Lilly’s $1.4 Billion Zyprexa Hit

Eli Lilly and Company has announced it is nearing a settlement with the US Attorney’s Office regarding unsavory marketing and promotional practices for Zyprexa, its antipsychotic blockbuster. As a consequence, Lilly will take a $1.4 billion charge, or $1.29 per share in Q3 2008.

Lilly stands accused of promoting the drug for psychotic symptoms in the setting of dementia even though the FDA did not approve the drug for this purpose.

As part of the settlement, Lilly announced it will incorporate a compliance program to assure its marketing and promotional practices comply with all laws and regulations.

“We now have a heightened sense of responsibility to all our stakeholders to intensify efforts to resolve these issues,” said Robert A. Armitage, Lilly’s general counsel.

Lilly’s move is an attempt to preempt a long, complex legal battle. Medicaid Fraud Control Units in 30 states had begun coordinating with the US Court while pursuing their own investigations of the matter.

Since its introduction in 1996, Zyprexa has been prescribed for 26 million people around the world. Q2 sales exceeded $1.1 billion, nearly a third of Lilly’s total revenue. Zyprexa sales dropped in 2008 as competitive drugs entered the market and concerns about weight gain and diabetes risk have surfaced.

Last month Pizaazz reported that Zyprexa is also commonly used off-label for psychosis in children, although its efficacy has been questioned and serious side effects have been reported in this group.

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