Eli Lilly To Settle Zyprexa Claims With Feds, States For Record Amount

That's the word from the New York Times yesterday. To whit, that Lilly and the Department of Justice and Lilly and the many states preparing to sue the company are in settlement talks. A settlement with both groups would absolve Lilly of all civil actions by the feds and the states concerning a slew of accusations around the company's handling of its atypical anti-psychotic Zyprexa. The settlement could result in Lilly paying more than $1 billion to the feds and the states--which would be a record fine for illegal marketing--and apparently Lilly is under some time pressure to get a deal done. (A slighty different Times account appeared today.)

A lawsuit brought by the State of Alaska against the company is slated for trial in March. With that outcome much in doubt, Lilly likely would prefer to have whatever verdict comes out of that suit not affect negotiations with the feds and other states. It's not clear to me how many states would be covered under this settlement. Ten have already sued the company individually, a suit is in the offing by Arkansas, and 25 or so states' AG's offices have been mulling filing a multistate action against Lilly.

According to the Times, Lilly may agree to plead guilty to a misdemeanor criminal charge as part of the agreement. Perhaps, the crafters of the agreement could require some Lilly executives to do community service in lieu of jail--you know, like sterilizing dialysis machines and serving food to the homeless. Other press coverage from the Wall Street Journal and Pharmalot.

Neither Lilly nor the feds would confirm the settlement talks.

If Lilly gets to walk away from its Zyprexa nightmare for $1 billion or so, then I'd say it's getting out cheap, especially given that the company has already settled about 30,000 individual cases for about $1.3 billion. You have to assume that if Lilly is getting off this cheaply--and still being allowed to sell its drug through Medicaid and Medicare programs which are federally-funded--then whatever agreement comes out of the talks could well contain provisions under which Lilly would foot the bill for continuing care of people who developed diabetes as a result of taking the drug so that the states and feds don't have to pick up their long term Medicaid bills.

What remains unclear is how many of the states such as Montana and Utah which have sued Lilly might be covered under this agreement or whether their cases would continue. What's also unclear is whether all the 25 states in the multistate combine would agree to the terms or whether big states like California might go after Lilly on their own.

In other words, much remains to be determined. And, if the cases settle, does that mean Lilly's lawyers are going to stop cruising my website and its collection of the infamous Zyprexa documents?

What also remains to be determined is what effect these cases and settlements might have on the legal environment around lawsuits against J&J/Janssen over Risperdal and AstraZeneca over Seroquel which have been brought by individuals and states.

Stay Tuned.