$1.4 billion expected to settle Zyprexa case

Drug company Eli Lilly is expected to agree as soon as today to pay $1.4 billion to settle criminal and civil charges that it illegally marketed its anti-psychotic drug Zyprexa for unauthorized use in patients particularly vulnerable to its risky side effects.

The settlement amount is a record sum for so-called corporate whistle-blower 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 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 anti-psychotics, Zyprexa increases the risks of sudden death, heart failure and life-threatening infections such as pneumonia in elderly patients with dementia-related psychosis.

The company also pressed pediatricians and family practitioners 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. In the past decade, Zyprexa's use in children has soared.

The case is being prosecuted by the U.S. 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.

For years, Lilly executives have insisted the company's Zyprexa marketing efforts were legal and appropriate.

It could not be confirmed 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 drugmakers because their products are considered so essential.

In the United States, the government pays for most of Zyprexa's sales because so many of those taking the drug are indigent or disabled.

Zyprexa had sales of $4.8 billion in 2007, making it the biggest seller 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 use Zyprexa, because physicians are free to prescribe drugs as they see fit.

But it is because drugmakers are barred from promoting drugs for uses not specifically approved by the Food and Drug Administration (FDA) that Lilly has been charged.

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

The Zyprexa settlement, if as reported, would be the largest such recovery in history, surpassing the $900 million fine that Tenet Healthcare paid in 2006 to resolve whistle-blower claims that it improperly billed Medicare.