Indianapolis-based Lilly marketed the drug for unapproved uses and seeks to recoup $200 million it contends it wrongfully spent on Zyprexa prescriptions for ailments other than the approved schizophrenia and bipolar disorders. The state also is seeking a $5,000 fine for each Zyprexa prescription dating back to 1997 that could result in billions of dollars in fines.

Lilly resolved a marketing investigation over Zyprexa in January with the U.S. Justice Department, promising to pay $1.42 billion, including about $362 million to more than 30 states. South Carolina opted not to join that settlement. The only trial of a state’s lawsuit ended with an out-of-court settlement in which Lilly agreed to pay Alaska $15 million.

Zyprexa has been linked to excessive weight gain and diabetes. The lawsuits claim Lilly, faced with the loss of patent protection for its antidepressant Prozac, pushed its sales force to market Zyprexa for numerous non-FDA approved ailments including depression, anger and agitation and failed to properly warn of Zyprexa’s side effects. Lilly already pled guilty to a federal criminal charge of off-label promotion of Zyprexa for use in elderly patients.

Eli Lilly’s Zyprexa scam is just the latest in a long line of examples of a huge drugmaker unjustly enriching itself in the billions of dollars at consumers’ expense.

Without passing on the merits of this particular settlement or the allegations against Sprint Nextel, it nevertheless bears noting that individual consumers who were inappropriately charged fees of $25, $50, or $100 could never economically take on a huge corporation, like Sprint, in court. Cases that cost more to litigate than any possible recovery are sometimes called “negative value” cases. Many negative value cases are in the consumer arena. The United States Supreme Court has said that the existence of a negative value case is one issue that weighs in favor of class certification. Class actions help level the playing field and allow a group of similarly aggrieved people to band together to take on a corporate wrongdoer. And most importantly, consumer class actions protect us from unscrupulous conduct and make wrongful conduct unprofitable.

UnitedHealth Group, WellPoint Blue Cross and Assurant Inc. have canceled coverage to more than 20,000 including those suffering from breast cancer, lymphoma, high blood pressure, pregnancy and other serious diseases. This crass action pocketed the companies $300 million over five years.

Insurers targeted policy holders with serious illnesses, encouraged their employees in the practice of rescission or cancellation of coverage after the fact, and even went so far as to give bonuses and performance enhancements to employees who terminated clients who had high-expense illnesses.

Although the executives defended their rescission actions as a means of ferreting out fraud, they refused to commit to Congress that they would only rescind policies involving intentional misrepresentation on applications and intentional fraud. Really, to only root out fraud? A nurse diagnosed with aggressive breast cancer testified she was cancelled for failing to divulge a visit to the dermatologist for acne. An Illinois woman testified about her deceased brother who died from lymphoma being cancelled for not disclosing possible gallstones his doctor had never even discussed with him. Fraud? I don’t think so. Just follow the money trail for the real reason behind the cancellations.

When private insurers are allowed to get away with cancelling a sick person’s health coverage after the fact simply to increase profits, the system is broken. Perhaps that’s why there is a growing call for a public option for health coverage so those least able to fight the big insurance companies have an alternative.

Synthes ran over 200 unauthorized human trials of their bone filler involving patients who underwent one of two spinal procedures, vertebroplasty or kyphoplasty. In these procedures, the cement-like bone filler is injected into spinal fractures. Three patients died during the procedures. The four Synthes executives are now facing criminal charges and possible prison sentences.

Prosecutors allege Synthes knowingly approached doctors to perform the procedures despite a 2002 FDA warning of the risk of generating large blood clots. Even after learning of the deaths, Synthes continued to hold seminars teaching doctors how to perform the procedures and callously chose not to report the deaths to the FDA.

The federal prosecutors should be applauded for taking the unusual step of criminal indictments against these greedy corporate executives who put profit over concern for patient safety. Usually executives only face civil fines and go their merry way with their ill-gotten gains. Perhaps after a few executives are sent to prison there will be a clear message that the safety of medical devices being sold to the public must remain the paramount concern of medical device manufacturers.

Sen. Charles Grassley continues to delve into the murky world of medical clinical trials. Now, a prominent Harvard researcher who is a leading advocate of early diagnosis of bipolar disorder in young children and treatment with anti-psychotic drugs is under fire for a lucrative relationship he had with Johnson & Johnson, the maker of Risperdal ( risperidone). Dr. Joseph Biederman told J & J that his planned study would result in conclusions that would benefit the company. Dr. Biederman’s study concluded that treatment with risperidone improved the symptoms of hyperactivity and attention deficit in bipolar children. That study helped generate a significant increase in use of the drug in children. Of course, that increase resulted in significant financial benefits to the drug manufacturer.

