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Lilly to settle Zyprexa probes for $1.4b

Bloomberg News / January 15, 2009
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SOUTHFIELD, Mich. - Eli Lilly & Co. and US prosecutors will say as early as today that a $1.4 billion settlement of federal and state investigations over marketing of the antipsychotic Zyprexa has been reached, said people familiar with the negotiations.

Lilly said Oct. 21 it was in "advanced discussions" to settle allegations the company improperly marketed Zyprexa for unapproved uses and would take a $1.42 billion charge in the third quarter. The settlement will likely be entered today in federal court in Philadelphia, according to a person familiar with the talks.

The settlement would be a record in a false-claims case, said Patrick Burns of Taxpayers Against Fraud in Washington, which tracks such litigation. It would conclude investigations by the US Attorney's Office for the Eastern District of Pennsylvania and Medicaid fraud units in more than 30 states and wouldn't affect lawsuits brought by 12 other states alleging fraud, Lilly said in October. The agreement includes at least $500 million in criminal fines, according to two people familiar with the settlement.

"The settlement is a game-changer because it breaks the $1 billion barrier," said Burns. "Smaller settlements weren't getting the job done."

A Lilly spokeswoman wouldn't confirm when the settlement would occur or the terms.

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.

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