Lilly Settles Ark.'s Zyprexa Marketing Suit For $18.5M

By James Armstrong

Law360, New York (February 16, 2010) -- Arkansas has struck an $18.5 million settlement in its suit against Eli Lilly & Co. over the alleged off-label promotion of schizophrenia drug Zyprexa, the state's attorney general announced Tuesday.

The two sides entered into a consent judgment in the Circuit Court of Pulaski County, without Eli Lilly admitting to any wrongdoing.

“When drug companies seek to circumvent FDA measures meant to ensure the safety of our citizens, it endangers lives and unnecessarily increases costs,” Attorney General Dustin McDaniel said. “This lawsuit and settlement should send a message that such actions won't be tolerated and those responsible will be held accountable.”

Eli Lilly did not immediately return a request for comment.

The announcement marks Arkansas' largest pharmaceutical settlement ever and the second-largest civil settlement in the state's history, according to the attorney general's office.

Arkansas filed suit against Eli Lilly in 2008, accusing the company of illegal and fraudulent off-label marketing by pitching the schizophrenia drug for dementia, hostility, depression, generalized sleep disorders and other conditions.

The state also alleged Eli Lilly improperly marketed Zyprexa for use by children.

Zyprexa is not approved by the U.S. Food and Drug Administration for any of those uses, and marketing it as such violated the Arkansas Medicaid Act, the Arkansas Deceptive Trade Practices Act and other laws, the state said.

About $15 million of the settlement will be placed in the state's Medicaid Program Trust Fund. Arkansas' Consumer Education and Enforcement Fund will get $2 million and about $1.4 million will be allocated to the state's Medicaid program as reimbursement for payments from off-label marketing.

In addition to the monetary payment, the settlement includes other terms aimed at preventing future deceptive practices, according to the attorney general's office.

The settlement calls for restrictions on promotional activities, restrictions on dissemination of medical information and disclosure requirements regarding grants and continuing medical education programs.

In the future, Eli Lilly's medical staff rather than its marketing staff will have to develop and approve medical content regarding Zyprexa, and the company will only be allowed to provide samples of the drug to doctors whose practices are consistent with the product's labeling, according to the settlement.

Earlier this month, Eli Lilly settled a similar suit over Zyprexa with the Mississippi attorney general's office, also for $18.5 million. Other plea agreements have included a $24 million settlement with Utah, a $25.1 million settlement with Connecticut and a $45 million settlement with South Carolina.

Last year, Eli Lilly agreed to pay a whopping $1.415 billion as part of a plea deal with the federal government over off-label uses of Zyprexa.

Critics of Zyprexa claim Eli Lilly underplays the drug's side effects, including weight gain, hyperglycemia and diabetes. The company has been accused of training its sales teams to avoid discussions with physicians about the drug's side effects.

Bailey Perrin Bailey served as outside counsel for the state in the case. Pepper Hamilton LLP served as outside counsel for Eli Lilly. Neither outside counsel immediately returned requests for comment.

The case is State of Arkansas v. Eli Lilly and Co., case number 2008-4722, in the Circuit Court of Pulaski County, Arkansas.

--Additional reporting by Christie Smythe and Elaine Meyer