Several state attorney generals are now suing the drug manufacturers for defrauding their state Medicaid programs by improperly marketing their drugs for use in treatment of children to increase sales using their association with Dr. Biederman. Dr. Biederman only reported $200,000 of the actual $1.6 million in consulting fees he earned from the drug manufacturers to his employer, Harvard University. Harvard and the National Institutes of Health are investigating whether he violated federal and university research rules.

Why should we care? Because we should all be able to trust that approved drugs we are prescribed are actually safe and effective. When a well-paid medical researcher promises results before the actual studies are conducted, those conclusions, as well as the safety and effectiveness of the drug ,are suspect .

“Super Water”

Have we reached a point in human evolution when regular ole water isn’t healthy enough anymore?  Some restaurants now have water menus.  Leaving the issue of tap vs. filtered vs. bottled for another day, think about the volume of H20 sitting on shelves and in coolers at the local grocery store. I’m not talking about gallons here. I mean the vast variety of name-brand water, marketed as everything from energy enhancers to stress reducers. This one is supposedly jam-packed with antioxidants; that one will help you drop those extra pounds. Are these fashionable drinks as mighty as they claim?

The Center for Science in the Public Interest doesn’t think so. They deemed the marketing of VitaminWater offensive enough to sue manufacturer Coca-Cola Co. back in January, arguing that the drinks are primarily sugar water. The vitamins added to various brands of flavored waters are unlikely to deliver strong health benefits to anyone who isn’t vitamin-deficient; and the sugar, aspartame, and other deleterious ingredients may prove to provoke more harm than any of the drink’s supposed health advantages.

Omega 3s and Other Add-ins

“Fortified” seems to be the word of the day. But an isolated ingredient added to a highly processed food is generally not as beneficial as the natural form of that ingredient found as part of the complex nutritional biochemistry of a whole food. Beck gives us a good example:

You’d need to drink 45 eight-ounce glasses of milk that is fortified with 32 mgs of omega 3 to get as much of these fatty acids as you get in a three-ounce serving of salmon.

Yogurt has cultivated a “healthy” reputation by being fortified with potassium, probiotics, and more. Those cute little yogurt tubs boast big benefits: lowering cholesterol, protecting digestive health, controlling blood pressure. Some may have the support of scientific studies, but how do we know which to trust if marketing regulation is so obscure?

Cheerios: Heart Healing “Drug”?

The big news most recently concerning food marketing regulation is the May 5 warning letter sent by the FDA to General Mills, the makers of Cheerios. Apparently, the FDA’s review of the labeling of Cheerios Toasted Whole Grain Oat Cereal found “serious violations” concerning Cheerios boxes’ claim that eating the cereal is “clinically proven to lower cholesterol,” as well as unacceptable use of the claim that regular whole grain consumption can reduce the risk of certain cancers. According to the FDA, Cheerios boxes are promoting not a food, but a drug.

Sparks are flying from all sides as reporters, bloggers, and every-morning-Cheerios-eaters debate whether General Mills has the right to make its current marketing claims. After all, as currently stated on the Cheerios home page:

Cheerios’ soluble heart health claim has been FDA-approved for 12 years, and Cheerios’ ‘lower your cholesterol 4% in 6 weeks’ message has been featured on the box for more than two years.

“The science is not in question,” this response goes on to say. The FDA merely takes issue with the wording and presentation of the Cheerios boxes and website. A quote from the warning letter rebuking Cheerios’ incomplete claims regarding cancer and heart disease risk reduction states that the failure to include required information of the health effects of fruits, vegetables, and fiber content “does not enable the public to understand the significance of the claim in the context of the total daily diet.”

How to decide which side to take in such a dispute? Well, as in most cases, there’s something to be learned from all sides. While I’d venture a guess that most consumers consider their breakfast cereal “food” not “drug” (which perhaps means that the FDA could be using its scarce resources on something more useful than picking on Cheerios), I’m also grateful for enforcement of regulation that seeks to protect and inform the consumer regardless of his or her knowledge or ignorance of basic nutrition information. Nutrition is a complicated field to navigate, even for its own experts. If disallowing sketchy food marketing claims – or even nitpicking incomplete ones – contributes to consumer knowledge and wellbeing, I’m all for it.

