Healthy Skepticism Library item: 3500

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Callahan R.
Eli Lilly to Pay $36M to Settle Charges
SFGate ( via AP) 2005 Dec 21
http://www2.ljworld.com/news/2005/dec/22/eli_lilly_feds_reach_settlement/

Keywords:
Evista osteoporosis Eli Lilly

Notes:

Ralph Faggotter’s Comments:

It is very tempting for a pharmaceutical company to illegally promote prescription drugs for off-label use because they rarley get prosecuted, and when they do, the damages awarded against them will be partly or wholly off-set by a surge in profits from the original off-label promotion effort.

Full text:

Eli Lilly to Pay $36M to Settle Charges

By RICK CALLAHAN, Associated Press Writer

Wednesday, December 21, 2005

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(12-21) 14:33 PST Indianapolis (AP) —

Eli Lilly and Co. said Wednesday it has agreed to plead guilty to a federal misdemeanor and pay $36 million to settle charges that it illegally marketed and promoted its Evista osteoporosis drug for two unapproved uses.

The Department of Justice said an investigation that began in July 2002 found that some Lilly sales representatives promoted Evista in 1998 as useful for preventing and reducing the risk of breast cancer and for reducing the risk of heart disease.

The Food and Drug Administration has approved neither use.

Lilly Chairman and Chief Executive Sidney Taurel said in a statement that the Indianapolis-based company regrets its conduct and plans to “continue to take steps designed to assure that Lilly’s promotional activities remain fully compliant.”

A federal judge in Indianapolis must approve Lilly’s plea agreement. The settlement includes a permanent injunction and a consent decree under which Lilly promises not to engage in the type of marketing and promotion practices that put it violation of the Food, Drug, and Cosmetic Act.

Don Woodley, a principal with Woodley Farra Manion Portfolio Management Inc., in Indianapolis said he and many others in the investment community were surprised that Lilly had promoted any drug for unapproved uses.

The plea agreement is good news for Lilly executives and investors because it will allow the company to put the problem behind them, he said.

“I think they were totally embarrassed by this situation. This settlement is very reasonable and affordable. It’s chump change for a company of Lilly’s size,” he said.

The company reported that its net income grew to $794.4 million in the third quarter, or 73 cents a share.

Under the settlement, Lilly agreed to a $6 million criminal fine, a $6 million forfeiture to the government and payment of $24 million to settle the civil action. The company already recorded a charge in the fourth quarter last year to cover the pending settlement.

Although doctors are permitted to prescribe drugs for conditions for which a drug is not approved, companies are not allowed to actively market them for unapproved uses.

The FDA approved the estrogen-replacing drug in December 1997 for preventing and treating osteoporosis, a condition that causes bones to become brittle, in post-menopausal women.

Evista is the subject of ongoing clinical trials assessing its value in treating or preventing breast cancer and heart disease, Lilly said, but the FDA has not approved those uses.

In a statement, the Department of Justice said Lilly began promoting Evista for those two uses “to expand sales of the drug” after Evista’s first year of sales proved disappointing.

“These fines and the permanent injunction demonstrate that there is a strong system in place for ensuring that pharmaceutical companies fully comply with all aspects of the drug approval process,” acting FDA Commissioner Dr. Andrew C. von Eschenbach said in a statement.

In its first year, Evista generated sales only $120 million – far lower than the company’s original forecast of $401 million in sales, the statement said.

Lilly reported in October that its global Evista sales through Sept. 30 were $770.8 million, compared with $755.4 million for the same period last year.

Aside from the misdemeanor charge, the government filed a civil complaint alleging that some Lilly sales representatives continued the illegal Evista promotion into 2000. Lilly’s statement said it disagrees with that but agreed to settle the dispute “to reach a final resolution of this investigation.”

Under the civil consent decree it has signed, Lilly must continue a compliance program for marketing and promotion practices for five years.

If a federal judge accepts its plea, Lilly said federal prosecutors in Pennsylvania have agreed to drop their investigation into Evista marketing practices in that state.