Lilly decides to settle with AG Hood

John O'Brien Feb. 4, 2010, 1:28pm

OXFORD, Miss. (Legal Newsline) - Even after a federal judge dismissed most of Mississippi Attorney General Jim Hood's claims, Eli Lilly & Co. has decided to pay $18.5 million to settle the remaining part.

Hood announced the settlement Thursday at a news conference, according to the Clarion-Ledger of Jackson. The last remaining claim of his Zyprexa lawsuit had been stayed pending a decision in another matter.

"What we have always found is it is in the best interest of Lilly customers, employees and other important constituents to put these issues behind us the best and most appropriate way we can, so we can get back to business we're best at," Lilly spokesperson Marni Lemons said.

The settlement was filed Jan. 26 in state court. Mississippi was one of 12 states that did not participate in a previous 33-state, $62 million settlement.

The suits allege Lilly marketed Zyprexa for off-label purposes and that the drug caused weight gain-related side effects like diabetes and hypertension.

The holdout states that have settled are:

-Connecticut settled for $25.1 million;

-West Virginia settled for more than $22 million ($6.75 went to outside counsel hired by state Attorney General Darrell McGraw);

-Idaho settled its case for $13 million ($2.5 went to outside counsel hired by state Attorney General Lawrence Wasden);

-New Mexico settled its case for $15.5 million ($5.4 million went to outside counsel hired by former state Attorney General Patricia Madrid);

-Utah settled for $24 million (more than $4 million went to outside counsel hired by state Attorney General Mark Shurtleff); and

-South Carolina settled for $45 million (more than $6.5 million went to outside counsel hired by state Attorney General Henry McMaster).

Eli Lilly has paid $1.4 billion to settle federal civil and criminal claims stemming from alleged off-label marketing.

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

Houston firm Bailey Perrin Bailey, which donated $75,000 to Hood, is also representing the states of Arkansas, Pennsylvania and Louisiana. None of those three states have finalized settlements, but Louisiana appears to have reached a tentative one. The other two cases are in state court and have not reached tentative settlements yet.

Bailey Perrin and a Mississippi firm will earn $3.7 million from the settlement.

U.S. District Judge Jack Weinstein had rejected the firm's statistical analysis it said showed the drug harmed the state's Medicaid program.

He also wrote that a ruling in favor of Mississippi could have been dangerous.

"If allowed to proceed in their entirety, the State's claims could result in serious harm or bankruptcy for this defendant and the pharmaceutical industry generally," he wrote.

"For the legal system to be used for this slash-and-burn style of litigation would arguably constitute an abuse of the legal process. Constitutional, statutory and common law rights of those injured to seek relief from the courts must be recognized. But courts cannot be used as an engine of an industry's destruction."

Lemons would not comment on the size of the settlement. She had called Mississippi's remaining claim "a small portion" of its suit.

Action on that remaining claim was stayed pending a decision on Lilly's appeal of Weinstein certifying a group of third-party payers, like insurance companies, as a class.

From Legal Newsline: Reach John O'Brien by e-mail at

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Mississippi Attorney General
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