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AMERICAN LAWYER MEDIA NEWS SERVICE New york-A fraud suit brought by health insurance companies over the controversial anti-diabetes drug Rezulin has been revived by the 2d U.S. Circuit Court of Appeals. Reversing a district court victory for drug maker Warner-Lambert Co., Judge Guido Calabresi, writing for the 2d Circuit, said major health insurers had adequately stated a claim that they were the “direct victims of Defendants’ fraudulent marketing” in Louisiana Health Services Indemnity Co. v. Warner-Lambert Co., No. 01-9318. Southern District of New York Judge Lewis A. Kaplan had ruled that the plaintiffs had failed to allege the required causal connection between the marketing of the drug and their financial injury. Rezulin’s introduction in 1997 by Warner-Lambert Co. subsidiary Parke-Davis & Co. was hailed as a sign of real progress in the treatment of Type II diabetes. But although the Food and Drug Administration (FDA) approved the drug for use in conjunction with insulin or for use with two other drugs in January 1997, and then approved its use as “stand-alone” therapy in August 1997, the FDA later accused the company of making “false and misleading claims” about the drug’s effectiveness. The FDA began hearing reports of liver failure and liver injury in some patients who took the drug, and in 1998 the National Institutes of Health stopped a clinical study of the drug out of concern for the safety of patients. Warner-Lambert was also forced to change labels on the drug several times, on one occasion to state that regular liver testing should accompany its use. Another change came after the FDA allowed the drug to stay on the market, but only if labeling made it clear that Rezulin could not be used as a stand-alone drug. The health service providers charged that Warner-Lambert continued to represent the drug as safe even though the company had reported to the FDA that 31 users had died during a six-month period in 1998, and the company continued to lie about the drug even as evidence of liver failure in patients mounted. The company ultimately removed Rezulin from the market in March 2000.

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