Full opinion text
MEMORANDUM, ORDER AND PARTIAL SUMMARY JUDGMENT JACK B. WEINSTEIN, Senior District Judge: Table of Contents I. Introduction..............................................................400 II. Zyprexa Adjudications.....................................................402 A. Administrative Controls...............................................403 B. Private Plaintiff Litigation.............................................403 C. Federal Criminal and Civil Actions and State Attorney General Civil Actions............................................................406 1. Federal Criminal and Civil Settlement with Penalties and Provision for State Payments..............................................406 2. State Attorney General Civil Actions.................................407 a) Settlements ...................................................407 b) Mississippi....................................................408 III. Facts....................................................................408 A. Zyprexa and Anti-Psychotic Medications ................................408 B. Approved Uses of Zyprexa.............................................414 C. Off-Label Use of Zyprexa.............................................414 D. Off-Label Promotion of Zyprexa........................................415 1. Lilly’s Federal Guilty Plea .........................................415 2. Documentary Evidence of Off-Label Promotion.......................416 a) Promotion for Long-Term Care Patients..........................416 b) Promotion to Primary Care Physicians............................416 E. Labeling and Warnings of Side-Effects to Patients and Medical Professionals.......................................................420 1. FDA Labeling and “Dear Doctor Letter”.............................420 2. Consensus Statement of American Diabetes Association and Other Learned Groups ................................................422 3. March 2007 FDA Letter...........................................423 4. Medical Community’s Knowledge of Zyprexa’s Risks...................423 F. Mississippi Zyprexa Use and Medicaid Benefits...........................424 G. Aggregate Evidence Offered by Mississippi..............................426 1. Evidence of Overpricing of Zyprexa.................................426 2. Evidence of Costs Due to Zyprexa-Induced Diabetes..................428 3. Evidence that Zyprexa Was Over-Prescribed.........................429 IV. Law.....................................................................429 A. Summary Judgment ..................................................429 B. Choice of Law........................................................430 C. Mississippi’s State-Law Claims.........................................430 1. Medicaid Fraud Control Act (MFCA)................................430 2. Product Liability Act (PLA)........................................430 3. Consumer Protection Act (CPA) ....................................431 4. Common-Law Claims..............................................431 5. Statute of Limitations .............................................432 D. Learned Intermediary Doctrine........................................432 E. Individual Issues and Aggregate Proof in Class Actions, Quasi-Class Actions, and Structural Class Actions..................................433 1. Individualized Proof Rule..........................................434 a) Illustrations of the Individualized Proof Rule ......................434 b) Statistical Evidence and the McLaughlin Decision..................442 2. Zyprexa Third-Party Payors Certification Decision....................450 a) Reliance ......................................................450 b) Loss Causation ................................................452 c) Injury........................................................452 3. Appeal of the Third-Party Payors Certification Decision...............452 V. Application of Law to Facts................................................453 A. PLA Claim ..........................................................454 B. MFCA and Unjust Enrichment Claims..................................455 1. Zyprexa Prescriptions Resulting from Lilly’s Failure to Warn...........456 2. “Non-Medieally Necessary” Zyprexa Prescriptions....................456 C. CPA Violations.......................................................458 1. CPA Claim for Damages...........................................458 2. CPA Claim for Statutory Penalties..................................458 D. Common-Law Fraud and Negligence Claims.............................459 E. Pending Third-Party Payors Appeal and Stay of Proceedings..............460 VI. Other Considerations......................................................460 A. Mississippi’s Awareness of Risks and Benefits............................460 B. Social Value of Zyprexa ...............................................462 C. Unconstitutional Punitive Aspects.......................................462 VII. Mississippi’s Motion for Partial Summary Judgment...........................464 VIII. Conclusion...............................................................464 I. Introduction Plaintiff, the State of Mississippi, moves for partial summary judgment on its claims for compensation for its payments for the drug Zyprexa. Defendant Eli Lilly & Company (“Lilly”) moves for summary judgment of dismissal. For the reasons set forth below, Lilly’s motion for summary judgment is granted in part and reserved in part. Mississippi’s motion for partial summary judgment is denied. Mississippi’s action is one of many thousands of cases relating to Lilly’s drug Zyprexa, one of a number of “atypical” or “second-generation” antipsychotic drugs to come on the market over the past twenty years. Second-generation antipsychotics were perceived of as more effective than predecessor drugs for treating serious psychiatric disorders, such as schizophrenia and bipolar disorder. They have been widely prescribed for these and a variety of other mental conditions. Zyprexa has been used by large numbers of people, resulting in tens of billions of dollars in total sales for Lilly. Zyprexa is widely believed to be one of the most efficacious of the second-generation antipsychotics. See Benedict Carey, Study Finds Little Advantage in New Schizophrenia Drugs, N.Y. Times, Sept. 20, 2005, at FI (“One of the newer [atypical antipsychotic] drugs, Zyprexa, from Eli Lilly, helped more patients control symptoms for significantly longer than the other drugs.... The patients on Zyprexa were less likely to be hospitalized because their condition worsened than those taking the other drugs.... ”). As the court has previously observed: “There is little doubt about the usefulness of Zyprexa for both on-label and some off-label purposes. It assists many people with serious debilitating diseases. It has substantially increased the quality of life of many thousands of people.... Many treating physicians continue to rely on it after what is by now extensive revelation of information about Zyprexa’s risks and benefits.” In re Zyprexa Prods. Liab. Litig., 493 F.Supp.2d 571, 575 (E.D.N.Y.2007); see also In re Zyprexa Prods. Liab. Litig., 253 F.R.D. 69, 77 (E.D.N.Y.2008). In the case of some users who were leading dismal, hazardous lives as a result of their mental problems, Zyprexa has enabled a greatly improved quality of life. Large numbers of such patients have been litigants in this court. See, e.g., Belcher v. Eli Lilly & Co., No. 06-CV-2782, 2009 WL 3597447 at *9 (E.D.N.Y. Oct. 16, 2009) (“During an October 1999 hospitalization, Ms. Belcher initially required restraints to control her aggressive behavior; once Zyprexa was administered, she ‘started responding to the treatment and became calmer and more directable.’ In October 2001, after discontinuing use of Seroquel, Ms. Belcher continued to receive Zyprexa and enjoyed ‘better control of her psychotic symptoms.’ ” (internal citations omitted)); Folse v. Eli Lilly & Co., No. 04-CV-1612, 2009 WL 3596526 at *9 (E.D.N.Y. Oct. 16, 2009) (“Mr. Folse had previously tried and failed to find relief from several psychiatric medications for his anxiety and depression, including Zoloft, Paxil, Effexor, Buspar, and Remeron.... Mr. Folse responded well to Zyprexa. His symptoms improved. When Mr. Folse returned for his second visit with Dr. Concepcion on February 7, 2002, Mr. Folse displayed noticeable improvements while taking his medications. Dr. Concepcion noted that Mr. Folse’s ‘mind [was] resting better at night’ and he was ‘not as hyper during the day.’ ... By his third visit with Dr. Concepcion in March 2002, Mr. Folse was ‘doing good’ with ‘no physical complaints’; his ‘stress level, mood and anxiety [had] been more manageable.’ ” (internal citations omitted; alterations in original)). Notwithstanding Zyprexa’s benefits, two circumstances have resulted in a flood of Zyprexa-related litigation, of which Mississippi’s suit is a part. First, Lilly allegedly improperly promoted Zyprexa for use in treating conditions for which it was never approved by the federal Food and Drug Administration (“FDA”). Second, Zyprexa is associated with serious metabolic side-effects, including weight gain and diabetes, for which Lilly allegedly provided inadequate warnings to patients, physicians, and payors such as the State of Mississippi. Related civil and criminal actions have been filed in federal and state courts by the federal government, state attorneys general, insurance companies and other third-party payor institutions, and individual plaintiffs. Institutional and individual plaintiffs number in the tens of thousands. The resulting complex, sprawling series of Zyprexa litigations in state and federal courts has involved federal administrative agencies, federal criminal charges, federal and state statutory claims brought by the federal government and the states’ attorneys general, the common laws of all fifty states, a huge national discovery archive, and the utilization of six special masters, two plaintiffs’ steering committees, a national class action with a class of more than 30,000 third-party payors (now on appeal), individual claims for physical injuries (more than 30,000 of which have been settled), securities fraud claims, a derivative action against Lilly’s Board of Directors, and liens and “hold-backs” on individual recoveries by the states and the federal government and independent distribution entities. Mississippi’s suit is one of a series of claims asserted by the attorneys general of more than forty states. Total recovery claimed by Mississippi is in the billions of dollars. With the assistance of a Special Settlement Master appointed by this court, all similar claims by other states pending before this court have been tentatively or conclusively settled, as have the claims of all but two states brought in state courts. The Settlement Master reports that the amount for each settled state attorney general claim falls within reasonable parameters of tens of millions of dollars. Mississippi asserts claims under (1) the Mississippi Medicaid Fraud Control Act (MFCA), (2) the Mississippi Products Liability Act (PLA), (3) the Mississippi Consumer Protection Act (CPA), and (4) common law theories of fraud, unjust enrichment, negligence, and gross negligence. The crux of these claims is that Lilly improperly promoted Zyprexa for unapproved and “non-medically necessary” uses and failed to adequately warn about the drug’s adverse side-effects. Statutory penalties and monetary damages are sought based on this State’s payments for Zyprexa in the various medical programs it finances. Arguing that Zyprexa’s price was artificially inflated by Lilly’s improper promotions, the State seeks to recover the difference between Zyprexa’s market price and the value actually received by patients over an eleven-year period. It also seeks to recover the costs of treating Medicaid recipients whose diabetes and other diseases are attributable to Zyprexa. Statutory penalties are claimed in connection with each of an estimated nearly one million sales of Zyprexa on prescriptions written for Mississippi residents since the drug was first sold in late 1996, as well as specifically in connection with every Medicaid payment made for “non-medically necessary” uses of Zyprexa. Crucial to Mississippi’s claims is statistical evidence relating to the population of patients who received Zyprexa in Mississippi. The State relies on expert analyses to establish the amount by which Lilly’s improper promotions inflated the price of Zyprexa, the amounts by which the State Medicaid program overpaid for Zyprexa, the number of additional Zyprexa prescriptions that are attributable to Lilly’s alleged promotional misconduct, and the costs to the State Medicaid program of treating diseases caused by Zyprexa. Relevant to the appropriateness of this evidence are numerous ruling appellate decisions which have placed narrow limits on the use of aggregate evidence in mass tort cases. Also relevant is the decision on aggregate proof and statistical evidence in connection with a national class action brought by insurance companies and other third-party payors that paid for Zyprexa (the “Third-Party Payors”). See In re Zyprexa Prods. Liab. Litig., 253 F.R.D. 69 (E.D.N.Y.2008). In the Third-Party Payors case the court certified the class and approved the limited use of statistical evidence in support of plaintiffs’ claims. An appeal of that certification decision is now pending before the Court of Appeals for the Second Circuit. Mississippi brings suit individually, rather than as a Rule 23 class action or a quasi-class action. In this respect, decisions in class actions concerning the use of statistical or aggregate evidence are not directly on point. In effect, however, Mississippi’s individual claim is structured on the foundation of many thousands of conceptually separate claims associated with individual patients, coordinated and aggregated by the State for purposes of recovering a portion of its overall Zyprexa-related Medicaid costs. Such a “structural” class action is congruent with other forms of aggregate litigation insofar as the State seeks to use generalized evidence to prove its claims. The extensive case law regarding the uses and limitations of aggregate evidence in class and other mass actions is applicable. See Part IV.E.l, infra. Mississippi relies on substantially identical expert analyses by several of the same experts offered by the Third-Party Payors. The State’s claims may survive summary judgment only insofar as they are premised on the difference between Zyprexa’s price and the value actually received by patients, based upon theories and forms of aggregate evidence similar to those approved in the Third-Party Payors litigation. To the extent that Mississippi’s claims