Monthly Archives: January 2009

Marketing a Phony “Miracle” Drug – Zyprexa

Rolling Stone
SPECIAL REPORT
Marketing a Phony “Miracle” Drug
By Ben Wallace-Wells

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Zyprexa was created to treat schizophrenia, but it wound up being used on depressed moms and misbehaving kids. How one of the nation’s biggest pharmaceutical companies turned a flawed, dangerous pill into a multi-billion-dollar bonanza — and who paid the price.

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Whistle-blower’s perspective on Lilly case

Philadelphia Inquirer
Whistle-blower’s perspective on Lilly case
By Miriam Hill

Robert Rudolph knew he was about to end his lucrative career at Eli Lilly & Co., but he had to say something.

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Why, he asked management, was the Indianapolis pharmaceutical company marketing its antipsychotic drug Zyprexa to elderly people when the drug was not approved for that group?

Why had the company violated privacy rules by culling patient lists at doctors’ offices?

Why was the company counting drug samples as sales, which would boost the stock price?

He went on for about 10 minutes during a sales meeting in 2002. The other 25 Lilly sales representatives stared at him, stunned.

“I’d just been wrestling with this stuff for so long,” he said in a telephone interview today. “I was put in a position of breaking the law, in my view, or quitting.”

Rudolph and eight other whistle-blowers brought their allegations to federal prosecutors. That led Lilly to agree Thursday to a record $1.4 billion fine to settle charges of marketing Zyprexa illegally.

Zyprexa had been approved by the Food and Drug Administration for schizophrenia and bipolar disorder – but in 2001, the company began promoting it for other uses, such as treating anxiety, agitation and confusion in the elderly.

Drug companies are permitted to market drugs only for approved uses, though doctors may prescribe as they see fit. Lilly did an end run around the process by telling doctors Zyprexa could ease agitation, anxiety, and other everyday symptoms, according to the Philadelphia U.S. Attorney’s Office, which brought the case.

In a statement today, Lilly insisted its employees always adhered to strict ethics. “Doing things the right way at Lilly is more important than securing a prescription,” the statement said.

Rudolph and several other whistle-blowers found their way to prosecutors through their attorneys, Steve Sheller of Sheller P.C. and Michael Mustokoff of Duane Morris L.L.P., both of Philadelphia, and Gary Farmer of Florida.

Lilly’s Zyprexa marketing material included pictures of composite patients such as Martha, a confused and agitated widow.

“If you looked at it, you would say this was an Alzheimer’s dementia patient,” Rudolph said in the interview from his home in Oregon.

Other tactics bothered him, too. Company employees were allowed into doctors’ offices on weekends to collect names of patients taking certain drugs in hopes of switching them to Lilly products.

“We’re not selling soap. We’re selling chemicals that can be dangerous if they’re not used in the right way,” he said.

That was especially true of Zyprexa, which caused weight gain. And diabetes is a risk of the drug.

Rudolph, who was a pharmacist before joining Lilly in 1976, chose the company because of its sterling reputation.

But gradually, as financial markets boomed and stock options became a bigger part of executive pay, Lilly’s culture began to change, Rudolph said.

Instead of the pharmacists it had traditionally hired, Lilly started bringing in recent college graduates who had no medical background and were easy to train to parrot the company line. Instead of a profit-sharing program that all employees participated in – “even the guy who swept the floor,” Rudolph said – compensation shifted to rewards-based on sales.

“This new way of compensation kind of opened the door for a lot of unscrupulous practices, I felt,” Rudolph said.

He warned management of his concerns. Their response: “You’re not a team player.”

He began talking to other sales representatives about the issue, including Hector Rosado, another whistle-blower in the case.

As he pondered what to do, Rudolph’s son, then 15, provided a moment of clarity:

“He came up to me and said, ‘Dad, what’s wrong is wrong.’ I had taught my kids that. It was wrong, and I wanted to make it right.”

So he raised his hand at the Lilly district sales meeting in Sacramento, Calif., in January 2002.

The stress of the job had thrown him into a depression. Managers made it clear they wanted him to leave, so six months after he made his stand at the meeting, he retired from his $115,000-a-year job.

