http://www.bloomberg.com/apps/news?pid=20601087&sid=aGDAxYMRGIw0&refer=home
Lilly to Pay $1.42 Billion to Settle Zyprexa Probe (Update3)
By [bn:PRSN=1] Margaret Cronin Fisk [] and [bn:PRSN=1] Cary O’Reilly []
Jan. 15 (Bloomberg) -- Eli Lilly & Co. will plead guilty to a criminal
charge of promoting its antipsychotic drug Zyprexa for unapproved uses, pay
$1.42 billion in fines and submit to U.S. monitoring against future
lawbreaking.
The company admitted its marketing of Zyprexa was illegal in a civil and
criminal settlement announced jointly today in a statement by Acting U.S.
Attorney Laurie Magid and U.S. Attorney General Michael Mukasey.
Lilly resolved federal and state probes into how it marketed the drug and
will plead guilty in U.S. District Court in Philadelphia in the next few
weeks, the Indianapolis-based drugmaker said in a statement. Lilly said it
promoted Zyprexa in elderly people to treat dementia, a use not approved by
the Food and Drug Administration, between September 1999 and March 2001, a
criminal violation of the Food, Drug and Cosmetic Act.
“Eli Lilly completely ignored the law” and made “hundred of millions of
dollars” from its illegal promotion of Zyprexa, Magid said at a press
conference in Philadelphia today. “We’re holding a company responsible for
putting thousands and thousands of patients at risk.”
The company hasn’t entered a guilty plea to the misdemeanor criminal charge
yet. No court date has been set.
Settlement Record
The settlement is a record in a false-claims case, said Patrick Burns of
Taxpayers Against Fraud in Washington, which tracks such litigation. The
agreement includes a $615 million penalty for the criminal charge and
payments of $800 million to end civil probes by the U.S. Attorney’s Office
for the Eastern District of Pennsylvania and Medicaid fraud units in more
than 30 states, Lilly said.
“We deeply regret the past actions covered by the misdemeanor plea,” said
Chief Executive Officer John Lechleiter in the statement.
Lilly booked a $1.42 billion charge, or $1.29 a share, to pay for the
settlement in last year’s third quarter. The company will state the tax
consequences when it announces fourth quarter earnings Jan. 29.
As part of the settlement, Lilly agrees to operate under a federal monitor’s
review for five years. The “independent third- party review organization”
will “assess and report on the company’s systems, processes, policies,
procedures and practices,” Lilly said.
Game Changer
“The settlement is a game changer because it breaks the $1 billion barrier,”
said Burns of Taxpayers Against Fraud. “Smaller settlements weren’t getting
the job done.”
Zyprexa, used to treat schizophrenia and bipolar disorder, had sales of
$4.76 billion in 2007, accounting for about a quarter of Lilly’s revenue.
The drug, part of a class of medications called atypical antipsychotics, has
been linked to excessive weight gain and diabetes.
The U.S. and state investigations involved claims that Lilly improperly
marketed the drug to doctors for unapproved uses. Doctors can prescribe
medicines for any use. Drugmakers can’t promote those medicines for any use
not approved by the FDA.
Beginning in 1999 and continuing through at least November 2003 Lilly
management created marketing materials promoting Zyprexa for off-label uses,
trained its sales force to disregard the law and directed its sales
personnel to promote Zyprexa for off-label uses, prosecutors said in their
statement today.
The settlement period was negotiated to “capture” most of the illegal
activity, Magid said at the press conference.
Pending Suits
The settlement adds to Lilly’s earlier settlement of more than 31,000
Zyprexa lawsuits filed by individuals for $1.2 billion. About 139 suits are
still pending, said Marni Lemons, a Lilly spokeswoman, in a telephone
interview yesterday.
The company also still faces lawsuits by 12 states, including Pennsylvania
and Connecticut, alleging the company improperly marketed the drug for
unapproved uses and withheld information about side effects. These lawsuits
aren’t part of the settlement, said attorney Blair Hahn, who represents West
Virginia.
The company paid the state of Alaska $15 million in March to settle one of
these suits. Lilly also agreed in October to pay a total of $62 million to
32 states and the District of Columbia to settle consumer protection claims
over improper marketing.
To contact the reporters on this story: Margaret Cronin Fisk in Southfield,
Michigan, at
mcfisk@bloomberg.net; Cary O’Reilly in Washington at
caryoreilly@bloomberg.net.
Last Updated: January 15, 2009 10:53 EST