may survive summary judgment on this ground, decision on Lilly’s motion is reserved pending the outcome of the appeal of the Third-Party Payors certification decision. In all other respects Lilly’s motion for summary judgment is granted, because the use of aggregate proof to establish essential elements of Mississippi’s theories of recovery is barred by applicable case law. The State’s motion for partial summary judgment is denied. Proceedings in this action are stayed pending the outcome of appellate review of the Third-Party Payors certification decision. II. Zyprexa Adjudications Litigation against Lilly for injuries allegedly caused by Zyprexa was initiated in this court in March 2004. See Benjamin v. Eli Lilly & Co., No. 04-CV-893 (E.D.N.Y. filed March 3, 2004). Thousands of cases were then transferred here from federal district courts throughout the United States pursuant to an order of the Judicial Panel on Multidistrict Litigation (“MDL”). See Letter from Multidistrict Litigation Panel to Clerk of the Eastern District of New York, In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, Docket Entry No. 1 (E.D.N.Y. Apr. 14, 2004). Similar cases have been litigated in state courts, see In re Zyprexa Prods. Liab. Litig., 239 F.R.D. 316 (E.D.N.Y.2007) (Communication to State Judges on Cooperation Between Federal and State Judges); many of them were removed to federal courts and then transferred to this court. Cooperation between federal and state courts has been encouraged at all stages of the Zyprexa litigation. See, e.g., In re Zyprexa Prods. Liab. Litig., 467 F.Supp.2d 256, 262 (E.D.N.Y.2006) (“Cooperation with state courts will continue to be stressed.”); In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2006 WL 898105, at *1 (E.D.N.Y. Apr. 6, 2006) (“Coordination and cooperation between state and federal courts has been encouraged.”); In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2006 WL 197151 (E.D.N.Y. Jan. 26, 2006) (letter to state judges with Zyprexa cases suggesting coordination and cooperation); In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2004 WL 3520248, at *4 (E.D.N.Y. Aug. 18, 2004) (directing defendant Lilly and Plaintiffs’ Steering Committee I to “confer regarding procedures for coordination of state-court discovery with discovery in this [multidistrict litigation]”). A. Administrative Controls Zyprexa has been subject to supervision by the FDA since it was first developed. It was initially approved by the FDA in 1996 only for treatment of short-term manifestations of psychotic disorders. See Part III.B, infra. In 2000, the FDA expanded the indications for which Zyprexa was approved to other uses in connection with bipolar disorder and schizophrenia. See id. Since Zyprexa’s initial FDA approval, the agency has several times investigated the risks and side-effects associated with this drug and other atypical antipsychotics; changes to Zyprexa’s warning label have been ordered and made. See generally Part III.E.l, infra. In 2000, the FDA requested information from Lilly concerning Zyprexa’s relation to diabetes and hyperglycemia. See id. In 2003, the FDA imposed on all atypical antipsychotics, including Zyprexa, a required warning relating to hyperglycemia and diabetes mellitus. See id. In 2004, the FDA requested that Lilly send a “Dear Doctor” letter to physicians informing them of the new 2003 warning. See id. In 2007, the FDA raised further concerns about Zyprexa’s warning label in a letter to Lilly. See Part III.E.3, supra. B. Private Plaintiff Litigation Some 30,000 cases have been brought against Lilly by individual plaintiffs suffering from serious psychiatric problems who were treated with Zyprexa. They principally allege that Zyprexa caused deleterious side effects of excessive weight gain, hyperglycemia, and diabetes; that Lilly misled them and their physicians about the likelihood of these side effects; and that, had they or their attending physicians been aware of the risks, they would not have used Zyprexa or would have taken measures to address its adverse effects. The individual Zyprexa user litigation has been administered as a quasi-class action. See In re Zyprexa Prods. Liab. Litig., 467 F.Supp.2d 256, 262 (E.D.N.Y.2006) (“The court, magistrate judge and special masters will continue to administer this litigation as a quasi-class action.”); In re Zyprexa Prods. Liab. Litig., 451 F.Supp.2d 458, 477 (E.D.N.Y.2006) (“Recognizing its obligation to exercise careful oversight of this national ‘quasi-class action,’ the court has already utilized its equitable power to limit attorneys’ fees and costs.”) (citation omitted); In re Zyprexa Prods. Liab. Litig., 433 F.Supp.2d 268, 271 (E.D.N.Y.2006) (finding that individual Zyprexa user litigation “may be characterized properly as a quasi-class action subject to the general equitable power of the court”); In re Zyprexa Prods. Liab. Litig., 424 F.Supp.2d 488, 491 (E.D.N.Y.2006) (same); In re Zyprexa Prods. Liab. Litig., 233 F.R.D. 122, 122 (E.D.N.Y.2006) (same). On April 16, 2004, a class action was filed on behalf of individuals claiming personal injury based on, among other claims, Lilly’s failure to provide an adequate warning about the risks of Zyprexa. See Ortiz v. Eli Lilly & Company, No. 04-CV-1587 (E.D.N.Y.). A second and substantially similar class action was filed in this court on May 19, 2004. See Tringali v. Eli Lilly & Company, No. 04-CV-2104 (E.D.N.Y.). On September 15, 2004, Lilly and plaintiffs’ counsel in the two putative class actions entered into an agreement to execute stipulations of dismissal. See Joint Memorandum of the Parties Regarding Stipulation of Voluntary Dismissal of Certain Claims, In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, Docket Entry No. 80-2 (E.D.N.Y. Sept. 15, 2004). Discovery and negotiations in the first batch of settled individual cases were overseen in part by a court-appointed special discovery master and four special settlement masters. In November 2005, Lilly, without conceding liability, entered into a settlement covering some 8,000 individual plaintiffs. See In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2005 WL 3117302 (E.D.N.Y. Nov. 22, 2005). The settlement resolved virtually all cases then pending in the multidistrict litigation, along with some state cases. See id. An attorneys’ fee structure for the individual cases was ordered, capping fees at 20% of recovery in smaller, lump-sum claims, and at 35% of recovery in other claims. See In re Zyprexa Prods. Liab. Litig., 424 F.Supp.2d 488 (E.D.N.Y.2006). Costs related to the individual cases and charged to individual settling plaintiffs were limited. See In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2006 WL 2443248 (E.D.N.Y. Aug. 24, 2006). Counsel for some 2,000 individual plaintiffs filed an appeal of an order capping fees, see In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2007 WL 2340789 (E.D.N.Y. Aug. 17, 2007), which is now pending before the Court of Appeals for the Second Circuit. The magistrate judge allocated funds from a first common benefit fund after reviewing the first Plaintiffs’ Steering Committee’s (“PSC I”) applications. See In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2007 WL 805793 (E.D.N.Y. Mar. 15, 2007). Payments have been substantially completed for PSC I. Following an influx of thousands of new cases, after January 2007 the parties announced another round of settlements, which