Pharmaceutical Giant To Pay Largest Qui Tam Settlement In U.S. History

Eli Lilly and Co. reached an agreement to pay $1.4 billion to resolve civil and criminal charges that it improperly marketed its drug, Zyprexa, from September of 1999 to March of 2001. As part of the settlement, Lilly will pay an $800 million civil penalty ($438 million to the federal government; $362 million to the states) to resolve False Claims Act charges. The False Claims Act charges relate to claims that Lilly defrauded Medicare, Medicaid, and other government healthcare programs. Lilly will also plead guilty in U.S. District Court for the Eastern District of Pennsylvania and pay a fine of $615 to address charges that it violated the Food, Drug, and Cosmetic Act. In total, the settlement is the largest ever of its kind.

Zyprexa is a drug approved by the Food and Drug Administration to treat schizophrenia in adults over age 18. One of the primary allegations against Lilly was that it created a special Long Term Care (LTC) sales force specifically to market Zyprexa to nursing homes and other elderly care facilities as little more than a sedative for patients. This sort of “off-label marketing” – selling a drug outside of its licensed purposes – is illegal. The qui tam relators were a pair of Lilly LTC sales representatives who, through their attorneys, alleged that Zyprexa “was essentially used as a ‘chemical restraint’ for the elderly for whom Zyprexa had no other health benefit.” Zyprexa had sales of $4.76 billion in 2007.

This is not the first billion-plus dollar settlement Lilly has made relating to Zyprexa. It earlier settled 31,000 lawsuits brought by individuals for $1.2 billion. There are still almost 150 suits pending, along with open lawsuits brought by 12 states alleging that Lilly withheld information about Zyprexa’s side-effects.

In addition to the qui tam relators’ private attorneys, the federal investigation was led by the U.S. Attorney’s Office for the Easter District of Pennsylvania. The attorney generals’ offices in Massachusetts and Delaware led the states’ investigation.

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