December 21, 2005

Lilly pleads guilty to misdemeanor violation

BOSTON (Reuters) - Eli Lilly and Co. said on Wednesday it
will plead guilty to a misdemeanor violation as part of a
settlement with the government over its marketing and
promotional practices for an osteoporosis drug.

The investigation, which began in July 2002, led to
government charges that in 1998 certain Lilly employees
promoted the company's drug Evista to prevent and reduce the
risk of breast cancer and certain heart problems.

While doctors are allowed to prescribe drugs for conditions
for which a drug is not approved, companies are not allowed to
actively market them for other uses. Evista is approved to
prevent and treat osteoporosis in post-menopausal women.

The government also filed a civil complaint claiming
similar Evista-related conduct continued into 2000. The company
did not admit to these allegations, but said it agreed to
settle the dispute over them to close the investigation.

Lilly agreed to pay $36 million in connection with the
settlement. The company took a charge in the fourth quarter of
2004 to cover any settlement, which was enough to cover the
final agreement. The company said it will take no further
charges related to it.

The company, which agreed to the settlement with the
Department of Justice's Office of Consumer Litigation and the
U.S. Attorney's Office for the Southern District of Indiana,
also agreed to a civil consent decree which will require it to
continue its compliance program and establish a set of
corporate integrity policies related to Evista for five years.

In a separate, previously disclosed investigation, the U.S.
Attorney's Office for the Eastern District of Pennsylvania told
Lilly that a whistleblower action has been filed claiming the
company engaged in unlawful marketing practices related to

The office said that if today's settlement is accepted by
the court, it will not pursue further action on Evista and will
close the Evista part of its investigation.