are nearing completion. A second common benefit fund was established to compensate members of a second PSC for their work. See In re Zyprexa Prods. Liab. Litig., 467 F.Supp.2d at 262. A national system for resolving Medicare and Medicaid liens and “hold-backs” in connection with individual Zyprexa recoveries was approved. See In re Zyprexa Prods. Liab. Litig., 451 F.Supp.2d 458 (E.D.N.Y.2006). All states and the federal government agreed to modify their lien demands to provide a national equitable system. See In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 2006 WL 3501263, at *1 (E.D.N.Y. Dec. 4, 2006) (“In compliance with this court’s instructions ... all fifty states as well as the federal government have resolved their Medicare and Medicaid liens.”) (citation omitted). As a result of the global settlement of these ancillary claims, a total of $21,100,849.60 has been allocated to the states and $22,342,445.37 to the federal government, reflecting their shares of compensation received from Lilly by individual plaintiffs, whose recovery for their own injuries from Zyprexa included recovery of amounts originally paid by Medicaid and other “welfare” programs. See Administrator’s Report of Aug. 28, 2009, In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596 (E.D.N.Y.) (filed under seal). The State of Mississippi has recovered $755,496.32 through this global lien and hold-back settlement. Id. A class action has been brought on behalf of third-party payor institutional plaintiffs, including pension funds, labor unions, and insurance companies that cover their members’ health benefits; they have made outlays for Zyprexa prescriptions. Mail fraud under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) is alleged, see 18 U.S.C. § 1964, predicated on overpricing supported by excessive claims of utility as well as disavowal of adverse secondary effects of the drug, primarily weight gain and diabetes. That class has been certified. See In re Zyprexa Prods. Liab. Litig., 253 F.R.D. 69, 201 (E.D.N.Y.2008). The certification decision is currently on appeal before the Court of Appeals for the Second Circuit. Individual plaintiffs who bought, or paid a portion of the purchase price for, Zyprexa for their own use also sought class action status on a similar theory. Certification of this individual payor class action was denied. See id. at 201-02. Some of Lilly’s shareholders have filed suit because of the decline in share price. See In re Eli Lilly & Co. Sec. Litig., No. 07-CV-1310 (E.D.N.Y.). This litigation has been dismissed on statute of limitations grounds. See In re Zyprexa Prods. Liab. Litig., 549 F.Supp.2d 496 (E.D.N.Y.2008). Current shareholders have sued in this court in the form of three separate shareholder derivative actions. See Waldman v. Taurel, No. 08-CV-560 (E.D.N.Y.); City of Taylor Employees Retirement System v. Taurel, No. 08-CV-1554 (E.D.N.Y.); Robins v. Taurel, No. 08-CV-1471 (E.D.N.Y.). Similar cases are pending in other courts. Settlement negotiations are ongoing. Additional cases transferred as part of the multidistrict litigation or commenced in this district are being managed by a special master, who is tracking settlements, setting timelines for discovery and the adjudication of dispositive motions, and scheduling trial dates. See Case Management Order No. 32, In re Zyprexa Prods. Liab. Litig., 04-MD-1596, Docket Entry No.2072 (E.D.N.Y. Mar. 3, 2009). Individual actions originating in the Eastern District of New York have been placed on an expedited discovery and motion schedule so that trial on those actions may, if necessary, move forward without undue delay. Many cases originally set for trial in this court have been settled or withdrawn. The court has ruled on the parties’ Daubert motions challenging proposed expert testimony in a number of cases. See, e.g., In re Zyprexa Prods. Liab. Litig., 04-MD-1596, 2009 WL 1357236 (E.D.N.Y. May 12, 2009) (ordering the exclusion of plaintiffs’ proposed expert testimony in twenty cases); see In re Zyprexa Prods. Liab. Litig., 04-MD-1596, 2009 WL 1322286 (E.D.N.Y. May 12, 2009) (approving plaintiffs’ proposed expert testimony in two cases); In re Zyprexa Prods. Liab. Litig., 04-MD-1596, 2009 WL 1322292 (E.D.N.Y. May 12, 2009) (approving defendant’s proposed expert testimony); Souther, 489 F.Supp.2d at 281-91 (denying plaintiffs’ and defendant’s Daubert motions to exclude expert testimony). A series of summary judgment motions by Lilly in individual Zyprexa user actions have been decided and others are pending. See, e.g., Souther, et al. v. Eli Lilly & Co., 489 F.Supp.2d 230 (E.D.N.Y.2007). In the most recent series of motions, summary judgment has been granted against individual plaintiffs. See, e.g., Eric Fuller v. Eli Lilly & Co., No. 06-CV-2782, 2009 WL 2485829 (E.D.N.Y. July 31, 2009). Several individual plaintiffs have appealed the grant of summary judgment. Review of those cases is pending before the Court of Appeals for the Second Circuit. Summary judgment has been denied with respect to other individual plaintiffs. See Arlene Earl v. Eli Lilly & Co., No. 07-cv-3912, - F.Supp.2d -, 2009 WL 2762170 (E.D.N.Y. Aug. 28, 2009), mot. for recons. denied, Docket Entry No. 27 (E.D.N.Y. Oct. 14, 2009); Venica Pruett v. Eli Lilly & Co., No. 07-CV-1931, 2009 WL 2245068 (E.D.N.Y. July 22, 2009). Substantial numbers of individual plaintiffs’ Zyprexa actions continue to be filed in this court and elsewhere. C. Federal Criminal and Civil Actions and State Attorney General Civil Actions The federal government sought criminal and civil penalties against Lilly in connection with “off-label” promotion of Zyprexa — ie., promotion of Zyprexa for uses that were not approved by the FDA. Many state attorneys general sued on behalf of their states’ citizens seeking various state-law remedies as well as reimbursement for payments for Zyprexa made with state and federal funds via state Medicaid and other programs. Some forty-two states and the federal government have settled independent claims with Lilly. Three state actions are still pending, including Mississippi’s, the only one still pending in this court. 1. Federal Criminal and Civil Settlement with Penalties and Provision for State Payments In January 2009 Lilly pled guilty in the Eastern District of Pennsylvania to federal criminal charges of introducing misbranded drugs into interstate commerce in connection with its promotion of Zyprexa for off-label uses. Upon the plea of guilty, a $615 million criminal fine was imposed. See Memo, in Supp. of Pl.’s Mot. for Partial Summ. J., Sept. 18, 2009, Ex. 3 (Guilty Plea Agreement, Jan. 14, 2009); see also Eli Lilly & Company, Press Release, Lilly Resolves Investigations of Past Zyprexa Marketing and Promotional Practices, Jan. 15, 2009, available at http://newsroom.hlly. com/releasedetail.cfm?ReleaseID=359242. Simultaneously with its guilty plea, Lilly settled civil claims with the federal government. Id. Lilly’s settlement payments included both a $438 million federal government share and a $362 million state share set aside and designed to compensate settling states for amounts paid out of state funds for Zyprexa. Id. States, like Mississippi, that opted to independently pursue their claims against Lilly did not receive a portion of this state share. In connection with the federal civil settlement, Lilly also entered into a corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services. Id. The agreement requires Lilly “to maintain its compliance program and to undertake a set of defined corporate integrity obligations for five years” and “provide[s] for an independent third-party review organization to assess and report on the company’s systems, processes, policies, procedures and practices.” Id. Independent state settlements contain equivalent obligations by Lilly to improve its ethical practices. See Part II.C.2.a, infra. 