January 16, 2009 INDIANAPOLIS (AP) -- Eli Lilly & Co. taught its sales force a catchy slogan to peddle the antipsychotic drug Zyprexa for treating the elderly.
Company salespeople told care providers that 5 milligrams of Zyprexa at 5 p.m. -- or "5 at 5" -- would help dementia patients sleep.
Only problem: Regulators never approved selling the drug for dementia, and federal prosecutors say marketing like that led to a record $1.42 billion settlement with Lilly announced Thursday.
The Indianapolis company agreed to plead guilty to a misdemeanor charge of introducing misbranded drugs into interstate commmerce and pay $615 million to resolve the criminal case.
It also agreed to pay roughly $800 million to resolve a civil case. The company said in a statement it admits no wrongdoing in that case.
Zyprexa is Lilly's top-selling product, a drug that rakes in more than $4 billion a year. The U.S. Food and Drug Administration has approved marketing it to treat schizophrenia and bipolar disorder.
But court documents show Lilly sales representatives also pushed it to treat generalized sleep disorder, aggression, Alzheimer's-related dementia and depression, among other unapproved uses, from 1999 through 2003. Doctors can prescribe drugs for unapproved uses, but companies aren't allowed to market drugs for those uses.
"The company made hundreds of millions of dollars by trying to convince health care providers that Zyprexa was safe for unapproved uses," said Laurie Magid, acting U.S. Attorney for the Eastern District of Pennsylvania.
In 1999, Lilly started pushing the drug in nursing homes and assisted-living facilities. Sales reps said the weight gain caused by Zyprexa was actually a "therapeutic benefit," according to papers filed with the criminal case.
The drugmaker also marketed Zyprexa to primary-care doctors, even though the company knew there were "virtually" no approved uses for the drug in that market, the documents state. It trained salespeople to focus on symptoms rather than Zyprexa's approved uses.
At one point, Lilly had thousands of sales representatives involved in marketing the drug for unapproved uses, Magid said.
In 2006, the FDA approved a severe, "black box" warning tying Zyprexa to an increased risk of death in elderly patients, mainly from heart problems and infections.
Magid said Lilly was responsible for "putting thousands and thousands of patients at risk."
"Off-label marketing circumvents the very process put in place to protect the public," she said.
Lilly Chief Executive John Lechleiter said in a statement his company "deeply regrets the past actions covered by the misdemeanor plea."
On the civil side, Lilly will pay $438 million to settle allegations that it caused invalid claims to be submitted to government programs like Medicaid and the Federal Employees Health Benefits Program.
The company will pay $361.8 million to state Medicaid programs, too.
Six former sales representatives helped trigger the government's investigation into Lilly. Those whistleblowers will share $78.8 million as part of the civil settlement, according to the U.S. Attorney's Office.
Lilly also signed onto a corporate integrity agreement as part of the civil settlement. That calls for reviews by outside companies and more training for all U.S. employees, among other things, spokeswoman Angela Sekston said.
She said Lilly has a strong compliance program and is "fully committed" to the agreement as well.
Aside from Thursday's settlement, Lilly also has spent roughly $1.2 billion to resolve 32,000 claims related to Zyprexa product liability. About 125 cases are still pending.
For instance, a group of insurance companies, unions and others are suing Lilly for billions, saying it broke marketing laws and overcharged for the drug.
Lilly said in October it would set aside the $1.42 billion it agreed to pay Thursday and take that amount as a charge in its third-quarter earnings report. That led to Lilly's first quarterly loss in three years.
Lilly shares rose 8 cents to $37.55 in trading Thursday.
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