He and the eight other whistle-blowers will split $78 million to $100 million of the settlement. Rudolph, 60, says the settlement against Lilly will only go so far in changing business practices. He wants jail time for wrongdoing by companies and executives.

Zyprexa sales were about $39 billion since FDA approval in 1996. Lilly did plead to a single misdemeanor of misbranding of a drug.

“You have to remember, with Zyprexa,” he said, “people lost their lives.”

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Lilly Reaches Zyprexa Settlement

Wall Street Journal
Lilly Reaches Zyprexa Settlement
By KERRY E. GRACE

Eli Lilly & Co. agreed to pay $1.42 billion in a long-awaited settlement with federal prosecutors regarding allegations of improperly marketing its blockbuster antipsychotic drug Zyprexa.

A resolution has been expected since October, when the Indianapolis drug maker announced it was in “advanced discussions” and had set aside the settlement’s amount, a record sum in a corporate whistleblower case, for an eventual settlement in the case.

The company said Thursday it will pay $615 million to settle a criminal investigation and nearly $800 million — $438 million to the federal government and $362 million available for settlements with states — to resolve civil investigations related to Zyprexa.

As part of the settlement with the Justice Department, Lilly agreed to plead guilty to one misdemeanor violation of the Food, Drug and Cosmetic Act related to the off-label promotion of Zyprexa between 1999 and 2001. The guilty plea says Lilly promoted the drug in elderly people as treatment for dementia, including Alzheimer’s, although the drug isn’t approved for such use.

The company said it disagrees with and doesn’t admit to the allegations, but would settle the dispute. General Counsel Robert A. Armitage noted in October the probe “has been ongoing for five years and we now have a heightened sense of responsibility to all our stakeholders to intensify efforts to resolve these issues.”

Lilly will also face a period of increased regulation as part of the settlement — it has entered a corporate integrity agreement with the Health and Human Services Department. The agreement requires the company to maintain its compliance program and undertake a set of obligations related to integrity over five years. The deal also provides for a third-party review of the company’s policies…

Insurers, pension funds and unions have been among those seeking compensation from Lilly, accusing it of concealing Zyprexa’s tendency to cause weight gain and diabetes and of marketing the drug for unapproved uses

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LILLY TO PAY RECORD $1.415 BILLION FOR OFF-LABEL DRUG MARKETING

U.S. Department of Justice
United States Attorney
Eastern District of Pennsylvania
615 Chestnut Street
Suite 1250
Philadelphia, Pennsylvania 19106-4476
(215) 861-8200

For Immediate Release January 15, 2009
PHARMACEUTICAL COMPANY ELI LILLY TO PAY RECORD
$1.415 BILLION FOR OFF-LABEL DRUG MARKETING
Criminal Penalty is Largest Individual Corporate Criminal Fine

PHILADELPHIA – United States Attorney General Michael B. Mukasey and Acting United States Attorney Laurie Magid today announced the filing of a criminal information against, and a civil settlement with, pharmaceutical company Eli Lilly and Company, headquartered in Indianapolis, Indiana, for the off-label marketing of the anti-psychotic drug Zyprexa. The monetary settlement, totaling $1.415 billion, is the largest amount paid by a single defendant in the history of the United States Department of Justice (“DOJ”).

Joining Mukasey and Magid in today’s announcement were Assistant Attorney General Gregory Katsas, who is in charge of DOJ’s Civil Division; Director of DOJ’s Office of Consumer Litigation, Eugene Thirolf; Special Agent-in-Charge of the Defense Criminal Investigative Service Ed Bradley; Special Agent-in-Charge of the Food and Drug Administration, Office of Criminal Investigations Kim Rice; and Special Agent-in-Charge Patrick Doyle of the Office of Inspector General of the Department of Health and Human Services.

The Criminal Charge
The information charges Eli Lilly with the misdemeanor of introducing misbranded drugs into interstate commerce between September 1999 and November 2003. The Food and Drug Administration (“FDA”) had approved Zyprexa for use by adults for treatment of schizophrenia and certain types of bipolar disorder. Eli Lilly has admitted that it illegally marketed Zyprexa for uses never approved by the FDA. Among other things, the government alleges that these uses included treatment of elderly patients for such things as sleep disorders and dementia.