2. State Attorney General Civil Actions a) Settlements In March 2008, Lilly settled with the State of Alaska during a trial on Zyprexarelated claims. See Alex Berenson, Alaska Suit Against Lilly Is Settled, N.Y. Times, Mar. 27, 2008, at Cl. That State’s lawsuit sought reimbursement for the medical costs of Alaska Medicaid patients who developed diabetes while taking Zyprexa; the State’s claim to recover costs associated with Lilly’s off-label promotion of Zyprexa was dismissed before trial. See Alex Berenson, Lilly Executive Discussed Off-Label Uses for Drug, N.Y. Times, Mar. 15, 2008, at Cl. Some of the materials introduced in that trial are available as part of the public record. Other state settlements have followed. In October 2008, thirty-two states and the District of Columbia settled claims relating to improper off-label promotion of Zyprexa. See Alex Berenson, 33 States to Get $62 Million in Zyprexa Case Settlement, N.Y. Times, Oct. 7, 2008, at B7. The settling states were: Alabama, Arizona, California, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode ‘'Island, South Dakota, Tennessee, Texas, Vermont, Washington and Wisconsin, as well as the District of Columbia. See Eli Lillyh & Company, Press Release, Eli Lilly and Qompany Resolves Investigation Involving Numerous States, Oct. 7, 2007, available, at http://newsroom.lilly.com/ releas '■;>detail.efm?ReleaseID=338857. In/ connection with the October 2008 statofe settlements, Lilly agreed to be bound by compliance provisions relating “to the company’s promotional practices, dissemination of medical information, funding of continuing medical education (CME) and grants related to Zyprexa, and continued disclosure of Zyprexa clinical trials and their results.” Id. Lilly also agreed to “provide signatory attorneys general with information related to compensation made to healthcare professionals who have received more than $100 annually from the company for promotional speaking or consulting regarding Zyprexa in the U.S.” Id. State attorney general actions on behalf of the citizens of Connecticut, Idaho, Louisiana, Minnesota, Mississippi, Montana, New Mexico, and West Virginia were brought in this court, or transferred to this court pursuant to an order of the Judicial Panel on Multidistrict Litigation. The state Attorneys General of Arkansas, Pennsylvania, South Carolina, and Utah brought suit in their respective state courts. A putative qui tarn action by a whistleblower representing California was dismissed. Order, California ex rel. Jaydeen Vincente v. Eli Lilly & Co., No. 08-CV-600, Docket Entry No. 84 (E.D.N.Y. Apr. 23, 2008). Most state attorney general cases have been settled. In addition to the thirty-two state settlements in October 2008 and the state of Alaska’s settlement, settlements have been tentatively reached or concluded by Connecticut, Idaho, Louisiana, Minnesota, Montana, New Mexico, South Carolina, Utah, and West Virginia. The final settlement agreements contain compliance provisions mirroring those of the October 2008 state settlements, covering Lilly’s promotional activities, dissemination of medical information, use of continuing medical education and grants, payments to consultants and speakers, use of product samples, and clinical research. See, e.g., Final Judgment and Consent Decree, Con necticut v. Eli Lilly & Co., No. 08-CV-955, Docket Entry No. 247, 2009 WL 3229314 (E.D.N.Y. Sept. 29, 2009). Special Settlement Master Michael Rozen reported to the court that the settlement amounts agreed by these nine states are in rough equivalency, relative to the size of each state. See Sept. 21, 2009 Hr’g Tr. at 9, In re Zyprexa Prods. Liab. Litig., 04-MD-1596 (E.D.N.Y). b) Mississippi Mississippi’s case is the last open state attorney general case before this court. Arkansas and Pennsylvania are the only other state attorney general cases still pending, both in state courts. Because Mississippi, like eleven other states, elected to continue pursuing its claims against Lilly, it did not participate in the recovery obtained by thirty-two states in the October 2008 settlements, and did not receive a portion of the state share provided for in the federal civil settlement. See Parts II.C.l to 2.a, supra. Other litigants’ settlements in the related Zyprexa litigations described above have directly and indirectly affected Mississippi. First, as already noted, Mississippi has directly recovered $755,496.32 for liens and “hold-backs” as its share of compensation received from Lilly by individual plaintiffs whose recovery for their own injuries from Zyprexa included amounts paid by the states through Medicaid and other “welfare” programs. See Administrator’s Report of Aug. 28, 2009, In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596 (E.D.N.Y.) (filed under seal); Part II.B, supra. Second, the extensive ongoing compliance provisions to which Lilly has agreed in its settlements of claims by the federal government and the other states are not subject to any geographic limitation. Mississippi is thus indirectly protected by these provisions, though it lacks any right to enforce them directly. As discussed above, Lilly is subject to compliance provisions in the October 2008 state settlement agreements, the corporate integrity agreement entered into in connection with the federal civil settlement, and the final settlement agreements of states that pursued claims in federal or state court. See Parts II.C.l to 2.a, supra. These agreements contain terms that relate to the company’s promotional practices, dissemination of medical information, funding of continuing medical education and grants related to Zyprexa, and continued disclosure of Zyprexa clinical trials and their results. See Part II.C.2.a, supra. Other terms require Lilly to provide information related to compensation made to healthcare professionals for promotional speaking or consulting regarding Zyprexa, to maintain a compliance program and undertake a set of defined corporate integrity obligations, and to provide for an independent third-party review organization to assess and report on the company’s procedures and practices. See Parts II.C.l to 2.a, supra. III. Facts A. Zyprexa and Anti-Psychotic Medications This court has previously detailed the history of the development and merchandizing of Zyprexa and similar antipsychotic medications. It is repeated here for the reader’s convenience. Lilly’s prescription medicine Zyprexgif with a chemical name of olanzapine^/is one of a class of medications known as “atypical” or “second-generation”/anti-psychotics (“SGAs”) that treat ¡Schizophrenia and bipolar disease, schizophrenia is a severe, debilitating mental illness that afflicts over one percent of the general population — 2.5 miillion Americans — often beginning in late kdolescence or early adulthood. See Robert Freedman, Schizophrenia, 349(18) New Eng. J. Med. 1738, 1738 (2003); Gary D. Tollefson & Cindy C. Taylor, Olanzapine: Preclinical and Clinical Profiles of a