The top executive of Eli Lilly and Co. says he personally decided to launch Oraflex into the huge U.S. market in May 1982 despite seeing a new report relating the unexpected deaths of five elderly women in Northern Ireland to the new prescription arthritis medicine.

Chairman and chief executive officer Richard D. Wood said in a sworn statement that it was "entirely appropriate" to start sales two weeks later, as had been planned, because the "incomplete" report neither proved nor disproved that Oraflex had caused the deaths in Belfast.

Wood gave his deposition for the first of more than 80 Oraflex suits to go to trial. Last week, after plaintiff's lawyer C. Neal Pope had read the first half of the deposition to the jury in U.S. District Court, Lilly lawyer John H. Schafer halted the process with the surprise announcement that Wood will testify personally later in the trial, which began Monday and may last a few weeks.

A key issue in the case is whether Lilly executives were in compliance with federal regulations although they didn't tell the Food and Drug Administration about the 32 known overseas deaths before the agency approved the marketing of Oraflex (benoxaprofen). The FDA had asked for an investigative grand jury, but the U.S. attorney in Indianapolis and the Justice Department in Washington accepted Lilly's offer to provide documents for their joint investigation.

A related issue is where the legal and moral obligations of corporate executives begin and end. Chairman Wood made a sweeping defense of Lilly's handling of Oraflex, testifying in the deposition that company executives complied fully with the drug law and FDA requirements and held to an ethical standard even higher than that required by the law.

In the opening argument for plaintiff Clarence Borom, Pope attacked Wood for opening on schedule an Oraflex promotional blitz aimed mainly at arthritis victims and costing a reported $12 million. Four weeks later, users numbered about 500,000; 14 weeks later, sales totaled $30 million. Borom seeks punitive damages--originally $15 million but now $100 million--from Lilly under a law that sets no limit on such awards.

The Committee on Safety of Medicines (CSM), the United Kingdom's equivalent of the FDA, banned the drug on Aug. 4, 1982, after a reported 61 benoxaprofen users had died, many from liver and kidney diseases (the U.K. toll is now 96). Hours later, Wood halted sales in the United States--where the reported deaths totaled 11 in August 1982 and 43 as of last month--and in the eight other nations where the drug was sold. Experts say adverse reactions are usually under-reported, often drastically.

Wood said he stopped global sales not "from a scientific point of view" but only because adverse reactions to Oraflex had become a media event and "very politicized" by a House Government Operations subcommittee here and the British House of Commons. Oraflex is "still a very useful drug when used properly," he said.

The five deaths occurred between July 13, 1981, and Jan. 26, 1982, at Belfast City Hospital, where Dr. Hugh McA. Taggart is a geriatrician. He began to report the deaths to the CSM in November 1981, saying he expected the U.K. drug agency to routinely notify Dista Products Ltd., the Lilly U.K. subsidiary that had sold benoxaprofen (as Opren) since October 1980.

Taggart said his suspicions of the drug crystallized in February 1982, and on Feb. 9 he reported two deaths to Dista on forms given to him by a Dista salesman who had heard of the cases. He did not fill out Dista forms for the other three until April, when he also filed the final two CSM forms.

Meanwhile, on March 16 in Belfast, Dr. Brian A. Gennery, Lilly's U.K. medical director, came to Taggart to discuss all five cases. Taggart said he provided essential details but Gennery didn't seem particularly interested.

In the opening statement for Lilly, James C. McKay of Covington & Burling, Lilly's Washington law firm, charged that Taggart had "stonewalled" by refusing to supply needed information such as his patients' medical records.

But Taggart testified Tuesday that U.K. physicians do not believe in giving such records to drug companies and that health authorities had advised him to do so only under a court order. Lilly got such an order, and he turned over the records in mid-October.

Taggart said that all five of the women, who were in their 80s, had a form of liver disease not previously associated with any of the several drugs in the same chemical class of drugs as benoxaprofen, and that four of them had a unique syndrome combining the liver disease with related kidney disease.