According to the information, Eli Lilly targeted its illegal marketing of Zyprexa to two types of doctors: those who treat the elderly in nursing homes and assisted living facilities, and primary care physicians. In September 1999, Eli Lilly began encouraging doctors to prescribe the drug for the treatment of dementia, Alzheimer’s, agitation, aggression, hostility, depression, and 2 generalized sleep disorder. Zyprexa was not approved for use for any of these disorders, which, unlike schizophrenia, are prevalent in the elderly population. Nevertheless, Eli Lilly’s long-term care sales force promoted the use of Zyprexa in elderly populations for these symptoms. Because one of Zyprexa’s side effects is sedation, Eli Lilly directed its long-term care sales force to tell doctors that Zyprexa would help patients with sleep problems, behavioral issues, and dementia.

They claimed this side effect was a therapeutic benefit, not an adverse event, with the sales slogan “5 at 5,” that five milligrams of Zyprexa at 5 p.m. would help their patients sleep. Then in 2000, Eli Lilly expanded its illegal marketing to primary care physicians with its primary care sales force in the “Viva Zyprexa” campaign, adding even more sales representatives. The goal of the campaign was to make Zyprexa an “everyday agent in primary care” even though the company recognized that schizophrenia and bipolar disorder were not viewed as conditions typically treated by primary care physicians. Lilly instructed the sales force to recommend Zyprexa for all adult patients with behavioral symptoms like agitation, aggression, hostility, mood and sleep disturbances, and depression.

The information alleges that Eli Lilly’s illegal off-label marketing campaign raised safety issues and posed potential risk to patients. Eli Lilly knew that significant weight gain and obesity were adverse side effects of Zyprexa and that weight gain and obesity were factors in causing hyperglycemia and diabetes. Yet despite written caution from the FDA, Eli Lilly continued to promote these adverse events as therapeutic benefits of Zyprexa use, particularly in the elderly.

Eli Lilly’s management created marketing materials promoting Zyprexa for off-label uses, trained its sales force to disregard the law, and directed its sales personnel to promote Zyprexa for off-label uses. Anticipating the possibility of resistance from primary care physicians to prescribing Zyprexa, defendant Eli Lilly specifically trained its sales representatives on how to respond to doctors’ concerns about off-label uses of Zyprexa, and how to continue to promote Zyprexa for off-label conditions. Eli Lilly retained medical professionals to speak to doctors during peer-to-peer sessions about off-label uses of Zyprexa. When promoting Zyprexa to health care providers, Lilly emphasized that the weight gain side effect of the drug was a therapeutic benefit for patients who had trouble maintaining their weight.

“When pharmaceutical companies interfere with the FDA’s mission to insure that drugs are safe and effective, they undermine the doctor-patient relationship and put the health and safety of patients at risk,” said Magid. “People have a legal right to know that pharmaceutical companies are marketing their drugs only for uses approved by the FDA and that their doctors’ judgment has not been affected by misinformation from a pharmaceutical company trying to boost revenues.”

In a plea agreement with the United States, Eli Lilly will pay a total of $615 million, including a $515 million fine and $100 million in forfeiture. “Off-label promotion of pharmaceutical drugs is a serious crime because it undermines the FDA’s role in protecting the American public by determining a drug is safe and effective for a particular use before it is marketed,” said Gregory G. Katsas, Assistant Attorney General for the 3 Civil Division. “This settlement demonstrates the Department’s ongoing diligence in prosecuting cases involving violations of the Food, Drug, and Cosmetic Act, and recovery of taxpayer dollars used to pay for drugs sold as a result of off-label marketing campaigns.”

The Civil Settlement
In a separate civil settlement agreement, Eli Lilly agreed to pay the United States approximately $438,171,543.58 to settle allegations that it caused invalid claims for payment for Zyprexa to be submitted to various government programs such as Medicaid, TRICARE, and the Federal Employees Health Benefits Program and caused purchases of Zyprexa by the Department of Veterans Affairs, the Bureau of Prisons, the Department of Defense, the Defense Logistics Agency, the Department of Labor, and Public Health Service entities for unapproved off-label uses. Also, Eli Lilly agreed to pay various state Medicaid programs more than $361,828,456.42 to settle similar claims.

