The American Spectator

FIRM STAND
Re: Robert Goldberg’s Smearing Mitch:

The Center for Public Integrity firmly stands behind its May 9 story on Gov. Mitch Daniels and his prior employment with Eli Lilly. The recent letter [sic] from Robert Goldberg appears to be little more than an apology for the illegal behavior of the pharmaceutical giant during Daniels’ tenure and an ad hominem attack on the Center.

The facts are irrefutable: During Daniels’ time there, Lilly pleaded guilty to two criminal misdemeanors, paid more than $2.7 billion in fines and damages, settled more than 32,000 personal injury claims — and agreed to settle one of the largest state consumer protection cases involving a drug company in U.S. history.

Mr. Daniels was a senior executive with the company during this dark period, and as he weighs a presidential bid, it is the responsibility and duty of the media to investigate his work history and professional associations. Starting in 1990, Daniels served as vice president of corporate affairs, then as president of Lilly’s North American pharmaceutical operations, and finally in 1997, as senior vice president of corporate strategy and policy. He cannot claim to be “out of the loop.”

Lastly, Mr. Goldberg’s insinuation that the Center was somehow used by our esteemed board member Arianna Huffington or a mental health activist to attack Eli Lilly and Mitch Daniels is simultaneously insulting and absurd. The Center is not — and never has been — a pen for hire. We are nonpartisan investigative news organization and we follow the facts wherever they lead.
— William E. Buzenberg
Executive Director, Center for Public Integrity

Robert Goldberg replies:
Mr. Buzenberg’s letter confirms the point of my article. The Center for Public Integrity claims that “by providing thorough, thoughtful, and objective analyses, the Center serves as a provider of factual information.”

Mr. Buzenberg’s response possesses none of those qualities. 

Characterizing Governor Daniels’ tenure as “this dark period” is all we need to know about how objective Buzenberg and CPI really are. I do not apologize for Lilly’s illegal behavior. Rather, I provide the background about the use of the False Claims Act as a platform for government and third party plaintiff lawsuits against pharmaceutical firms. As I noted in my article: “Eli Lilly engaged in illegal activity. But here’s the gist of its unlawful actions: Eli Lilly was accused of providing doctors with medical information that Zyprexa could be used to treat agitation in people diagnosed with dementia and sleep disorders in people with schizophrenia.” I also noted that Medicaid programs reimbursed the off-label promotion of Zyprexa and Evista.

I did not note — because of space considerations — what CPI knows and did not report about the 32,000 claims: These were not 32,000 individuals all suing Lilly individually. These were, as James Beck has written about such cases, “thousands, of plaintiffs — and no information about any of them. It amounts to an instant mass tort. Often it’s worse, in that otherwise diverse plaintiffs are fraudulently misjoined with non-diverse plaintiffs (or non-diverse defendants against which only very few plaintiffs have a claim).” In other words, most of the claims were either bogus, or filed by people who did not even take Zyprexa or benefitted from the drug.

Lilly settled these 32,000 claims only because it costs over $30,000 to review and validate each one. The fact that Lilly settled for $500 million (compared to the total cost of $960 million of reviewing each one) suggests that most claims were flimsy or false. Kenen and Sharpe, the CPI report’s authors, ignore these details as well as the fact that 90 percent of the claims Lilly did challenge were dismissed. So much for Lilly’s “dark period.”

Further, Kenen and Sharpe omit important facts surrounding the Second Circuit Court’s reversal of a lower court decision that Lilly’s off-label activity caused third party payers to cough up more for Zyprexa than they otherwise would have. The reporters say the 2nd Circuit merely ruled that the third parties could not sue as a class. In fact, as described by litigation attorneys John P. Stigi III and Eric S. O’Connor, “At the core of this decision is the Second Circuit’s rejection of the use of ‘aggregate proof’ of causation in the consumer class certification process.” There was no individualized proof rather than generalized proof of causation (i.e. the assertion that Lilly’s marketing of Zyprexa caused the plaintiffs to pay a higher price for the drug than they otherwise would have).

In Buzenberg’s mind, if Kenen and Sharpe had included such information it would been like apologizing for illegal activity. 

Finally, there is the claim that I am “insinuating that the Center was somehow used by our esteemed board member Arianna Huffington or a mental health activist to attack Eli Lilly and Mitch Daniels.” Buzenberg goes on to assert: “The Center is not — and never has been — a pen for hire. We are nonpartisan investigative news organization and we follow the facts wherever they lead.”

First, I was not insinuating but asking a question: How did the reporters get to Ellen Liversidge, a “mental health activist” with ties to Scientology-based groups and Peter Breggin. I speculate, given Huffington’s long and persistent attention to Eli Lilly, her crusade against psychiatric medications, and the fact that the Huffington Post was a platform for people that shared her views, that perhaps Huffington or Breggin suggested Liversidge to Kenen and Sharpe. Indeed, the reporters do not mention Liversidge’s groups, an odd omission since telling her story is at the core of her “activism.” As for CPI’s “esteemed” board member, her role in undermining confidence in vaccines and prescription drugs is worth a full article and then some.

I don’t believe the Center is a pen for hire. I do believe it has an ideological agenda and a sense of righteous entitlement that colors its reporting.