Thanks again to Melinda Beck for her informative and thought-provoking article. Hope you’ve enjoyed our blog series, and as always, we’d love to hear your thoughts on food marketing, confusing labels and ingredients, or anything else you’d like to share. Join the conversation by adding your comments below.

Read the first two posts in this series by clicking the following links:

Part I: “Healthy” Ingredients that Can Make You Sick

Part II:  “Health” Food Labeling Regulation

Although she only reported $600 in income from Glaxo, Wagner was actually paid more than $160,000 for work on a major study of Paxil. That study has been widely criticized for over-promoting positive findings while down-playing increased suicidal thoughts and behavior in adolescents.

The National Institutes of Health requires researchers who receive federal grants to keep financial disclosures on file with their universities. Not only did Wagner, who was the director of child and adolescent psychiatry at UT in Galveston, not report her actual income from Glaxo , she also filled out several research proposals during the time she said she had no financial interest in the drug companies involved.

Sen. Grassley has led the investigation into doctor-drug company connections and exposed for national debate the undue influence big drug companies have over medical research. He has filed a bill to force drug companies to report gifts, travel and speaking payments to doctors. We should urge our senators to support this legislation. Medical research should be independent and trustworthy, not paid for by the very company who will financially benefit from it.

Those small claims (ones that cost more to litigate than the bogus charges are worth) are known as “negative value” claims. Class actions are often the only way that consumers cheated by insurance companies and other big corporations can be compensated for being cheated out of small amounts or “negative value claims.”

Class actions guard against such dishonesty. A recent example is a case from Missouri. Some insurance policyholders complained that American Family Mutual Insurance Company used inferior, non-original equipment to repair their damaged vehicles in violation of their policy with the company. A jury agreed and awarded over 17 million dollars in damages. Contrary to most arguments that defendants make about a “runaway jury,” an appellate court agreed with the findings of the jury. That court stated that the plaintiffs “presented sufficient evidence for a reasonable juror to conclude that aftermarket parts are not of like kind and quality to OEM (original equipment manufacturer) parts and that American Family breached its contracts with its policyholders when it paid to return the damaged vehicle to pre-loss condition based on the nature and cost of aftermarket parts.”

The lawyer for the consumers, Michael Waldeck, said the appeals court’s decision “recognizes the importance of giving relief to class members whose claims are otherwise too small to pursue.” Exactly.
At Neblett, Beard and Arsenault, we applaud the courage of the Missouri Court of Appeals, Western District, and attorneys Like Mr. Waldeck who stand up for consumers who have been shorted by their insurance companies.

Is this to say that those companies who purchased PCA products were misled by a deceptive supplier, and  thus blameless for their part in distributing Salmonella contaminated product to consumers? Let’s not jump to that conclusion without looking a little more closely.

Take, for example, Kellogg, which reportedly spent $20 million on PCA products, but may also lose up to $70 million due to recalls. Kellogg chose to do business with PCA without performing its own audit of the now-notorious PCA Blakely plant. Instead, Kellogg trusted the word of inspectors of a firm, AIB International, who was paid by PCA, is known to rate the majority of its clients “superior” or “excellent,” and has been rejected by some companies because of “inadequate” inspections.

Nestle, unlike Kellogg, performed its own inspections of PCA plants, and deemed the Blakely plant nowhere near Nestle standards. Nestle has rejected PCA as a supplier on more than one occasion.

So, while Kellogg may regret its monetary loss due to massive PCA peanut product recalls, perhaps an appropriate lesson to be learned is that the cost of performing an independent inspection is more palatable than the risk of trusting a biased and substandard one.

Kellogg reportedly has stated that it will do its own inspections of high-risk suppliers in the future, which, of course, leads to yet more questions: what determines “high risk,” and why bother with “high risk” suppliers at all when surely there are reputable companies somewhere out there providing quality products from a clean environment?

Only when we cut through the industry double-talk and make safety a higher priority than profit margin will we see meaningful change in our flawed food system. One more question: why didn’t Nestle or other inspectors feel the need to notify the FDA of their atrocious findings at the Blakely plant, in an effort to prevent such a pathogen outbreak as we’ve seen over the past few months?