“Today’s announcement of the filing of a criminal charge and the unprecedented terms of this settlement demonstrate the government’s increasing efforts aimed at pharmaceutical companies that choose to put profits ahead of the public’s health,” said Special Agent-in-Charge Kim Rice, of FDA’s Office of Criminal Investigations. “The FDA will continue to devote resources to criminal investigations targeting pharmaceutical companies that disregard the safeguards of the drug approval process and recklessly promote drugs for uses for which they have not been proven to be safe and effective.”

“The illegal scheme used by Eli Lilly significantly impacted the integrity of the Department of Defense’s healthcare system,” said Special Agent-in-Charge of the Defense Criminal Investigative Service Ed Bradley. “This illegal activity increases patients’ costs, threatens their safety and negatively affects the delivery of healthcare services to the more than nine million military members, retirees and their families who rely on this system. Today’s charges and settlement demonstrate the ongoing commitment of the Defense Criminal Investigative Service and its partners in law enforcement to investigate and prosecute those that abuse the government’s healthcare programs at the expense of the taxpayers and patients.”

“Today’s disclosures should send a clear message to those doing business with the Government that they will be held accountable for their decisions and actions that have an adverse impact on health care programs, such as Medicare and Medicaid,” said Special Agent-in-Charge Patrick Doyle, HHS, Office of Inspector General, Office of Investigations. “Our office is committed to pursuing those companies and individuals who choose to put profits ahead of the law.”

The civil settlement also resolves four whistle-blower lawsuits filed in federal court here: United States of America ex rel. Robert Rudolph v. Eli Lilly and Company, Civil Action No. 03-943; United States of America ex rel. Joseph Faltaous v. Eli Lilly and Company, Civil Action No. 05-1471; United States of America ex rel. Steven Woodward v. Eli Lilly and Company, Civil Action No. 06-5526; and United States of America ex rel. Jaydeen Vincente v. Eli Lilly and Company, Civil Action No. 07-1791. Those cases were filed by former sales representatives who identified Eli Lilly’s off-label marketing practices. To encourage individuals to come forward and identify companies and individuals that defraud the government, federal law permits whistle blowers to share in the recovery for such fraud. In this case, the whistle blowers will share in 18%, or $78,870,877, of the federal share of the (civil) settlement.

The HHS Office of Inspector General and Eli Lilly entered into an agreement that requires Eli Lilly to cease off-label marketing and to put certain programs in place to prevent the illegal conduct from recurring. This agreement, called a Corporate Integrity Agreement, requires Eli Lilly to send doctors letters advising them of this resolution and give them a way to report questionable conduct of sales representatives, list payments to doctors on its website, and assure that its board of directors and top management regularly certify that the company obeys the law and has an effective compliance program.

This case was investigated by the Defense Criminal Investigative Service, the FDA’s Office of Criminal Investigations, and the Department of Health and Human Services Office of the Inspector General. The case is being prosecuted by Assistant United States Attorneys Catherine L. Votaw, Marilyn May, Joseph Trautwein, and Denise S. Wolf, and DOJ Office of Consumer Litigation Trial Attorneys Jeffrey Steger and Ross Goldstein.

Assistance was provided by representatives of FDA’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.

The Corporate Integrity Agreement was negotiated by the Office of Inspector General of the Department of Health and Human Services. Eli Lilly’s guilty plea and sentence are not final until accepted by the United States District Court.

UNITED STATES ATTORNEY’S OFFICE
Contact: PATTY HARTMAN
EASTERN DISTRICT, PENNSYLVANIA Media Contact
Suite 1250, 615 Chestnut Street 215-861-8525
Philadelphia, PA 19106

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ELI LILLY TO PAY RECORD $1.415 BILLION – Criminal Penalty is Largest Individual Corporate Criminal Fine

U.S. Department of Justice
United States Attorney
Eastern District of Pennsylvania
615 Chestnut Street
Suite 1250
Philadelphia, Pennsylvania 19106-4476
(215) 861-8200

