Eli Lilly’s $1B Email Gaffe

As you might have read about in the New York Times on January 30 and January 31, Eli Lilly is in settlement talks with the FDA for marketing their blockbuster drug Zyprexa for treating conditions not approved by the FDA.

What you might not have known is how the Times broke this story. This article explains that it was a result of a misdirected email, probably caused by the email client’s automatic completion of addresses.

One of its outside lawyers at Philadelphia-based Pepper Hamilton had mistakenly emailed confidential information on the talks to Times reporter Alex Berenson instead of Bradford Berenson, her co-counsel at Sidley Austin.

I’ve talked about fear of secure email before, but this is a case where it really hits home. If Eli Lilly had policies and technical controls to ensure that sensitive business information had to be transmitted using encrypted email, this never would have happened. The lawyer wouldn’t have an encryption certificate for the Times reporter, and the email would not have been sent. Instead, Eli’s stock dropped about $1/share the day this story was released. With 1.13B outstanding shares, this misdirected email cost them about $1B of their market cap.