Lilly charged $105M for future state settlements

John O'Brien Sep. 3, 2009, 2:42pm

INDIANAPOLIS (Legal Newsline) - Eli Lilly & Co. plans to spend approximately $105 million to resolve the 11 remaining lawsuits brought by state attorneys general over its prescription antipsychotic Zyprexa.

In a 10-Q filing with the Securities and Exchange Commission, Lilly revealed that it incurred special charges of $105 million in the second quarter and noted that it is in close to reaching settlements with the state attorneys general.

"We are in advanced discussions with the attorneys general for several states that were not part of the Eastern District of Pennsylvania settlement, seeking to resolve their Zyprexa-related claims, and we have reached settlement with the State of West Virginia," the filing says.

"The charge represents the currently probable and estimable exposures in connection with the states' claims."

West Virginia settled its case for $22.5 million, with more than $6 million going to private attorneys hired by state Attorney General Darrell McGraw to pursue the case. U.S. District Judge Jack Weinstein gave Special Settlement Master Michael Rozen a copy to coordinate future settlements with state attorneys general.

In an Aug. 17 memorandum, Weinstein wrote that he is only presiding over the cases of Louisiana, Mississippi and Idaho.

When asked if that meant Montana, Minnesota, New Mexico and Connecticut had settled theirs, Lilly spokesperson Marni Lemons said no settlements have yet been reached.

States with actions in state courts are Utah, Pennsylvania, South Carolina and Arkansas.

South Carolina's trial is scheduled to begin Sept. 14. It can be viewed online through Courtroom View Network.

The states argued Eli Lilly promoted off-label uses for Zyprexa and also claimed the drug's side effects (weight gain-related issues like diabetes and hypertension) put a strain on their Medicaid programs.

Eli Lilly has already settled consumer protection claims with 33 other states for $62 million, and also agreed to pay $1.4 billion to settle federal civil and criminal claims stemming from the alleged off-label marketing.

The payment also benefited the Medicaid programs of more than 30 states that collectively received approximately $362 million.

In October, Weinstein told the parties to take 30 days off from the case to try to work out a settlement.

"While most states have settled their cases against Lilly for a few million dollars each, the states with cases now pending in this court -- Connecticut, Louisiana, Mississippi, Montana, New Mexico and West Virginia -- are seeking, on essentially the same theories and evidence, many billions of dollars in damages in fines," Weinstein wrote.

Eli Lilly has also paid $1.2 billion to settle more than 30,000 individual lawsuits.

Weinstein has requested those representing Mississippi's Jim Hood, Idaho's Lawrence Wasden and Louisiana's Buddy Caldwell be present Sept. 21 for arguments on three motions.

Lilly has filed for summary judgment in the Louisiana case, and pre-summary judgment conference will be held in the Mississippi and Idaho cases. Firms representing Mississippi and Louisiana have donated to the campaigns of the attorneys general in those states.

Bailey Perrin Bailey, representing Mississippi, gave Hood $75,000.

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