For Immediate Release January 15, 2009
PHARMACEUTICAL COMPANY ELI LILLY TO PAY RECORD
$1.415 BILLION FOR OFF-LABEL DRUG MARKETING
Criminal Penalty is Largest Individual Corporate Criminal Fine

PHILADELPHIA – United States Attorney General Michael B. Mukasey and Acting United States Attorney Laurie Magid today announced the filing of a criminal information against, and a civil settlement with, pharmaceutical company Eli Lilly and Company, headquartered in Indianapolis, Indiana, for the off-label marketing of the anti-psychotic drug Zyprexa. The monetary settlement, totaling $1.415 billion, is the largest amount paid by a single defendant in the history of the United States Department of Justice (“DOJ”).

Joining Mukasey and Magid in today’s announcement were Assistant Attorney General Gregory Katsas, who is in charge of DOJ’s Civil Division; Director of DOJ’s Office of Consumer Litigation, Eugene Thirolf; Special Agent-in-Charge of the Defense Criminal Investigative Service Ed Bradley; Special Agent-in-Charge of the Food and Drug Administration, Office of Criminal Investigations Kim Rice; and Special Agent-in-Charge Patrick Doyle of the Office of Inspector General of the Department of Health and Human Services.

The Criminal Charge
The information charges Eli Lilly with the misdemeanor of introducing misbranded drugs into interstate commerce between September 1999 and November 2003. The Food and Drug Administration (“FDA”) had approved Zyprexa for use by adults for treatment of schizophrenia and certain types of bipolar disorder. Eli Lilly has admitted that it illegally marketed Zyprexa for uses never approved by the FDA. Among other things, the government alleges that these uses included treatment of elderly patients for such things as sleep disorders and dementia.

According to the information, Eli Lilly targeted its illegal marketing of Zyprexa to two types of doctors: those who treat the elderly in nursing homes and assisted living facilities, and primary care physicians. In September 1999, Eli Lilly began encouraging doctors to prescribe the drug for the treatment of dementia, Alzheimer’s, agitation, aggression, hostility, depression, and 2 generalized sleep disorder. Zyprexa was not approved for use for any of these disorders, which, unlike schizophrenia, are prevalent in the elderly population. Nevertheless, Eli Lilly’s long-term care sales force promoted the use of Zyprexa in elderly populations for these symptoms. Because one of Zyprexa’s side effects is sedation, Eli Lilly directed its long-term care sales force to tell doctors that Zyprexa would help patients with sleep problems, behavioral issues, and dementia.

They claimed this side effect was a therapeutic benefit, not an adverse event, with the sales slogan “5 at 5,” that five milligrams of Zyprexa at 5 p.m. would help their patients sleep. Then in 2000, Eli Lilly expanded its illegal marketing to primary care physicians with its primary care sales force in the “Viva Zyprexa” campaign, adding even more sales representatives. The goal of the campaign was to make Zyprexa an “everyday agent in primary care” even though the company recognized that schizophrenia and bipolar disorder were not viewed as conditions typically treated by primary care physicians. Lilly instructed the sales force to recommend Zyprexa for all adult patients with behavioral symptoms like agitation, aggression, hostility, mood and sleep disturbances, and depression.

The information alleges that Eli Lilly’s illegal off-label marketing campaign raised safety issues and posed potential risk to patients. Eli Lilly knew that significant weight gain and obesity were adverse side effects of Zyprexa and that weight gain and obesity were factors in causing hyperglycemia and diabetes. Yet despite written caution from the FDA, Eli Lilly continued to promote these adverse events as therapeutic benefits of Zyprexa use, particularly in the elderly.

Eli Lilly’s management created marketing materials promoting Zyprexa for off-label uses, trained its sales force to disregard the law, and directed its sales personnel to promote Zyprexa for off-label uses. Anticipating the possibility of resistance from primary care physicians to prescribing Zyprexa, defendant Eli Lilly specifically trained its sales representatives on how to respond to doctors’ concerns about off-label uses of Zyprexa, and how to continue to promote Zyprexa for off-label conditions. Eli Lilly retained medical professionals to speak to doctors during peer-to-peer sessions about off-label uses of Zyprexa. When promoting Zyprexa to health care providers, Lilly emphasized that the weight gain side effect of the drug was a therapeutic benefit for patients who had trouble maintaining their weight.

