The drugmaker is talking to federal prosecutors about settling civil and criminal investigations into its marketing of the antipsychotic and the money would be paid to federal and state governments,The New York Times reports. If a deal is reached, the fine would be the largest ever paid by a drugmaker for breaking the federal laws that govern how pharma can promote medicines.
Zyprexa has serious side effects and is approved only to treat people with schizophrenia and severe bipolar disorder. But documents from Lilly show that between 2000 and 2003, Lilly encouraged docs to prescribe Zyprexa to people with age-related dementia, as well as people with mild bipolar disorder who had previously been diagnosed only as depressed, the Times writes. Lilly may also plead guilty to a misdemeanor criminal charge, but would be allowed to continue selling Zyprexa to Medicare and Medicaid, the biggest Zyprexa customers, according to the Times.
Lilly would neither confirm nor deny the settlement talks. “We have been and are continuing to cooperate in state and federal investigations related to Zyprexa, including providing a broad range of documents and information,” Lilly said in a statement today to the Times. “As part of that cooperation we regularly have discussions with the government. However, we have no intention of sharing those discussions with the news media and it would be speculative and irresponsible for anyone to do so.” Lilly also said that it had always followed state and federal laws when promoting Zyprexa.
The Lilly fine would be distributed among federal and state governments, which spend about $1.5 billion on Zyprexa each year through Medicare and Medicaid. The fine would be in addition to $1.2 billion that Lilly has already paid to settle 30,000 lawsuits from people who claim that Zyprexa caused them to suffer diabetes or other diseases. Zyprexa has also been linked to weight gain.
Apparently, the talks were sparked by publicity a year ago over Zyprexa documents that the Times published, which led to a separate controversy. A federal judge ruled that a Times reporter; a former expert witness for plaintiffs' lawyers, and a psychiatric-rights attorney from Alaska conspired to leak the documents, which were sealed but detailed how Lilly hid side-effect info and off-label marketing practices.'
Federal prosecutors in Philadelphia are leading the settlement talks for the government, and state attorneys general’s offices are also involved. Lawyers at Pepper Hamilton, a firm based in Philadelphia, and Sidley Austin, a firm based in Chicago, are negotiating for Lilly, the Times writes. Nina Gussack, who is representing Lilly at Pepper Hamilton, wouldn't comment, as did Joe Trautwein, an assistant US attorney in Pennsylvania.
Both sides want to reach a deal, the Times says. Besides the escalating pressure of the federal criminal inquiry, Lilly faces a civil trial scheduled for March in Anchorage, Alaska, in a lawsuit brought by the state of Alaska to recover money the state has spent on Zyprexa. A loss in that lawsuit would damage Lilly’s bargaining position in the Philadelphia talks.
The settlement negotiations in Philadelphia began several months ago, according to the Times. Last fall, the two sides were close to a deal in which Lilly would have paid less than $1 billion to settle the case, which at the time consisted only of a civil complaint. Then Justice Department lawyers pressed for a grand jury investigation to examine whether Lilly should be charged criminally for its promotional activities, according to the Times. A few days ago, facing the possibility of both civil and criminal charges, Lilly began new talks with prosecutors in Philadelphia.