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US: Eli Lilly settles Zyprexa inquiries in 32 states

by TOM MURPHY and MARLEY SEAMANAssociated Press
October 7th, 2008

Drugmaker Eli Lilly & Co. cleared another legal cloud hanging over its top-selling drug Zyprexa when it announced a $62 million settlement Tuesday, but several other storms are still brewing for the antipsychotic medication.

Lilly agreed to pay 32 states and Washington, D.C., to resolve an investigation into the company's marketing practices.

Attorneys general from several states had accused Lilly of marketing Zyprexa for off-label uses and inadequately disclosing the drug's side effects to health care providers, the same claims made in reams of other litigation against the drugmaker.

Lilly was accused of marketing the drug for pediatric care, for use at a high dose and for the treatment of dementia, according to a statement from the Indiana attorney general's office. Doctors are free to prescribe drugs for uses not approved by the FDA, but drug companies cannot market them for those situations.

The company did not admit wrongdoing in the settlement.

Tuesday's settlement will be divided among the states and the district based on population, said Greg Zoeller, Indiana's chief deputy attorney general. Indiana, for instance, will receive $1.6 million.

Lilly also agreed to several mandates that will last until 2014, well beyond Zyprexa's patent expiration in 2011. The company agreed to avoid making false, misleading or deceptive claims about the drug and not to promote it outside FDA-approved uses.

The drugmaker also agreed to give its medical staff, not the marketing staff, ultimate responsibility for approving the content in "all medical letters and medical references regarding Zyprexa," according to the Indiana attorney general's statement.

"The one thing that's really key here is they've agreed to have a much more transparent system," Zoeller said.

However, Lilly spokesman Phil Belt said many of the items his company agreed to were things it either already did or was in the process of doing.

"There's no admission of wrongdoing, there's no dramatic changes in the way we're doing business," he said.

He said Lilly agreed to the settlement to avoid being wrapped up in litigation and other things it deems counterproductive to drug development.

"We think its better for Lilly, better for patients, better for prescribers to have this kind of activity behind us," he said.

Lilly said it will take a related charge of 4 cents per share in the third quarter for the settlement.

The states involved in Tuesday's settlement are Alabama, Arizona, California, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington and Wisconsin, as well as the District of Columbia.

Zyprexa rang up $4.8 billion in sales last year. But Lilly also has settled more than 31,000 product liability claims against the drug since 2005, shelling out more than $1.1 billion in the process.

Last year, Lilly paid $15 million to settle a lawsuit with the state of Alaska in March. The drugmaker still faces litigation with 11 states, generally involving consumer protection issues or Medicaid reimbursement. These cases are separate from the settlement announced Tuesday.

Those states include Arkansas, Connecticut, Idaho, Louisiana, Mississippi, Montana, New Mexico, Pennsylvania, South Carolina, Utah and West Virginia.

The U.S. Attorney's office for the Eastern District of Pennsylvania also is investigating Zyprexa marketing.

A group of insurance companies, unions and others are suing Lilly for billions of dollars, saying the drugmaker charged too much for Zyprexa and marketed the drug for off-label uses. A federal judge has recommended that Lilly settle that case and last month granted the plaintiffs class-action status.

All told, Lilly still faces about 185 product liability lawsuits involving 1,185 plaintiffs, according to its latest quarterly statement.

Lilly shares rose more than 3 percent to $39.73 in trading Tuesday.

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