“When pharmaceutical companies interfere with the FDA’s mission to insure that drugs are safe and effective, they undermine the doctor-patient relationship and put the health and safety of patients at risk,” said Magid. “People have a legal right to know that pharmaceutical companies are marketing their drugs only for uses approved by the FDA and that their doctors’ judgment has not been affected by misinformation from a pharmaceutical company trying to boost revenues.”

In a plea agreement with the United States, Eli Lilly will pay a total of $615 million, including a $515 million fine and $100 million in forfeiture. “Off-label promotion of pharmaceutical drugs is a serious crime because it undermines the FDA’s role in protecting the American public by determining a drug is safe and effective for a particular use before it is marketed,” said Gregory G. Katsas, Assistant Attorney General for the 3 Civil Division. “This settlement demonstrates the Department’s ongoing diligence in prosecuting cases involving violations of the Food, Drug, and Cosmetic Act, and recovery of taxpayer dollars used to pay for drugs sold as a result of off-label marketing campaigns.”

The Civil Settlement
In a separate civil settlement agreement, Eli Lilly agreed to pay the United States approximately $438,171,543.58 to settle allegations that it caused invalid claims for payment for Zyprexa to be submitted to various government programs such as Medicaid, TRICARE, and the Federal Employees Health Benefits Program and caused purchases of Zyprexa by the Department of Veterans Affairs, the Bureau of Prisons, the Department of Defense, the Defense Logistics Agency, the Department of Labor, and Public Health Service entities for unapproved off-label uses. Also, Eli Lilly agreed to pay various state Medicaid programs more than $361,828,456.42 to settle similar claims.

“Today’s announcement of the filing of a criminal charge and the unprecedented terms of this settlement demonstrate the government’s increasing efforts aimed at pharmaceutical companies that choose to put profits ahead of the public’s health,” said Special Agent-in-Charge Kim Rice, of FDA’s Office of Criminal Investigations. “The FDA will continue to devote resources to criminal investigations targeting pharmaceutical companies that disregard the safeguards of the drug approval process and recklessly promote drugs for uses for which they have not been proven to be safe and effective.”

“The illegal scheme used by Eli Lilly significantly impacted the integrity of the Department of Defense’s healthcare system,” said Special Agent-in-Charge of the Defense Criminal Investigative Service Ed Bradley. “This illegal activity increases patients’ costs, threatens their safety and negatively affects the delivery of healthcare services to the more than nine million military members, retirees and their families who rely on this system. Today’s charges and settlement demonstrate the ongoing commitment of the Defense Criminal Investigative Service and its partners in law enforcement to investigate and prosecute those that abuse the government’s healthcare programs at the expense of the taxpayers and patients.”

“Today’s disclosures should send a clear message to those doing business with the Government that they will be held accountable for their decisions and actions that have an adverse impact on health care programs, such as Medicare and Medicaid,” said Special Agent-in-Charge Patrick Doyle, HHS, Office of Inspector General, Office of Investigations. “Our office is committed to pursuing those companies and individuals who choose to put profits ahead of the law.”

The civil settlement also resolves four whistle-blower lawsuits filed in federal court here: United States of America ex rel. Robert Rudolph v. Eli Lilly and Company, Civil Action No. 03-943; United States of America ex rel. Joseph Faltaous v. Eli Lilly and Company, Civil Action No. 05-1471; United States of America ex rel. Steven Woodward v. Eli Lilly and Company, Civil Action No. 06-5526; and United States of America ex rel. Jaydeen Vincente v. Eli Lilly and Company, Civil Action No. 07-1791. Those cases were filed by former sales representatives who identified Eli Lilly’s off-label marketing practices. To encourage individuals to come forward and identify companies and individuals that defraud the government, federal law permits whistle blowers to share in the recovery for such fraud. In this case, the whistle blowers will share in 18%, or $78,870,877, of the federal share of the (civil) settlement.

