8-KMaterial Agreements

ELI LILLY & Co 8-K Report, Material Agreement (Feb 5, 2009)

Filed February 5, 2009For Securities:LLY

Summary

Eli Lilly and Company (LLY) filed an 8-K on February 5, 2009, reporting the resolution of a significant government investigation concerning the past marketing and promotional practices of its antipsychotic medication, Zyprexa. The company entered into a Plea Agreement, agreeing to plead guilty to one misdemeanor violation of the Food, Drug, and Cosmetic Act for off-label promotion of Zyprexa in elderly populations for dementia, including Alzheimer's dementia, between 1999 and 2001. As part of this plea, Lilly agreed to pay $615 million.

Key Highlights

  • 1Resolution of government investigation into Zyprexa marketing and promotion practices.
  • 2Company agreed to plead guilty to a misdemeanor violation of the Food, Drug, and Cosmetic Act.
  • 3The misdemeanor plea is specifically for off-label promotion of Zyprexa in elderly populations for dementia between September 1999 and March 2001.
  • 4Total payment associated with the Plea Agreement is $615 million.
  • 5A separate Settlement Agreement resolves the federal government's civil investigation, with total payments of nearly $800 million ($438 million to the federal government and $362 million to settling states).
  • 6Company entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services for five years, focusing on compliance program maintenance and oversight.
  • 7The Corporate Integrity Agreement requires independent third-party review of Lilly's compliance systems.

Frequently Asked Questions

This 8-K filing announces Eli Lilly & Company's resolution of a government investigation into the past marketing and promotional practices of its drug Zyprexa. This resolution involves a guilty plea to a misdemeanor charge and substantial financial penalties.

Eli Lilly agreed to plead guilty to one misdemeanor violation of the Food, Drug, and Cosmetic Act. This violation pertains to the off-label promotion of Zyprexa in elderly populations for dementia, including Alzheimer's dementia, between September 1999 and March 2001.

The Plea Agreement requires Lilly to pay $615 million. Additionally, the Settlement Agreement related to the civil investigation mandates payments totaling nearly $800 million, comprising $438 million to the federal government and $362 million to settling states.

The Corporate Integrity Agreement is a five-year commitment with the U.S. Department of Health and Human Services. It requires Lilly to maintain its compliance program and implement defined corporate integrity obligations, including oversight by an independent third-party reviewer, to ensure adherence to regulations.