This rogue sales unit promoted Bextra using outright false information including bogus protocols for use of Bextra in Ob/Gyn surgery pain, inventing false clinical claims that Bextra was safer than Vioxx and communicating that to prescribing physicians, making up false safety claims not based on clinical data, claiming Bextra reduced the risk of post-DVT blood clot formation and misstating FDA communications. Sales managers were even specifically asked not to pass on to their sales reps the FDA communication refusing to approve Bextra for acute pain during coronary bypass graft surgery due to cardiovascular event concerns.

Once again a pharmaceutical giant has placed profit over patient safety. These corporate executives were paid handsomely by their companies for their dogged pursuit of profit, profit, profit. They should pay as dearly with criminal fines and jail time for their fraudulent activities that put innocent patients at risk as a deterrent to such despicable behavior in the future.

The CPSC has been investigating claims in Florida for more than a month, according to the commission spokesman. Some homeowners are also alleging health problems, such as headaches and sore throats, caused by the high level of sulfur in the drywall. The Louisiana Department of Health and Hospitals has received one complaint related to Chinese drywall. The department is in touch with the Centers for Disease Control and Prevention and the Florida Health Department, and is “trying to determine what might be the public health impact for Louisiana and what the most appropriate response to this is,” a spokesman for the Louisiana DHH said. It appears that problems with Chinese drywall are ongoing and deserving of more investigation.

How about a dishwasher not being paid overtime for 19 weeks?

Unfortunately, employees at the federal government’s Labor Department Wage and Hour Division failed to investigate these allegations and others that were raised by undercover investigators with the Government Accountability Office. In fact, the Wage and Hour Division mishandled 9 of the 10 cases brought by a team of undercover agents posing as aggrieved workers according to a report by the GAO.

It mishandled hundreds more that were filed by other workers. “This investigation clearly shows that Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn,” the report said. “Unfortunately, far too often the result is unscrupulous employers’ taking advantage of our country’s low-wage workers.”

This is pathetic. The government has to do its job to protect workers. And workers must be assured that they have an ally when unscrupulous employers cheat them out of hard-earned wages. This investigation shows – again – the importance of the tort system to protect victims of greed and injustice. Oftentimes, our court systems are the last resort for victims injured by others.

“We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world,” commented Rose Romero, Regional Director of the SEC’s Fort Worth Regional Office. “As we allege in our complaint, Stanford and the close circle of family and friends with whom he runs his businesses perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors,” added Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.

Currently law firms, including ours, are investigating these allegations of fraud against Stanford.  If you were an investor with the Stanford Group and invested in their Certificates of Deposit or the Stanford Allocation Strategy, contact an attorney to learn more about your rights.

Well, that may soon change.  Congressman Henry “Hank” Johnson is set to introduce the Arbitration Fairness Act of 2009 this week.  The Arbitration Fairness Act would prohibit the enforcement of binding mandatory arbitration clauses in consumer, employment, and franchisee contracts.   If sophisticated corporations want to negotiate these agreements among themselves, let them have at it.  But consumers do not need to be unknowingly saddled with the expensive and unfair arbitration process when our courts are best equipped to handle disputes.  We urge Congress to pass the Arbitration Fairness Act of 2009 and encourage you to call your Congressman and Senator and urge them to join Congressman Johnson and vote for this important piece of consumer protection legislation.

Unfortunately, Louisiana’s Unfair Trade Practices Act (LUTPA) is not as strong as it should be to protect Louisiana consumers.  A new report by the National Consumer Law Center (NCLC) states that Louisiana’s law includes “broad prohibitions that would be far more valuable to consumers were its scope not so limited.”  In other words, our law includes too many loopholes and cannot be applied against many businesses, such as most lenders, creditors, insurers and utility companies.   Another major gap in the law is that consumers cannot assert a violation of the Louisiana Unfair Trade Practices Act in a class action.  Consumer protection laws “are supposed to be a frontline of defense for consumers, the only thing guarding the most common of transactions,” says Carolyn Carter, an NCLC senior attorney and the author of the report.  But Louisiana’s law does not provide that frontline of defense against predatory lenders, unscrupulous creditors, or insurance companies who cheat their insureds.  It is time for this to change.

We call on Governor Jindal and the Louisiana Legislature to strengthen our consumer protection laws.  Allow consumers to bring class actions under the Louisiana Unfair Trade Practices Act for unfair and deceptive practices.  Take away immunity for lenders, insurers and creditors who cheat, lie and steal.  Make our consumer protection law a real protection for Louisiana consumers.