As many news outlets were reporting yesterday, Eli Lilly has officially settled a lawsuit charging that it illegally marketed the anti-psychotic drug, Zyprexa, in the treatment of dementia and Alzheimer’s disease. Eli Lilly did not have to admit to any wrongdoing in the case, but civil litigants will get $800 million, the Feds will get $438 million, and $362 million will go to approximately 30 states who were involved in the suit.

The AP is also reporting that the company will have to pay “$615 million to resolve the criminal probe, and plead guilty to a misdemeanor violation of the Food, Drug and Cosmetic Act for promoting Zyprexa as a dementia treatment.” This is the largest settlement amount for a corporate whistleblower case.

Putting this into some context, Eli Lilly reportedly had sales of $4.8 billion of Zyprexa in 2007, and $37 billion since the drug was first introduced, making it one of Eli Lilly’s biggest sellers. Zyprexa is approved for prescriptions for people who have bipolar disorder or schizophrenia. While doctors are free to prescribe any drug for any indication, drug companies are not allowed to market such unapproved uses directly to doctors.

Hopefully this settlement will act as a warning to other drug makers that it ultimately doesn’t pay to market off-label uses for one’s drug, as eventually it will catch up with you. While the monetary damages may seem like a drop in the bucket compared to how much money the drug has made, the negative PR usually isn’t something that’s beneficial for a company’s image. Eli Lilly & Co. (LLY) shares were down 2 percent on the announcement at the time of this entry’s publication.

Read the full AP article: Lilly settles Zyprexa suit for $1.42 billion

Read WSJ’s take: Lilly Reaches Zyprexa Settlement

Dr. John Grohol is the founder & CEO of Psych Central. He is an author, researcher and expert in mental health online, and has been writing about online behavior, mental health and psychology issues -- as well as the intersection of technology and human behavior -- since 1992. Dr. Grohol sits on the editorial board of the journal Cyberpsychology, Behavior and Social Networking and is a founding board member and treasurer of the Society for Participatory Medicine.

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    Last reviewed: By John M. Grohol, Psy.D. on 15 Jan 2009
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