State settles with Eli Lilly for $45 million

Oct 24, 2009 (The Post and Courier - McClatchy-Tribune Information Services via COMTEX) -- LLY | Quote | Chart | News | PowerRating -- South Carolina's go-it-alone approach in bringing a fraudulent-marketing lawsuit against pharmaceutical giant Eli Lilly will pay off big.

State Attorney General Henry McMaster said Friday his office settled with the Indianapolis-based company over its marketing of Zyprexa for $45 million.

That amount is the second largest settlement amount in state history, dwarfed only by the $3 billion settlement with tobacco companies in 1998.

The settlement is also the largest amount for any single state to recover involving the anti-psychotic drug Zyprexa. Attorney general spokesman Trey Walker said the settlement figure was reached after South Carolina attorneys attempted to recover not only Medicaid money but also state health plan money that they alleged was improperly spent on prescription drugs.

Most states typically try to recover only Medicaid money.

Earlier this year, 32 states that collectively brought an action against the company settled for a total of $800 million.

If South Carolina had participated in that multistate action, it would have recovered $4.5 million, Walker estimated.

"We would have been derelict in our duty if we had just signed onto that and not recovered as much of the taxpayer money as possible," he said.

"Sometimes it's in our best interest to go it alone."

Most of the money will go directly back into the Medicaid and state health plan funds.

Earlier this year, 49 states agreed on a $331 million settlement with Pfizer in a similar case that involved different drugs.

South Carolina chose to pursue its own action against Pfizer, eyeing a larger settlement for the state health plan.

That case has not been resolved.

Forty-five states have brought some form of legal action against Eli Lilly over Zyprexa.

State attorneys general typically bring cases against large pharmaceuticals to recover Medicaid and state health plan dollars that were allegedly improperly spent on a drug.

Eli Lilly sales representatives, according to attorneys, were marketing Zyprexa for unapproved "off-label" uses, such as pediatric applications and the treatment of depression. It is illegal to market a drug for off-label uses or pay for those prescriptions with federal Medicaid money.

South Carolina's action against Eli Lilly also claimed the company failed to warn Zyprexa patients of potentially dangerous side effects such as heart problems, diabetes and an increased risk of dementia.

Doctors prescribed Zyprexa to treat schizophrenia and certain types of bipolar disorder.

The state attorney general's office estimated that roughly 64,000 South Carolina residents were affected by the drug's usage during between 1996 and 2007.

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