Lilly Resolves Investigations of Past Zyprexa Marketing and Promotional Practices

Eli Lilly and CompanyEli Lilly and Company (NYSE: LLY) today announced that it has reached resolution with the United States Attorney for the Eastern District of Pennsylvania (EDPA) and the Office of Consumer Litigation of the Department of Justice regarding the previously-reported government investigation into the company's past U.S. marketing and promotional practices for the antipsychotic medication Zyprexa(R) (olanzapine).

Lilly has been cooperating with the government in its investigation since it began in 2004. As part of the resolution, Lilly has agreed to plead guilty to one misdemeanor violation of the Food, Drug, and Cosmetic Act. The company will also enter into a settlement agreement resolving the federal government's civil investigation. Even though the company disagrees with and does not admit to the civil allegations, the company has agreed to settle the dispute over these allegations. In addition, the company has agreed to settle civil investigations brought by the State Medicaid Fraud Control Units of the states that have coordinated with the EDPA in its investigation.

"We deeply regret the past actions covered by the misdemeanor plea," said John C. Lechleiter, Ph.D., chairman, president and chief executive officer of Lilly. "At Lilly we take seriously our responsibilities to abide by all the laws governing our business practices, and we realize that we have a tremendous responsibility to the patients and healthcare professionals we serve. Every day and with every interaction we strive to operate in a responsible and compliant manner. Doing the right thing is non-negotiable at Lilly, and I remain personally committed to all of us at Lilly maintaining the highest standards of conduct."

Continued Lechleiter, "The company's comprehensive compliance program is an embedded part of our company's culture. These are not just words to us - we continue to implement a range of programs and policies to help ensure that we operate in a manner consistent with all applicable laws and regulations. These programs apply to all parts of our business, and all of our employees are aware of the imperative for them to be models of compliance and of ethical behavior."

The misdemeanor plea is for the off-label promotion of Zyprexa between September of 1999 and March of 2001. Specifically, the plea states that Lilly promoted Zyprexa in elderly populations as treatment for dementia, including Alzheimer's dementia, although Zyprexa is not approved for such uses. As part of this agreement regarding the criminal investigation, Lilly has agreed to pay $615 million.

Under terms for the resolution of the civil investigations, Lilly has agreed to make payments totaling nearly $800 million. Approximately $438 million will be paid to the federal government and approximately $362 million will be made available for payment to settling states. As previously reported, Lilly took a charge of $1.415 billion, or $1.29 per share, in the third quarter of 2008 in connection with this investigation. The 2008 charge will be sufficient to cover the payments announced today. The company is now finalizing the tax treatment of these payments, and will communicate this impact when the company announces fourth quarter 2008 financial results on January 29, 2009.

Lilly has a comprehensive compliance program that is designed to ensure that the company's global business practices fully comply with all laws and regulations. Lilly's compliance program, which the company is committed to continually improving and enhancing, includes each of the elements of compliance guidelines issued by the Department of Health and Human Services, Office of Inspector General, for the pharmaceutical industry. The company has a vice president and chief compliance officer, who reports directly to Lilly's chief executive officer; a corporate compliance committee; a code of conduct; policies and procedures specific to promotion and marketing; extensive training; auditing, monitoring and reporting programs, including a compliance hotline; and processes for disciplinary and corrective action.

Also, as part of the settlement, Lilly has entered into a corporate integrity agreement with the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS). This agreement will require Lilly to maintain its compliance program and to undertake a set of defined corporate integrity obligations for five years. The terms of the corporate integrity agreement are largely consistent with the company's existing compliance program. They also provide for an independent third-party review organization to assess and report on the company's systems, processes, policies, procedures and practices. This agreement reflects Lilly's commitment to continually build on a foundation of compliance, accuracy and transparency.

The settlement is subject to approval by the federal court in Philadelphia; the company anticipates a hearing on the settlement will occur within the next few weeks.

Zyprexa Background
Zyprexa is indicated in the United States for the short- and long-term treatment of schizophrenia, acute mixed or manic episodes of bipolar I disorder, and maintenance treatment of bipolar disorder. Since Zyprexa was introduced in 1996, it has been prescribed for an estimated 26 million patients around the world. Zyprexa is not approved for patients under 18 years of age.

Full prescribing information, including a boxed warning, is available at www.zyprexa.com.

About Lilly
Lilly, a leading innovation-driven corporation, is developing a growing portfolio of first-in-class and best-in-class pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in Indianapolis, Ind., Lilly provides answers - through medicines and information - for some of the world's most urgent medical needs. Additional information about Lilly is available at www.lilly.com.

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