Eli Lilly to pay $1.42 billion to settle misdemeanor case regarding blockbuster drug Zyprexa

15 January 2009

Drugmaker Eli Lilly agreed to pay $1.42 billion in a long-awaited settlement with American prosecutors regarding allegations of improperly marketing its blockbuster antipsychotic drug Zyprexa to treat dementia when it wasn't approved to do so.

A resolution has been expected since October, when the Indianapolis drug maker announced it was in "advanced discussions" and had set aside the settlement's amount, a record sum in a corporate whistleblower case, for an eventual settlement in the case.

The company said Thursday that it will pay $615 million to settle a criminal investigation and nearly $800 million - $438 million to the federal government and $362 million available for settlements with states - to resolve civil investigations related to Zyprexa.

As part of the settlement with the Justice Department, the company has agreed to plead guilty to one misdemeanor violation of the Food, Drug and Cosmetic Act. There had been worries that a felony conviction would put Lilly's Medicare business at risk.

"Specifically, the plea states that Lilly promoted Zyprexa in elderly populations as treatment for dementia, including Alzheimer's dementia, although Zyprexa is not approved for such uses," the company said in a statement.

The company said it disagrees with and doesn't admit to the allegations but would settle the dispute. General Counsel Robert Armitage noted in October that the probe "has been ongoing for five years and we now have a heightened sense of responsibility to all our stakeholders to intensify efforts to resolve these issues."