Sept. 26 (Bloomberg) -- Eli Lilly & Co.'s best-selling schizophrenia drug Zyprexa is poised to get U.S. approval for treating adolescents diagnosed with mental illness after a senior government regulator overruled his colleagues.

A three-member Food and Drug Administration team initially urged rejecting the drug for pediatric use because of inconsistent data from studies in U.S. and Russian teens. In an April 29 memo posted on the FDA's Web site, Thomas Laughren, head of the agency's psychiatry division, said the drug's benefits in some studies outweighed the reviewers' concerns.

Zyprexa, with $4.4 billion in global sales in 2006, is Lilly's biggest revenue producer and the best-seller among five so-called atypical antipsychotics. The drug's market leadership has slipped because of surging pediatric prescriptions for competing products and side effects linked to Zyprexa. Johnson & Johnson's Risperdal last month became the only drug in the class cleared for pediatric use though doctors have long prescribed the pills to children, according to market research.

``These medications may help some patients, but I'm worried FDA approval may lead to rampant prescription writing,'' said Steven Klotz, a child psychiatrist in Harrisburg, Pennsylvania. ``I don't want drug reps telling pediatricians every adolescent that throws a tantrum is bipolar and should get antipsychotics.''

Klotz, who prescribes antipsychotics cautiously, is a critic of the overuse of medications in children. He and other doctors are concerned that weight gain and diabetes caused by the drug may be worse in children than adults.

No Plans to Promote

Lilly ``has no plans at this time to execute a broad promotional campaign'' for Zyprexa in children, spokeswoman Carole Puls said in an e-mail. The company will ``inform doctors who treat adolescents'' about the new data.

Indianapolis-based Lilly rose 19 cents to $57.40 at the close of New York Stock Exchange composite trading and has gained 10 percent this year. That's about three times the pace of the 14-member S&P 500 Pharmaceuticals Index.

Lilly's FDA application to market Zyprexa for pediatric use was based on a six-week study of 107 teenagers with schizophrenia, almost half of them in Russia, and a three-week test of 161 U.S. subjects with bipolar disorder.

The FDA reviewers, whose report wasn't released by the agency, urged Zyprexa's rejection because the beneficial findings in the schizophrenia trial came mostly from Russia, Laughren wrote. His memo, which offers a rare window into FDA decision- making, was posted without publicity under a 2002 law requiring the agency to release summaries when it reviews pediatric applications.

Laughren declined to comment because Lilly's application is pending, FDA spokeswoman Sandy Walsh said.

Placebo Response

The reviewers were concerned that Russian patients had greater responses to the drug and smaller responses to placebos than U.S. patients, Laughren wrote. They also worried that the relative ease of patient recruitment in Russia was a sign of fraud. An FDA inspection found no such evidence, Laughren said.

The Russian studies ``meet or exceed internationally accepted principles of clinical research,'' Lilly's Puls said.

Almost 44 percent of teenagers taking Zyprexa gained more than 7 percent of their body weight, compared with 7 percent of those on placebos, according to Laughren. Levels of fats, blood sugar and the hormone prolactin increased in patients taking Zyprexa, while dropping in placebo patients.

``A 7 percent increase in body weight in a young patient in such a short time may predispose people to diabetes and create a cardiac burden as the heart is forced to work harder,'' Klotz said.

Cardiac Burden

Zyprexa has been overtaken by Risperdal and AstraZeneca Plc's Seroquel as the first choice of psychiatrists, according to a survey by Decision Resources, a consulting firm in Waltham, Massachusetts. Of those surveyed, 86 percent said they'd reduced Zyprexa use because of side effects.

In 2003, Zyprexa accounted for 32 percent of all U.S. antipsychotic prescriptions and 15 percent of pediatric orders, according to the Amsterdam-based research firm Wolters Kluwer NV. By 2006, its share of the U.S. market was down to 15 percent overall and just 4.9 percent of prescriptions for children. Expanded approval is unlikely to change this trend because of concerns about side effects, analysts say.

Drug Risks

``Zyprexa dominated the schizophrenia market just two years ago,'' said Sandra Chow, a Decision Resources analyst, in a statement last week. ``Recent focus on the drug's risk of weight gain and diabetes has changed physician perception.''

U.S. sales of antipsychotics grew 74 percent from 2002 to 2006 to reach $11.5 billion. That was fueled partly by a 40-fold rise in children diagnosed with bipolar disorder, or manic depression, over 10 years, according to a study published this month.

J&J's Risperdal was cleared Aug. 22 for use by children over 9. Before that, no antipsychotic was approved for kids, though doctors may prescribe drugs to any group for any use once they're on the market. Zyprexa is not approved for pediatric use in any other country.

Even without approval, the number of prescriptions for U.S. youth doubled to 4.4 million from 2003 to 2006, according to Wolters Kluwer. Risperdal, New Brunswick, New Jersey-based J&J's best-selling drug, led the way, growing 58 percent to 1.9 million orders. Orders for Seroquel and Bristol-Myers Squibb Co.'s Abilify soared to 1 million prescriptions each. Only Zyprexa had declining sales for U.S. youth.

Under FDA rules, Lilly will get an extra six months of protection from competing generics for conducting pediatric studies. That's worth about $1 billion in revenue, said Robert Hazlett, an analyst with BMO Capital Markets in New York.

Bristol-Myers, based in New York, has sought approval to sell Abilify to children, and its application may be reviewed by year-end, spokesman Jeffrey Macdonald said. London-based AstraZeneca is testing Seroquel in youngsters and hasn't decided whether to apply, spokesman Jim Minnick said.

To contact the reporter on this story: Rob Waters in San Francisco at rwaters5@bloomberg.net.

Last Updated: September 26, 2007 17:37 EDT