The HHS Office of Inspector General and Eli Lilly entered into an agreement that requires Eli Lilly to cease off-label marketing and to put certain programs in place to prevent the illegal conduct from recurring. This agreement, called a Corporate Integrity Agreement, requires Eli Lilly to send doctors letters advising them of this resolution and give them a way to report questionable conduct of sales representatives, list payments to doctors on its website, and assure that its board of directors and top management regularly certify that the company obeys the law and has an effective compliance program.

This case was investigated by the Defense Criminal Investigative Service, the FDA’s Office of Criminal Investigations, and the Department of Health and Human Services Office of the Inspector General. The case is being prosecuted by Assistant United States Attorneys Catherine L. Votaw, Marilyn May, Joseph Trautwein, and Denise S. Wolf, and DOJ Office of Consumer Litigation Trial Attorneys Jeffrey Steger and Ross Goldstein.

Assistance was provided by representatives of FDA’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.

The Corporate Integrity Agreement was negotiated by the Office of Inspector General of the Department of Health and Human Services. Eli Lilly’s guilty plea and sentence are not final until accepted by the United States District Court.

UNITED STATES ATTORNEY’S OFFICE
Contact: PATTY HARTMAN
EASTERN DISTRICT, PENNSYLVANIA Media Contact
Suite 1250, 615 Chestnut Street 215-861-8525
Philadelphia, PA 19106

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Lilly Said to Be Near $1.4 Billion U.S. Settlement on Drug

New York Times
By GARDINER HARRIS

Eli Lilly, the drug company, is expected to agree as soon as Thursday to pay $1.4 billion to settle criminal and civil charges that it illegally marketed its blockbuster antipsychotic drug Zyprexa for unauthorized use in patients particularly vulnerable to its risky side effects.

The amount of the settlement is a record sum for so-called corporate whistleblower cases, which are federal lawsuits prompted by tips from company employees or former employees. Details of the agreement were provided by people involved in the negotiations.

Among the charges, Lilly has been accused of a years-long scheme to persuade doctors to prescribe Zyprexa to two categories of patients — children and the elderly — for whom the drug was not federally approved and in whom its use was especially risky.

In one marketing effort, the company urged geriatricians to use Zyprexa to sedate unruly nursing home patients so as to reduce “nursing time and effort,” according to court documents. Like other antipsychotics, Zyprexa increases the risks of sudden death, heart failure and life-threatening infections like pneumonia in elderly patients with dementia-related psychosis.

The company also pressed pediatricians and family practice doctors to treat disruptive children with Zyprexa, court documents show, even though the medicine’s tendency to cause severe weight gain and metabolic disorders is particularly pronounced in children. Over the last decade, Zyprexa’s use in children has soared.

The case is being prosecuted by the United States Attorney’s Office for the Eastern District of Pennsylvania. Patricia Hartman, a spokeswoman for the office, declined to comment.
Angela Sekson, a Lilly spokeswoman, said she could not comment on the status of the Zyprexa negotiations. Last fall, the company, anticipating a settlement, had set aside $1.4 billion for that purpose.

Lilly executives have for years insisted that the company’s Zyprexa marketing efforts were legal and appropriate. When asked whether she could repeat those assurances, Ms. Sekson said, “It would be inappropriate for me to comment further right now.”

It could not be confirmed on Wednesday whether the company will acknowledge wrongdoing as part of the settlement. Without a settlement, Lilly risks being barred from participating in the federal Medicaid and Medicare programs — a huge part of its business — even though such bans almost unheard of for big drug makers because their products are considered so essential.

In the United States, most of Zyprexa’s sales are paid for by government programs because so many of those taking Zyprexa are indigent or disabled. Zyprexa had sales of $4.8 billion in 2007, making it the biggest seller by far for Lilly, whose revenue that year was $18.6 billion. Depending on dosage, the drug can cost as much as $25 for a daily pill.
The settlement may have little impact on how doctors actually use Zyprexa, because physicians are free to prescribe drugs as they see fit. But it is because drug makers are barred from promoting drugs for uses not specifically approved by the Food and Drug Administration that Lilly has been charged.

Zyprexa has F.D.A. approval only for the treatment of schizophrenia and the mania and agitation associated with bipolar disorder.

Just about every major drug company in recent years has pleaded guilty or is under investigation for urging doctors to use medicines beyond their approved uses. The Zyprexa case and others were brought by former drug company employees using a Civil War-era whistleblower law to claim that the companies defrauded government health programs. The former employees usually share in the recovery.