Novel Antipsychotic Agent, 6(4) CNS Drug Reviews 303, 304 (2000); U.S. Dep’t of Health & Human Servs., Mental Health: A Report of the Surgeon General 273 (1999), http://www. mentalhealth.org/features/surgeon generalreport/home.asp; [American Psychiatric Association, Diagnostic and Statistical Manual of Mental Disorders at 308, 4th ed., Washington DC, American Psychiatric Press Inc., 2000 (“DSM-IV-TR”) ]. One of the most complex and challenging of psychiatric disorders, schizophrenia is a heterogeneous syndrome of disorganized and bizarre thoughts, delusions, hallucinations, inappropriate affect, and impaired psychosocial functioning. See DSM-IV-TR, supra at 298-302. The illness occurs when a patient suffers two or more of the following characteristic symptoms: (1) delusions, (2) hallucinations, (3) disorganized speech, (4) grossly disorganized or catatonic behavior, and (5) negative symptoms, see id., or has bizarre delusions or hallucinations of voices commenting on the person’s behavior or thoughts. Research has shown a variety of abnormalities in schizophrenic brain structure and function. Pharmacotherapy: A Pathophysiologic Approach (Joseph T. Dipiro et al., eds., 5th ed. 2002) (hereinafter “Pharmacotherapy”) at 1219; see DSM-IV-TR, supra at 299. Causation is believed to be multi-factorial. Pharmacotherapy, supra at 121; see DSM-IVTR, supra at 305-06, 309-11. Bipolar disorder is a serious, lifelong mental illness marked by dramatic shifts in mood, from abnormally elevated, expansive, or irritable moods to states of extreme sadness and hopelessness, often with periods of normal mood in between. Nat’l Inst, of Mental Health, Bipolar Disorder, available at http://www.nimh. nih.gov/publicat/bipolar.cfm (last visited June 30, 2008); see Decl. of Steven Klotz, M.D. 2, Feb. 22, 2007, Docket Entry No. 99 (“Klotz Decl.”). Bipolar I, characterized by the occurrence of one or more manic episodes or mixed episodes, often with major depressive episodes, and Bipolar II, characterized by one or more major depressive episodes accompanied by at least one hypomanic episode, are separate disease states. See DSM-IV-TR, supra at 382-92. Because of its complexity, bipolar disease can be difficult to diagnose; between seven and ten years of mis-diagnoses and incorrect treatment is typical for bipolar patients. Klotz Decl. 6. “[U]n-treated bipolar disorder can be disastrous; 10 percent of sufferers commit suicide.” Mary Carmichael, Welcome to Max’s World, Newsweek, May 26, 2008. In the past five years there has been extensive research into diagnosing and recommending treatments for bipolar disorder, funded in part by pharmaceutical manufacturers. Klotz Decl. 3. There has been a corresponding growth of bipolar diagnoses — correct and incorrect — leading to an increase in patients and greater awareness of the disease; many patients labeled “bipolar” are mentally ill but, upon detailed psychiatric examination, not bipolar. Id. at 3-4. An estimated 5.7 million Americans are affected by the disorder. Both schizophrenia and bipolar disorder, like many mental illnesses, display considerable biological and symptomatic differences. See Decl. of Richard G. Frank, Ph.D. at ¶ 7, Jan. 8, 2008, Docket Entry No. 148 (“Frank Deck”). Often, patients with these disorders have other psychiatric and physical problems. Id. Due to the illnesses’ heterogeneity, different people respond differently to different psychotropic drugs. Which drug will work best for a new patient is often unknown until he or she tries it; thus clinical decision-making about psychotropic medications almost inevitably is based on “trial and error.” Id. at 3-4 (citing H.A. Huskamp, Managing Psychotropic Drug Costs: Will Formularies Work?, Health Affairs 22(5): 84-96 (2003)). As a result, third-party payors prefer not to place strong restrictions on the use of antipsychotic medications. Id. at 4. While the two primary uses of second-generation antipsychotics remain the treatment of schizophrenia and bipolar disorder, antipsychotics are prescribed off-label, i.e., for non-FDA approved purposes, to treat symptoms related to agitation, anxiety, psychotic episodes, obsessive behavior, behaviors related to dementia, depression, obsessive compulsive disorder (“OCD”), Post Traumatic Stress Disorder (“PTSD”), personality disorders, and Tourette’s Syndrome. See Frank Decl. at 3 (citing Agency of Health Research and Quality, Off Label Use of Atypical Antipsychotic Drugs, available at http://effectivehealthcare. ahrq.gov/reports/topic. cfm?topic=8& sid=34&rType=10). “ ‘Off-Label’ prescriptions are a mainstay of the drug industry — an estimated 21% of drug use overall.” Anna Wilde Mathews & Avery Johnson, FDA to Propose Guidelines for ‘Off-Label’ Drug Use, Wall St. J., Feb. 15, 2008; see [Deck of Meredith Rosenthal at 26, Feb. 27, 2007, Docket Entry No. 101 (“Rosenthal Deck”) ] (noting that Zyprexa’s “unapproved uses represent an average of 31% of Zyprexa mentions in the National Disease and Therapeutic Index (NDTI) database.”). Examples of off-label use include using a drug to treat a condition for which it is not indicated, treating an indicated condition with different doses than those specified on the label, and prescribing a drug for a different patient population than that indicated (such as children, if it has only been approved to treat adults). Off-label uses of approved medications have not been subjected to the baseline FDA scrutiny required for on-label indications, and are thus considered riskier. See id. at 1021. Two common off-label uses of SGAs are for dementia in the elderly and children with bipolar disorder. One in four nursing home residents take antipsychotic drugs, with sales in 2007 totaling over $13 billion. Kris Hundley, Dementia Relief, with a Huge Side Effect: The Off-Label Use of Some Drugs Is Helping, Tampa Bay Times, Nov. 18, 2007. “The use of antipsychotic drugs to tamp down the agitation, combative behavior and outbursts of dementia patients has soared, especially in the elderly.” [Laurie Tarkan, Doctors Say Medication Is Overused in Dementia, N.Y. Times, June 24, 2008, at FI.]. Use of the medications [is] particularly high in nursing homes. Sedatives and antipsychotics— despite their potentially severe side effects, including increased risk of death— present a tempting option to overextended staff. Id. Of Zyprexa’s $4.4 billion sales in 2006, 26.6% were to patients over 64. Id. Off-label use of antipsychotics in children with bipolar disorder is a recent phenomenon. “Between 1994 and 2003, the number of children treated for bipolar disorder in the United States increased to more than 800,000 from 20,-000.” M. Alexander Otto, Should Kids Get These Drugs? Plan Likely to Increase Scrutiny of Anti-Psychotics in Children, News Tribune, May 12,; 2008. At least some of those were diagiaos“no doubt ... wrongly. The disease is hard to pin down.” See Carmichael, supra. Just two SGAs have been approved for use by children, Risperdal and Ability; Zyprexa is indicated for use by adults only. A. First-Generation or “Typical” Anti-Psychotics (“FGAs”) Zyprexa is generally known as a “second-generation antipsychotic” or “SGA” to differentiate it from older, first-generation antipsychotics (“FGAs”), which were the standard drug therapy for schizophrenia until the 1990s. FGAs include chlorpromazine (Thorazine), fluphenzine (Proxilin), haloperidol (Haldol), molindone (Moban), thioridazine (Mellaril), loxapine (Loxitane), mesoridazine (Serentil), perphenazine (Trilafon), thiothixene (Navane), and trifluoperazine (Stelazine), some of which have been in use since the 1950s. Pharmacotherapy, supra, at 1224. FGAs are sometimes referred to as “typical” antipsychotics and SGAs as “atypical.” Although many different FGAs exist, they share similar levels of efficacy. They are, generally speaking, post-synaptic dopamine-receptor antagonists, i.e., they target dopamine receptors in the brain. Id. at 1220. A troubling side effect of typical antipsychotics is that the blockage of dopaminergic neurotransmission causes extrapyramidal syndromes (“EPS”) such as Parkinsonian effects or tremors. Id. at 1223. Tar-dive Dyskinesia (“TD”), a long-lasting movement disorder, frequently occurs with prolonged treatment. Id. B. Second-Generation or “Atypical” Anti-Psychotics (“SGAs”) Because of FGAs’ potential for severe side effects and their limited efficacy, many pharmaceutical companies searched for new drugs that would be more effective and cause less movement disorder. By the 1980s, clozapine, the first SGA, was being investigated on that hypothesis. Since it had an “atypical index” when measuring its effect on different parts of the brain, clozapine became known [as] an “atypical” anti-psychotic. 2007 Physicians Desk Reference at 2184-89. Clozapine has different effects than FGAs on areas of the brain that control movement; it was hoped that it would cause less movement disorder than other antipsychotics. Id. While clozapine turned out to be effective, its toxic side effects, including agranulocytosis (dramatic loss of white blood cells), limited its use to about ten percent of persons with schizophrenia. Id.; [Rosenthal Decl. at 6]. Although clozapine was the first atypical antipsychotic, it tends to stand on its own between FGAs and SGAs. Clozapine was approved by the FDA in September 1989 and was the only SGA available in the United States until 1993, although its potential toxicity assured only a small market share. Id. at 5. During the 1990s pharmaceutical companies, building on the “atypical” hypothesis, developed newer, second-generation antipsychotic drugs (“SGAs”) attempting to capture the enhanced therapeutic effect of clozapine without its toxicity and [ ] the side effects caused by traditional antipsychotics, such as EPS and TD. “The introduction of atypical antipsychotic medications was trumpeted by the manufacturers of these pharmaceutical agents as a major advance in the treatment of schizophrenia with improved symptomatic control of the psychosis and a reduction in both tardive dyskinesia and extra pyramidal side effects.” [Decl. of William Wirshing, M.D. at 7, Jan. 31, 2007], In late 1993, risperidone became the first non-clozapine SGA to receive Food and Drug Administration (“FDA”) approval. In early 1994, Janssen, a subsidiary of Johnson & Johnson, began marketing and selling risperidone under the brand name Risperdal. During the next two years, Janssen heavily marketed and promoted Risperdal for its approved indication, management of the manifestation of psychotic disorders, and, allegedly, for multiple non-approved uses, including attention deficit-hyperactivity disorder, bipolar disorder, and aggression associated with late-onset dementia. By late 1996, Janssen had a significant share of the United States antipsychotic drug market, and had demonstrated the sales potential of marketing SGAs for non-approved indications. When Zyprexa entered the market in 1996, Risperdal was seen as its primary competitor. See Strategy Integration Team, Eli Lilly & Co., Zyprexa in Serious Mental Illness (65 Plus Years) — A Strategy Review (undated). The FDA first approved Zyprexa on September 30, 1996, for use in treating “the manifestations of psychotic disorders” seen in schizophrenia. Letter from Dr. Robert Temple, Director, Office of Drug Evaluation I, FDA, to Dr. Timothy R. Franson, Eli Lilly & Co., Sept. 30, 1996. Thereafter, the FDA approved Zyprexa for maintenance treatment of schizophrenia, FDA Nov. 9, 2000 Approval Letter; for the short-term treatment of acute manic episodes associated with bipolar I disorder as monotherapy, FDA March 17, 2000 Approval Letter; in combination with lithium or valproate, FDA July 10, 2003 Approval Letter; and for maintenance in the treatment of bipolar disorder. FDA Jan. 14, 2004 Approval Letter. Multiple other second-generation anti-psychotic drugs have been introduced since 1996. Atypical SGAs, in addition to clozapine (Clozaril), olanzapine (Zyprexa), and risperidone (Risperdal), now include quetiapine (Seroquel), aripiprazole (Ability), and ziprasidone (Geodon). Pharmacotherapy, supra at 1224. Seroquel has been approved since 1997. Indicated for schizophrenia and acute manic or mixed episodes associated with bipolar disorder, Geodon entered the marketplace in March of 2001, and Ability in November 2002. Ability is also approved for treatment of depression. Transcript of Evidentiary Proceedings on Class Certification 827 (“Evid. Hr’g Tr.”), March 28, 2008 through April 2, 2008. C. Rapid Growth of Pharmaceuticals and SGAs SGAs were and are marketed as providing more effective treatment with fewer side effects and better symptom reduction than the older — and far less expensive off-patent — FGAs. Expert Rep. of John Abramson, M.D., at 7, Feb. 28, 2007, Docket Entry No. 97 (“Abram-son Rep.”). Because of the severe and costly — in both human and economic terms — nature of the illnesses that SGAs treat, insurance companies, believing the newer drugs to be more effective, have been willing to spend billions of dollars on them, despite the fact that they can cost up to 100 times more than the older antipsychotic medications. Id. (noting that, for example, Zyprexa costs more than twenty times the cost of Haldol, an FGA). In 1994, when Risperdal, the second SGA after clozapine, was introduced, only five percent of schizophrenic patients were being prescribed an SGA; national spending on antipsychotic medications was $1.4 billion. Id. Ten years later, about ninety percent of schizophrenic patients nationally were being treated with SGAs rather than FGAs, and $10 billion was spent annually on antipsychotic medications. Id.; see Frank Decl. 4 (noting that in 2003, IMS Health estimated United States antipsychotic drugs sales to total $8.1 billion). The dramatic rise in the costs of prescription drugs over the past decade is in large part due to SGAs, which now make up a substantial proportion of increased national spending on medication. In 2004, for instance, prescription drug expenditures in the United States were estimated at $188.5 billion, nearly five times the $40.3 billion the nation spent fourteen years earlier. Prescription Drug Trends, Kaiser Family Foundation (June 2006). “Sales of newer antipsychotics like Risperdal, Seroquel and Zyprexa totaled $13.1 billion in 2007, up from $4 billion in 2000.” Tarkan, supra at FI; see Alex Berenson, Lilly Adds Strong Warning Label to Zyprexa, a Schizophrenia Drug, N.Y. Times, Oct. 6, 2007. SGAs now account for about ninety percent of all antipsychotics drugs prescribed for all psychiatric purposes, regardless of whether they were approved for those indications or not. See Jeffrey A. Lieberman, Effectiveness of Antipsychotic Drugs in Patients tuith Chronic Schizophrenia, 353 N. Eng. J. of Medicine 1209, 1210 (2005). Off-label prescriptions make up a substantial proportion of overall