Drug firm's bitter pill: $1.4B fine

Federal authorities slammed pharmaceutical giant Eli Lilly yesterday with a $1.42 billion bill - the largest settlement paid by a single defendant in U.S. history - for illegally marketing its best-selling anti-psychotic drug Zyprexa as a remedy for sleep disorders, dementia and other conditions it wasn't approved to treat.

The Indianapolis-based company will pay $800 million to settle civil suits, including $438 million to the federal government and $362 million to states; and $615 million to end the U.S. Department of Justice's criminal probe.

The company also pleaded guilty to a misdemeanor violation of the Food, Drug and Cosmetic Act for promoting Zyprexa to treat dementia.

Zyprexa is approved only to treat schizophrenia and bipolar disorder. Doctors can prescribe it for other ailments, but Lilly cannot market the drug for anything else because it lacks Food and Drug Administration approval.

The case began in 2004 and was led by the U.S. attorney for the eastern district of Pennsylvania in Philadelphia.

Zyprexa was approved in 1996 and has been Lilly's top seller for years. It brought in $3.5 billion in revenue through the first three quarters of 2008, or roughly $1.5 billion more than the company's second-best seller, the antidepressant Cymbalta.

But the company has spent roughly $1.2 billion to resolve 32,000 claims related to Zyprexa product liability. About 125 cases are pending.

According to the U.S. Attorney's Office, Eli Lilly targeted its illegal marketing of Zyprexa to two types of doctors: Gerontologists in nursing homes and assisted-living facilities, and primary-care physicians.

In September 1999, Eli Lilly began encouraging doctors to prescribe the drug to treat dementia, Alzheimer's, agitation, aggression, hostility, depression and generalized sleep disorder.

But Zyprexa was not approved for use for any of these disorders, which, unlike schizophrenia, are prevalent in the elderly population.

Because one of Zyprexa's side effects is sedation, Eli Lilly directed its sales force to tell doctors that Zyprexa would help patients with sleep problems, behavioral issues and dementia. They claimed this side effect was a therapeutic benefit, not an adverse event, with the sales slogan "5 at 5," that five milligrams of Zyprexa at 5 p.m. would help patients sleep.

"When pharmaceutical companies interfere with the FDA's mission to ensure that drugs are safe and effective, they undermine the doctor-patient relationship and put the health and safety of patients at risk," acting U.S. Attorney Laurie Magid said yesterday. "People have a legal right to know that pharmaceutical companies are marketing their drugs only for uses approved by the FDA and that their doctors' judgment has not been affected by misinformation from a pharmaceutical company trying to boost revenues." *