Eli Lilly close to resolving federal charges

John O'Brien Oct. 21, 2008, 5:00pm

INDIANAPOLIS (Legal Newsline) - Prescription drug manufacturer Eli Lilly and Co. said Tuesday that it will resolve a federal investigation by taking a $1.4 billion charge in the third quarter of this fiscal year.

The U.S. Attorney's Office for the Eastern District of Pennsylvania is probing the marketing and promotional practices of the antipsychotic drug Zyprexa, the subject of a recent settlement between the company and 33 state attorneys general.

The Indianapolis-based drug company had been accused of promoting the drug for so-called off-label uses that were not approved by the U.S. Food and Drug Administration.

Lilly was also accused of deliberately downplaying the side effects of Zyprexa, including an increase in the risk for diabetes given weight gain that can be associated with the medication.

"The government's investigation of Zyprexa has been ongoing for five years and we now have a heightened sense responsibility to all our stakeholders to intensify efforts to resolve these issues," Lilly's general counsel and senior vice president, Robert Armitage, said.

"Moving our discussions with the government forward is a step towards focusing us on delivering quality, innovative medicines to serve unmet medical needs."

Lilly said it has undertaken a comprehensive compliance program that includes a compliance officer, committee and hotline and a code of conduct.

The U.S. Attorney's Office began its investigation in March 2004.

The $62 million agreement the company reached with the 33 attorneys general was the largest consumer protection-based pharmaceutical settlement ever. The states claimed the drug harmed their Medicaid programs.

Eleven states still have cases pending against Eli Lilly, including Pennsylvania, South Carolina, Utah, Arkansas, West Virginia and Idaho.

Louisiana, Mississippi, Montana, New Mexico and Connecticut are all fighting against Eli Lilly's request for medical records.

The company's third-quarter figures will be released Thursday morning.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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