Document Type


Publication Date



Ineffectiveness of prescription drugs, hidden drug hazards, and advertising violations have led to several drug recalls and numerous lawsuits against pharmaceutical companies in recent years. These suits have involved several varieties of medications, but psychoactive medications have figured especially prominently. A recent $1.4 billion settlement by Eli Lilly & Company related to improper promotion of its top-selling drug olanzapine included the largest individual corporate criminal fine in U.S. history.

Improper promotion is far from the sole reason why olanzapine and other “second-generation” antipsychotic (SGA) drugs have become so successful. Rather, the widespread adoption of SGAs represents a collective judgment error by the medical profession. For policymakers, the olanzapine litigation is important because it provides an impetus for learning what makes certain drugs successful and for understanding processes that determine medication choices, physicians’ judgments, and expenditures for drugs. Litigation will not solve problems with these processes, so understanding them is crucial if regulatory agencies and other entities wish to avert future medical judgment errors and suboptimal uses of healthcare dollars.

To promote this understanding, we first describe the rapid switch from older drugs to SGAs and summarize recent evidence suggesting that the switch was improvident. We then review the lawsuits brought against Lilly, which exemplify the many types of liability claims that drugs may generate. We next describe marketing techniques that drug companies use to get physicians to prescribe their products, the special features of SGAs that have contributed to their huge success, and the ways that pharmaceutical companies exercise virtually total control over the information doctors use to prescribe drugs. We suggest that funding more independent, comparative effectiveness studies and giving pharmaceutical companies incentives to generate and disclose more information about their products’ flaws might produce better medications, help physicians make better treatment decisions, and improve patient safety.