LITTLE ROCK — Drug manufacturer Eli Lilly will pay Arkansas $18.5 million to settle a lawsuit over its marketing of the antipsychotic drug Zyprexa as part of the largest pharmaceutical settlement and the second-largest civil settlement in state history.
Arkansas Attorney General Dustin McDaniel said Tuesday at the state Capitol that Zyprexa was approved by the U.S. Food and Drug Administration only for the treatment of schizophrenia and bipolar disorder in adults.
But the Indiana-based pharmaceutical giant illegally marketed the drug to treat dementia, aggression, hostility, depression and sleep disorders in Arkansas, McDaniel said.
Eli Lilly, the 10th-largest pharmaceutical company in the world, also promoted the use of the “potent and powerful drug” for children, McDaniel said.
The drug has caused some Zyprexa users painful involuntary muscle retractions and neuroleptic malignant syndrome, a life-threatening condition that can cause fever and unstable blood pressure, McDaniel said. He also said Zyprexa has caused uncontrollable weight gain in children - sometimes up to 100 pounds in a year.
“If we had gone to trial, I not only believe we’d have been able to provethe drug’s danger to Arkansas citizens, but I also believe we would have proven that the company minimized, and even concealed blatantly, the known side effects,” McDaniel said.
“There is no question in my mind that Eli Lilly put their profits above the lives of our people.”
Despite the settlement, Eli Lilly admits “absolutely no wrongdoing” related to the marketing of Zyprexa, company spokesman Marni Lemons said Tuesday.
“We feel very strongly that had we gone to court we would have prevailed,” Lemons said. “However, we also felt the need to put this issue behind us and get back to doing what we do best, which is developing important new medications.”
Zyprexa remains Eli Lilly’s largest-selling drug, bringing in $4.9 billion in revenue during 2009, according to thecompany. Eli Lilly reported $21.8 billion in net sales overall during 2009.
Tuesday’s announcement was the largest pharmaceutical settlement in state history. The second-biggest settlement was $1.2 million Arkansas received from Merck involving the drug Vioxx, said Melissa Moody, McDaniel’s chief of staff.
The Zyprexa settlement is also the second-largest civil settlement overall in Arkansas next to the federal tobacco settlement, Moody said.
Arkansas has collected $569 million in tobacco money since the program’s inception in 2001, according to Arkansas Department of Finance and Administration data.
About $2 million of the $18.5 million Zyprexa settlement will go into the attorney general’s consumer education and enforcement fund to support future consumer investigations and prosecutions, McDaniel said.
The remainder will go toward buttressing Arkansas’ Medicaid program.
Increasing Medicaid enrollees and rising care costshave legislators worried about the program’s sustainability into the future. Gov. Mike Beebe has proposed growing the state’s generalrevenue Medicaid budget from $665 million in fiscal 2010 to $692 million in fiscal 2011.
About $15 million of the Zyprexa settlement will be placed into the Medicaid Program Trust Fund. The federal government matches payments into the fund at a 3-to-1 rate, so the $15 million deposit will draw a $45 million federal contribution.
“So the $15 million will provide over $60 million in services for Medicaid clients,” said John Selig, director of the Arkansas Department of Human Services. “That’s real money, and we are real pleased about it.”
The remaining $1.4 million in settlement money will go to reimburse Arkansas Medicaid for improper payments it made due to Zyprexa marketing.
The state paid $96.7 million, totaling 297,087 claims, to Zyprexa Medicaid users between 1999 and 2007, according to the state Department of Human Services. That’s the most recent data available.
The settlement does not include money for individuals, McDaniel said. It doesn’t prohibit the filing of personal-injury lawsuits against the company, however.
The state could have opted to settle with Zyprexa earlier.
In 2009, the company agreed to pay $1.42 billion in penalties, including $362 million to 32 states and the District of Columbia, $438 million to the federal government and $615 million to end a criminal probe.
If Arkansas had settled then, it would have received $1.5 million, McDaniel said.
Instead, Arkansas and some other states opted to pursue suits against Eli Lilly independently.
Earlier this month, the company agreed to settle for $18.5 million in Mississippi’s Zyprexa lawsuit. There is also ongoing litigation related to Zyprexa in Montana, Minnesota, Louisiana and Pennsylvania.
Arkansas is pursuing separate lawsuits against Janssen Pharmaceutica over the marketing of Risperdal and against AstraZeneca, the manufacturer of Seroquel. Both are antipsychotic drugs similar to Zyprexa.
McDaniel hired Texasbased firm Bailey Perrin Bailey to help file the suit against Eli Lilly. It’s participating in the other lawsuits, as well.
Arkansas agreed to a 15 percent fee as part of its contract with the firm. As part of the Eli Lilly settlement, however, the company will pay the firm’s $2.7 million fee, McDaniel said.
“I recognize there’s some discomfort with hiring outside counsel to take a contingent fee on state cases,” Mc-Daniel said. “It’s very unusual. I’ve not done it before, and I don’t intend to do it again. But in this case, I think it was absolutely the right decision.”
Front Section, Pages 1 on 02/17/2010