SGA sales. Because many patients treated with antipsychotics are severely disabled, Medicare and Medicaid, as public health insurers, are the largest buyers of the drugs. Between 1994 and 2003, total Medicaid spending on all prescription drugs increased by $25.9 billion, quadrupling from $8.4 billion to $34.3 billion; one-third of the increase, $8.5 billion, went towards increased expenditures on SGAs. Abramson Rep. 8. In 2003, three out of the top four drugs that Medicaid purchased were SGAs. Id. Zyprexa headed this list: Medicaid paid over $1.8 billion for olanzapine in each of 2003 and 2004, $500 million more than for any other single drug. Id.; see CMS Medicaid Drug Utilization data, ranked by Drug, 2003-2006. In 2005, the most recent year for which data is available, Medicaid paid over $1.6 billion for Zyprexa. D. Lilly, with Zyprexa, Has Been Successful Zyprexa has been a phenomenal success for Eli Lilly. Approved in more than 80 countries, it has been prescribed to more than 23 million people since 1996. Lisa Demer, State Claims Drug Maker Hid Data, Anchorage Daily News, Mar. 6, 2008. Over 73 million Zyprexa and Zyprexa Zydis prescriptions had been written by the end of 2006. See Rosenthal Decl., Ex. E.l (citing IMS Health TRx Data). From its launch, Zyprexa rapidly cut into Risperdal and Clozaril’s market shares, even while the overall market for atypical antipsychotics grew substantially. Rosenthal Decl. 6. For both FDA-approved and off-label indications, Zyprexa has the largest market share for SGAs in the United States, see Lieberman, supra at 1210, and in 2003, was the seventh best-selling drug in the country with sales of $3.3 billion. Rosenthal Decl. 6. Although 2005 sales dropped to $2.5 billion, id., Zyprexa sales now total $4.2 billion annually. Abramson Rep. 8. During plaintiffs’ proposed class period, Zyprexa sales exceeded $22 billion. See Pfs.’ Mem. in Opp. to Def.’s Mot. for Summary J., June 12, 2007 (filed under seal). In the United States, government payments for Zyprexa totaled $1.5 [bullion in 2007. Alex Berenson, In Trial, Alaska Says Lilly Concealed Risks of Schizophrenia Drug, N.Y. Times, Mar. 6, 2008. Zyprexa now accounts for approximately 27 percent of Lilly’s total revenues, down from a high of 33 percent in 2002, Fitch Affirms Eli Lilly & Co.’s IDR at ‘AA\ Business Wire, Sept. 26, 2007, but constitutes nearly fifty percent of the company’s profits. Pretax profits from Zyprexa total $2 billion annually. J.K. Wall, $2 Billion Challenge: Lilly Under Gun to Replace Aging Blockbuster Zyprexa, Indianapolis Business J., Nov. 3, 2007. The average cost per prescription — roughly a month’s supply — ranges from $250 to $350. See Summary J. Hr’g Tr. 74, June 22, 2007. At commonly prescribed doses, Zyprexa now costs about $8,000 per year. [Alex Berenson, Lilly E-Mail Discussed Off-Label Drug Use, N.Y. Times, Mar. 14, 2008]. Its costs, along with Lilly’s profits, [are] expected to sharply decrease when its patent expires in 2011. In re Zyprexa Prods. Liab. Litig., 253 F.R.D. 69, 98-102 (E.D.N.Y.). B. Approved Uses of Zyprexa Zyprexa was initially approved by the FDA for use in late 1996 for treatment of short-term manifestations of psychotic disorders. See In re Zyprexa Prods. Liab. Litig., 253 F.R.D. at 100; Decl. of Robert Cowan in Supp. of Pl.’s Mot. for Partial Summ. J. (“Cowan Decl.”), Ex. 1 at 2 (Def.’s Objections and Responses to Pl.’s First Set of Reqs. for Admis.). By 2001, the drug was approved for maintenance treatment of schizophrenia and acute manic episodes associated with bipolar disorder. In March 2000, the FDA approved the addition of the subheading “schizophrenia” to the short term management of the manifestations of psychotic disorders. See id. at 2-3. During the same month, the FDA approved Zyprexa for the short-term treatment of acute manic episodes associated with bipolar I disorder. See id. at 3. In November 2000, the FDA approved new labeling for Zyprexa for the short-term treatment of schizophrenia in place of the management of the manifestations of psychotic disorders, and for maintaining treatment response in schizophrenic patients who had been stable for approximately eight weeks and were then followed for a period of up to eight months. See id. at 3. In 2004 Zyprexa was approved for maintenance treatment of bipolar disorder. See In re Zyprexa Prods. Liab. Litig., 253 F.R.D. at 100. The FDA has never approved Zyprexa for treatment of dementia or Alzheimer’s dementia in the elderly. See id. at 4. Zyprexa’s current label bears a “black box” warning that “Elderly patients with dementia-related psychosis treated with antipsychotic drugs are at an increased risk of death compared to placebo.... ZYPREXA (olanzapine) is not approved for the treatment of patients with dementia-related psychosis.” Cowan Decl., Ex. 2 at 1 (2009 Zyprexa Label, as reproduced in 2009 Physicians’ Desk Reference Electronic Library). C. Off-Label Use of Zyprexa Under the Food, Drug, and Cosmetic Act, a drug is misbranded when its labeling does not contain “adequate directions for use.” 21 U.S.C. § 352(f)(1). The FDA cannot approve “adequate directions for use” until the drug is approved for a particular use or indication based on the FDA’s finding that the drug is safe and effective, as established by accurate clinical trial data provided by the drug manufacturer. 21 U.S.C. §§ 352, 355(a), (d). A drug that is promoted for an unapproved (“off-label”) indication or use does not contain “adequate directions for use” because the off-label indication or use is not included in the FDA approved labeling for the drug. Thus, the manufacturer’s promoting a drug for an off-label use constitutes misbranding of the drug. As the extensive deposition testimony of physicians in this litigation indicates, even though it is improper for a drug company to affirmatively merchandize a drug for an off-label use, doctors may voluntarily prescribe FDA-approved medicines for approved and unapproved uses as they believe appropriate in the exercise of their own professional judgment. See Aff. of Andrew Rogoff in Supp. of Def.’s Mot. for Summ. J., Sept. 4, 2009 (“Rogoff Aff.”), Ex. 20 at 18:1-11, 40:3-18 (Williams Depo. Tr., July 14, 2009); Rogoff Aff., Ex. 3 at 15:4-12 (Clark Depo. Tr., Apr. 15, 2009); see also Anna Wilde Mathews & Avery Johnson, Boost for Off-Label Drug Use— FDA Would Let Firms Keep Doctors Informed on Unapproved Methods, Wall St. J., Feb. 16, 2008, at A3 (“[0]ff-label uses of prescription drugs are a mainstay of the industry — an estimated 21% of drug use overall[J”). Some off-label uses of a prescription drug may be medically necessary. Numerous articles in medical journals and periodicals have reported off-label uses of atypical antipsychotics; some have endorsed such uses. See Def.’s Local Civil Rule 56.1 Statement of Undisputed Material Facts, Sept. 4, 2009 (“Def.’s SUF”), ¶ 122 & nn. 178-80 (citing articles). In February 2004 a joint panel that included the American Diabetes Association, the American Psychiatric Association, the American Association of Clinical Endocrinologists, and the North American Association for the Study of Obesity, summarized common uses of atypical antipsychotics: [T]hey have become first-line agents for their indicated use and are increasingly being used off-label. In current practice, people who are likely to be treated with an [atypical antipsychotic] include those with schizophrenia spectrum disorder