Eli Lilly agrees to settle shareholder lawsuit
Eli Lilly and Co. has agreed to settle a shareholder lawsuit over marketing practices that have already cost the drugmaker more than $2 billion in settlements and legal fees stemming from other cases.
The Indianapolis drugmaker could pay nearly $9 million in attorney fees and other expenses under the latest resolution, which would conclude a so-called derivative case brought by shareholders against Lilly directors on behalf of the company.
The 2008 case accused company leaders of breaching their fiduciary duty to Lilly and damaging the company through improper marketing of Lilly's top-seller, the anti-psychotic Zyprexa, as well as the antidepressant Prozac and the osteoporosis treatment Evista.
Last year, Lilly agreed to a then-record $1.42 billion settlement with federal prosecutors over allegations of Zyprexa marketing violations. Prosecutors accused Lilly of pushing their drug to treat several conditions beyond the scope of its approved uses.
The U.S. Food and Drug Administration has approved marketing Zyprexa to treat schizophrenia and bipolar disorder. But court documents showed Lilly sales representatives also marketed the drug 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.
Lilly also has paid more than $1.2 billion to resolve other civil lawsuits regarding the drug, many alleging illegal marketing.
The latest proposed settlement requires Lilly to pay a relatively small amount, $8.75 million in attorney fees and expenses, according to documents filed Monday with the Securities and Exchange Commission.
It also calls for the drugmaker to take several steps to improve corporate governance and risk management. Lilly agreed to create new positions that include a vice president for global compliance strategy and enterprise risk management and a vice president for global ethics.
The company also agreed to providing training for its U.S.-based affiliates and include adherence to Lilly's conduct code as an element in performance evaluations.
Lilly faces a total of seven shareholder derivative lawsuits. The proposed settlement is tied to two cases filed in U.S. District Court for the Southern District of Indiana. But Lilly spokesman Mark Taylor said the settlement also is subject to approval by two other courts.
All seven cases will be resolved if the other courts approve the settlement, Taylor said.