Terms of W.Va.'s apparent settlement with Eli Lilly not yet known

By John O'Brien | Jul 29, 2009


NEW YORK - State Attorney General Darrell McGraw and Eli Lilly & Co. apparently have reached a settlement, though the terms won't be known unless they are unsealed.

Kenneth King, an attorney for the pharmaceuticals manufacturer, filed a notice Monday with U.S. District Judge Jack Weinstein notifying him that the two parties had agreed to dismiss the case. McGraw hired outside attorneys to sue Lilly over its antipsychotic drug Zyprexa.

"I am writing on behalf of the parties to request that the Court approve the dismissal of this action with prejudice on the terms agreed to by the parties, as reflected in the enclosed, which is being submitted under seal," wrote King, of Pepper Hamilton in New York.

Eli Lilly spokesperson Marni Lemons said she couldn't comment on the sealed terms.

"Everything that's in the sealed documents, I can't make any comment until it is unsealed by the court," she said.

"We can't comment until its unsealed. I'm not exactly sure when that will happen."

Chief Deputy Attorney General Fran Hughes and King did not return messages seeking comment.

West Virginia was one of 12 states that still had a claim pending against Lilly. The company has already settled consumer protection claims with 33 other states for $62 million, and also agreed to pay $1.4 billion to settle federal civil and criminal claims. The payment also benefited the Medicaid programs of more than 30 states that collectively received approximately $362 million.

West Virginia's apparent settlement comes during a time the State was responding to Lilly's motion for judgment on the State's claim for civil penalties. The State dropped its claim for Medicaid reimbursement after Lilly requested records associated with the program.

There were approximately 400,000 Zyprexa prescriptions filled with an allegedly improper warning label.

"At $5,000 per violation, therefore, the State is attempting to fine Lilly approximately $2 billion for use of a product label that was approved by the FDA," the motion says.

"Such a penalty is not only grossly excessive in light of the fact that the State will not demonstrate actual harm, but a penalty of this magnitude would interfere with the FDA's regulatory scheme with respect to the labeling of prescription medications in ways similar to the fraud-on-the-FDA claims rejected by the U.S. Supreme Court."

The Medicaid claims allege states have had to pay for Zyprexa users who suffered weight gain-related effects, such as diabetes and hypertension, from the drug.

King also wrote in the notice that "there is some time sensitivity to this request" for the suit to be dismissed.

West Virginia is seeking only civil penalties for any unlawful activities occurring after 2002 because that's all the four-year statute of limitations allows. It filed suit in 2006, and Lilly's $1.4 billion payment to the feds only covered any alleged activities from 1999-2001.

In October, Weinstein told the parties to take 30 days off from the case to try to work out a settlement. It did not work.

"While most states have settled their cases against Lilly for a few million dollars each, the states with cases now pending in this court -- Connecticut, Louisiana, Mississippi, Montana, New Mexico and West Virginia -- are seeking, on essentially the same theories and evidence, many billions of dollars in damages in fines," Weinstein wrote.

Eli Lilly has also paid $1.2 billion to settle more than 30,000 individual lawsuits.

H. Blair Hahn, of Richardson, Patrick, Westbrook & Brickman in Mt. Pleasant, S.C., represents West Virginia. Also representing the State are Charleston's Jerri Janeen Legato and Charleston's Troy Giatras, whose political action committee Equal Justice gave $1,000 to McGraw's campaign in 2004.

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