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"Lilly settles Zyprexa suit for $1.42 billion"

Original source:

Los Angeles Times

January 16, 2009

The Indianapolis-based company said it will pay $800 million to settle civil suits, including $438 million to the federal government and $362 million to states. It will pay $615 million to resolve the criminal probe, and plead guilty to a misdemeanor violation of the Food, Drug and Cosmetic Act for promoting Zyprexa as a dementia treatment.

The company did not acknowledge any wrongdoing in the civil cases.

The plea resolves charges related to Lilly's marketing of Zyprexa between September 1999 and March 2001. The company plead guilty to marketing the drug as a treatment for dementia.

The case began in 2004 and was lead by the United States Attorney for the Eastern District of Pennsylvania and the Office of Consumer Litigation of the Department of Justice.

Patricia Hartman, a spokeswoman for the U.S. Attorney's Office, declined to comment on the case Thursday morning.

Lilly also said it agreed to resolve civil investigations brought by the Medicaid Fraud Control Units of the states involved in the settlement. The states were looking into rebate agreements between Lilly and pharmacy benefits managers related to Zyprexa and other drugs.

The company will enter a corporate integrity agreement with the government.

Zyprexa is approved to treat schizophrenia and bipolar disorder. Doctors are allowed to prescribe it for other uses, but Lilly is not allowed to market the drug for any other illnesses because it lacks Food and Drug Administration approval.

The drug was approved in 1996 and has been Lilly's top seller for years. It brought in $3.5 billion in revenue through the first three quarters of 2008, or roughly $1.5 billion more than the company's second-best seller, the antidepressant Cymbalta.

But the company has taken more than $1.6 billion in charges to settle allegations it improperly marketed the drug.

Lilly in October said it expected to pay $1.42 billion to end the investigations. It set aside that amount, or $1.29 per share, in the third quarter, which resulted in the company's first quarterly loss in three years.

Earlier the same month, Lilly agreed to pay $62 million to 32 states and the District of Columbia to resolve accusations it marketed Zyprexa for pediatric care, for use in high doses and for dementia.

The company has resolved more than 31,300 claims related to Zyprexa product liability, but other lawsuits and class actions are still pending. A group of insurance companies, unions and others are suing Lilly for billions, saying it broke marketing laws and overcharged for the drug.