Wood, citing Taggart's initially "sketchy" information, said that Lilly's U.K. operation didn't mention the Belfast deaths to headquarters in Indianapolis, and that he first learned of them May 6, after W. Ian H. Shedden, then vice president, saw Taggart's published report in an advance copy of the British Medical Journal (BMJ). U.S. sales began as scheduled on May 19.

Wood said "that particular syndrome of kidney-liver disease appeared to me" for the first time when he read the BMJ report. Clarence Borom blames a closely similar syndrome for the death of his mother, Lola T. Jones, 81. Tests showed she had normal kidney function on April 20, 1982, seven weeks before taking her first Oraflex tablet. McKay said, however, that the evidence will show Oraflex did not cause her death.

In an interview in New York City, Dr. Michael D. Lockshin of Cornell University Medical College, past chairman of the Arthritis Foundation's Unproven Remedies Committee, termed Dr. Taggart's BMJ report "not very convincing" and "not a basis for believing that the danger would be as great as it turned out to be."

Wood recalled he had told aides to confer with the FDA as "quickly as possible." He could cite few details; he "could guess," but not recall, who from Lilly had met with the agency, he had reviewed no minutes of the meeting, and he did not know of any documents recording it. Agency and company records show no such meeting--only phone conversations.

In any event, the FDA delayed action because an advisory panel was gearing up to suggest revising the prescribing instructions (labeling) for all drugs similar to Oraflex--the so-called nonsteroidal anti-inflammatory hormones. While awaiting FDA action, Lilly destroyed the printing plates for the original labeling and prepared, but did not issue, a new one that noted a possible association of Oraflex with liver and kidney diseases, McKay said.

Then, with soaring demand exhausting Lilly's supply of Oraflex prescribing instructions, it reprinted the initial labeling and issued it anew May 28. The company did not notify physicians of the Taggart and other newly published reports of liver and kidney diseases or deaths in Oraflex users until it revised the labeling June 24 and issued a "Dear Doctor" letter dated June 29.

An FDA regulation encourages a manufacturer learning of new hazards to warn physicians without waiting for the FDA to act, and the drug law puts the burden on a company to show safety, not on the FDA to show lack of safety.

Did Lilly officials conform to the "the highest ideals and ethics" of the century-old pharmaceutical company? Wood was asked. "I would say generally, yes," he replied. Is compliance with the drug law "the most that's required of your employes"? he was asked. "No," he said. "That's the minimum."

But Dr. Lockshin was critical. "A delay in marketing would not have hurt the public," he said. "Oraflex was not a necessary drug or a miracle, but a new rival to numerous existing drugs in the same class. . . . Because large dosages of the other drugs sometimes caused liver inflammation and kidney failure, Lilly could have anticipated that benoxaprofen would, too. . . .

"Oraflex's advantage was simply the same convenience offered by only . . . Pfizer's Feldene: A patient had to take a tablet only once a day. Lilly wanted to enter that big market, and delaying would have cost money. Lilly got what it deserved, because it had held out Oraflex as God's gift to the world."

The case may turn on whether Oraflex caused Mrs. Jones' death. For 41 days before she died July 30, l982, she took a 600-milligram pill--the once-a-day dosage Lilly advised initially. Dr. Alan S. Clepper, who did an autopsy, testified it revealed Oraflex-related liver and kidney damage.

Other plaintiff's experts say that Lilly recommended 600-mg doses despite having been warned in June l981 that doses of 300 or 400 mgs. more than once or twice weekly were dangerous in the elderly, who excrete Oraflex slowly and accumulate it in the body. "The more you take, the worse you get," testified Dame Sheila Sherlock of London, a leading expert on liver diseases who blamed the drug for Mrs. Jones' death.

But McKay told the jury that Mrs. Jones was a person for whom Oraflex should not have been prescribed, that Lilly had advised her doctor,Thomas B. Blake Jr., at an early stage to reduce doses for the elderly, and that Oraflex, in any event, had not killed her. Blake testified he did not recall having been told anything about lower dosages.

