Eli Lilly and Cephalon Feel Qui Tam Sting

As Cephalon Inc. concluded the painful check-writing phase in early January of its off-

label-marketing lawsuit involving three drugs and all 50 US states and the District of

Columbia, Eli Lilly & Co. entered the swallow-hard phase of its own such case by

pleading guilty to a criminal charge and agreeing to payments. Both cases achieved, at

their respective times, the distinction of largest settlement: Cephalon for achieving the

largest biotech medical fraud case in the United States; Eli Lilly for largest amount paid

by a single defendant in the history of the U.S. Justice Department. Both actions are the

result of

qui tam

whistleblower suits. And both also involve a heightened level of

regulation in the form of corporate integrity agreements between the offender and the

government.

Cephalon’s settlement for the illegal marketing of Provigil, Gabitril and Actiq amounted

to more than $440 million, and the company also pleaded guilty to a misdemeanor. The

settlement reimburses the federal government and states for Medicaid payments made to

Cephalon due to off-label marketing. For Lilly, $1.42 billion covers the criminal

settlement for activities as well as federal and state settlements over the marketing of its

blockbuster antipsychotic drug Zyprexa from 1999 to 2001.

Qui tam lawsuits have shown a gradual rising trend in the healthcare industry for the past

20 years, according to government statistics reported by the nonprofit Taxpayers Against

Fraud Education Fund.