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Eli Lilly to Pay $1.42 Billion Settlement

Eli Lilly and Co. has agreed to pay $1.42 billion after pleading guilty to a misdemeanor charge of introducing misbranded drugs into interstate commerce.

The drug manufacturer taught its sales force a catchy slogan to help them sell the antipsychotic drug Zyprexa. The drug was designed to help treat elderly patients who have dementia. Salespeople from Lilly would tell health care providers that 5 milligrams of Zyprexa at 5:00 PM – “5 at 5” – would help their patients suffering from dementia sleep. The problem with this advertisement is that regulators had not approved selling the drug for dementia patients. According to federal prosecutors, marketing Zyprexa like that led to a record $1.42 billion settlement.

Lilly, which is based in Indianapolis, agreed to plead guilty to the misdemeanor charge and pay $615 million to resolve the criminal case. The company also agreed to pay approximately $800 million to resolve a civil case. According to a statement, Lilly admits no wrongdoing in that case.

Zyprexa is Lilly’s top-selling product, which generates more than $4 billion in revenue each year. The U.S. Food and Drug Administration has approved marketing Zyprexa as a treatment for schizophrenia and bipolar disorder.

Court documents show that Lilly’s sales force also marketed the drug as a way to treat generalized sleep disorder, aggression, Alzheimer’s-related dementia and depression.

In addition to the $1.42 billion settlement, Lilly also has spent about $1.2 billion to resolve 32,000 claims related to Zyprexa product liability. Approximately 125 cases are still pending.

A group of insurance companies, unions and others are suing Lilly for billions of dollars, alleging Lilly violated marketing laws and overcharged for Zyprexa.

Lilly announced in October it would put aside the $1.42 billion it agreed to pay for the settlement and take that amount as a charge in its third-quarter earnings report, which led to its first quarterly loss in three years.