Arkansas AG announces $18.5M settlement with Eli Lilly over improper marketing of drug Zyprexa

Ark. announces $18.5M settlement with Eli Lilly

LITTLE ROCK, Ark. — Arkansas Attorney General Dustin McDaniel on Tuesday announced an $18.5 million settlement of a lawsuit with Eli Lilly & Co. over off-label marketing of the anti-psychotic drug Zyprexa.

Zyprexa was approved to treat schizophrenia and certain types off bipolar disorder in adults. McDaniel’s lawsuit alleged that the company engaged in “illegal and fraudulent off-label marketing of Zyprexa,” pushing its use to treat dementia, aggression, depression and sleep disorders among adults.

The suit also alleged the company promoted the drug for unapproved use in children.

“They didn’t care what they were doing to taxpayers and to children,” McDaniel said at a news conference at the state Capitol.

Eli Lilly admitted no wrongdoing in the settlement. A company spokesman didn’t immediately return a call for comment.

The bulk of the settlement — $15 million — will go to the state’s Medicaid trust fund.

After a federal match, the settlement will generate $60 million for the trust fund. The program itself will get $1.4 million as a reimbursement for improperly written prescriptions.

Zyprexa is the brand name for olanzapine, which is designed to attach to brain receptors to treat delusions and hallucinations. A side effect of the drug is severe weight gain, which posed a problem for children who took the drug.

McDaniel said Zyprexa did more harm than good for children because some developed diabetes while under treatment.

But he was careful to note that Zyprexa has a legitimate place in the market.

“It wasn’t that the drug itself was inherently bad,” the attorney general said.

After a similar settlement was reached in Mississippi on Feb. 4, Eli Lilly said there was no scientific proof Zyprexa causes diabetes.

The consumer education and enforcement division of Arkansas’ attorney general’s office will get $2 million of the settlement to fund future consumer investigations and litigation.

The settlement restricts Eli Lilly from off-label marketing of Zyprexa and requires the company to use its medical — not marketing — staff to develop materials that promote the drug.

Lilly paid a $1.4 billion settlement to the federal government in January 2009 after admitting it had promoted Zyprexa in elderly populations for treatment of dementia between 1999 and 2001. The action settled civil suits with several states and ended a criminal investigation.

The company also pleaded guilty to a misdemeanor Food, Drug and Cosmetic Act violation for promoting the drug as a dementia treatment.

Lilly had $4.9 billion in Zyprexa sales in 2009, but took charges of $692.7 million for litigation related to the drug. In 2008, the company took $1.97 billion in Zyprexa charges.

Zyprexa, approved in 1996, is Lilly’s top seller. But Lilly lost $465.6 million, or 43 cents per share, in 2008 after setting aside almost the money to settle the lawsuits. The company loses its patent on the drug in 2011.

Individuals suing Eli Lilly are not impeded by the Arkansas settlement.

Had Arkansas joined a multistate settlement, it would have gotten $1.5 million, McDaniel said. He said his office did not have the manpower to pursue the case on its own, so he hired a Dallas law firm. Eli Lilly agreed to pay Bailey Perrin Bailey $2.8 million in legal fees as part of the settlement.