Wood testified that questions about "the scientific integrity of the corporation" led him to order, map out, and guide an investigation. As part of it, Lilly lawyers prepared a chronology showing that Dr. Harvey A. Barnett, Lilly's director of regulatory affairs, and an associate, Dr. Louise Levine, had known of seven of the 32 overseas deaths.

In a May deposition, Barnett repeatedly invoked "my Fifth Amendment privilege" against self-incrimination, giving only his name and home address. Lawyer Pope read much of the deposition to the jury under a pretrial ruling by Judge J. Robert Elliott rejecting Lilly's objections.

The investigation reached what Wood called an "independent judgment" that Lilly had reported adverse reactions legally and properly from "day one." The investigators were Lilly's in-house counsel. Lawyers from Covington & Burling aided the in-house lawyers and made a report to the board of directors that has never been released. Wood asked no outsiders to evaluate Lilly's conduct.

To launch Oraflex, Lilly hired a public relations firm, held two press conferences, issued more than 6,100 press kits, and won several thousand mentions of Oraflex in lay print and electronic news media. Quickly, large numbers of arthritis victims asked their physicians to prescribe Oraflex.

But Wood complained that the press "overstated the therapeutic nature" of Oraflex, making "its own scientific interpretations of the product and its characteristics regardless of the facts" and also doing "interpretation of the news. They didn't report, they created it the news ."

By contrast, the FDA began to warn Lilly only two days after sales began that the press kit and other Oraflex materials were "less than ethical" and even "false and misleading," and that these combined with the costly media campaign to "invite" the press to indulge in the exuberant coverage of which Wood complained. Lilly "bears much of the responsibility for the misleading impressions of the safety and effectiveness of Oraflex which resulted," although the FDA could not prove "an intent to mislead," agency official Jerome A. Halperin told the company in his final letter in November 1982.

A key issue in the trial and Justice Department inquiry is the possible violation of an FDA regulation for a drug in "investigational" status. Oraflex was investigational until the FDA approved it for sale on April 19, 1982.

The rule requires the sponsor of an investigational drug to "promptly investigate and report to the FDA any findings associated with use of the drug that may suggest significant hazards . . . and precautions pertinent to the safety of the drug. If the finding is alarming, it shall be reported immediately . . ."

Did the Lilly executives who had known of some or all of the 32 overseas deaths well before April 19, 1982, violate the regulation by not reporting them to the agency until months after the approval date?

Wood testified that Lilly executives had complied with the regulation and acted "properly" as well. These arguments were made by Wood and former vice president Shedden, whose sworn statement that he had known of 29 of the deaths was read to the jury:

Some of the deaths were "not necessarily drug-related." Because Oraflex was one of the nonsteroidal, anti-inflammatory drugs, "occasional" deaths among large numbers of users "weren't unexpected" or were even "expected." The deaths were exempt from the rule because the overseas users had received commercial benoxaprofen and died after the clinical trials had ended.

The House subcommittee charged in a Nov. 3 report that, by failing to notify the FDA of several of the overseas deaths, Lilly "deprived" the agency of information it needed "for a responsible assessment" of the risks of Oraflex. The report also alleged that FDA officials believe Lilly did not comply with requirements to report overseas adverse reactions--but pointed out that many drug makers do the same. Lilly denied the charges against it and termed the report "flawed."

Subcommitee Chairman Ted Weiss (D-N.Y.) said: "It is inconceivable that Congress intended that the FDA be denied information critical to the protection of the public simply because it came from a foreign country. Nothing in the legislative history of the FDA law, or accompanying regulations, relieves drug manufacturers of the obligation to report serious adverse reactions outside the United States associated with drugs under FDA review."

The report accused the FDA of an "indefensible" failure to enforce its reporting regulations and of having put the public safety needlessly at risk. The agency had made "no effort to obtain information on Oraflex's safety from the foreign countries in which it was marketed" and, before approving marketing, had overlooked several reports of drug-associated liver and kidney disorders, the subcommittee charged.

Phil Gast of the Columbus Enquirer contributed to this article. graphics/1 photo: One page of an Oraflex advertisement that was published in a medical journal last year. By Eli Lilly and Co.