The Zyprexa settlement is the largest such recovery in history, surpassing the $900 million fine that Tenet Healthcare paid in 2006 to resolve whistleblower claims that it improperly billed Medicare. In 2001, TAP Pharmaceutical agreed to pay $875 million to resolve criminal and civil charges related to pricing and marketing of its cancer drug, Lupron.
But while the fines in such cases involving drug makers have been substantial, they generally recover only a fraction of the costs associated with unapproved drug uses.

Zyprexa, for instance, has generated more than $39 billion in sales since its approval in 1996, making it one of the biggest-selling drugs in the world. As much as half of Zyprexa’s use is estimated to be for unapproved or “off label” use, the $1.4 billion fine — punishment for years of illegal marketing efforts — represent less than one year of off-label sales of the drug.

And despite mounting concern about Zyprexa’s risks and the negative publicity surrounding the legal case, sales were $3.5 billion for the first nine of 2008, 2 percent higher than in the first nine months of 2007.

Zyprexa was initially received as a significant advance over an earlier generation of antipsychotics. But a series of landmark studies in recent years have cast doubt on that long-held view and suggested that Zyprexa is no better than older drugs that sell for far less.

A government study published in September, for instance, found that Zyprexa was no more effective in children than an older medicine but caused more serious side effects. Indeed, the children receiving Zyprexa gained so much weight during the study that a safety monitoring panel ordered that they be taken off the drug.

In December 2006, The New York Times published articles detailing hundreds of internal Lilly documents and e-mail messages among top company managers that showed how the company sought for years to downplay Zyprexa’s tendency to cause severe weight gain and metabolic disorders, including diabetes, while promoting unapproved uses.

One 2000 e-mail message, for instance, described how a group of diabetes doctors that Lilly had retained to consider potential links between Zyprexa and diabetes had warned the company that “unless we come clean on this, it could get much more serious than we might anticipate.”

The government’s case will remain sealed until at least Thursday, when a judge is expected to approve the settlement. People involved in the negotiations say that prosecutors pressed for a resolution in the waning days of the Bush Administration to avoid having to get another set of approvals from new bosses at the Justice Department in Washington.
While the settlement is intended to resolve all pending government claims, it is unclear whether all states, which are parties to the case through the federal-state Medicaid program, have agreed to terms.

Some of the claims and evidence in the government’s case are similar to those made in a pending California state whistleblower lawsuit in which Jaydeen Vicente, a former Lilly sales representative, described years of what she said were illegal Zyprexa marketing efforts.

Ms. Vicente claimed, for instance, that Lilly paid kickbacks to doctors who prescribed large amounts of Zyprexa by hiring them to educate other doctors through a “speaker’s program” or by sending doctors to posh resorts where they were trained to be speakers.

“The speaking engagements were frequently a mere sham,” Ms. Vicente’s lawsuit states. “Lilly-paid speakers were even paid to give pointless presentations to their colleagues at the healthcare facility with which they were affiliated.”

The drug industry continues to hire tens of thousands of doctors to serve as part-time marketing representatives, although medical schools and societies increasingly frown on the practice.

Ms. Vicente was hired in 2000 to join a 160-person “Long Term Care” sales team that focused on nursing homes “despite the lack of any clinical trials or F.D.A. approval for the use of Zyprexa in the elderly,” the lawsuit states.

Ms. Vicente and other Lilly sales representatives distributed a Lilly study contending that elderly patients who were prescribed the drug “required fewer skilled nursing staff hours than patients prescribed other competing medications” and reduced “caregiver distress,” the lawsuit states. Zyprexa often induces sleep in patients.

“In truth, this was Lilly’s thinly-veiled marketing of Zyprexa as an effective chemical restraint for demanding, vulnerable and needy patients,” the lawsuit states.

In October, Lilly agreed to pay $62 million to 32 states and the District of Columbia to settle consumer protection claims related to Zyprexa. It paid Alaska $15 million and agreed to pay $1.2 billion to 31,000 Zyprexa plaintiffs. Some private Zyprexa claims remain unresolved.

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