Utah Wins $24 Million from Eli Lilly Over Off-Label Zyprexa Marketing to Medicaid Patients

Zyprexa (olanzapine) came to market in 1996 with FDA approval for two conditions: schizophrenia and bipolar disorder. Starting in 1999, Eli Lilly's sales force pursued a broader mission. Representatives were trained to pitch the drug to physicians for dementia, Alzheimer's agitation, depression, aggression, hostility, and general sleep disorders. Internal company documents showed Lilly knew Zyprexa caused significant weight gain and metabolic effects that could lead to diabetes, hypertension, and stroke. Sales teams were directed to avoid those topics in conversations with doctors.

The harm fell heavily on Utah's Medicaid population. State investigators identified 1,769 Medicaid patients over 65 who received Zyprexa prescriptions despite carrying no diagnosis of schizophrenia or bipolar disorder. Utah's Medicaid program had spent roughly $11 million on the drug since 2007 alone. Many of those patients were elderly individuals in long-term care settings where the drug's serious metabolic risks went unweighed against off-label benefits that Lilly had never proven through clinical trials.

Utah Attorney General Mark Shurtleff filed suit against Eli Lilly under state consumer-protection and Medicaid-fraud statutes. His office retained private counsel to litigate the case, appointing Joseph Steele and several other Siegfried and Jensen attorneys, including Mitch Jensen, as Special Assistant Attorneys General alongside the state's legal team. Utah was one of roughly a dozen states that chose to pursue its own action rather than fold into the broader multi-state resolution that Lilly had already settled with 32 other states in 2008.

The case settled November 11, 2009, with Eli Lilly agreeing to pay Utah $24 million. The agreement required Lilly to comply with corporate integrity and remedial provisions monitored by the court. After contingency fees paid to outside counsel, approximately $20 million returned to the state. The outcome came roughly 10 months after Lilly's separate federal guilty plea and $1.42 billion federal resolution, which included a $515 million criminal fine that the Justice Department called the largest ever imposed in a U.S. health care case at the time, a marker of the scale of the company's off-label marketing operation.

The $24 million Utah figure represented restitution for Medicaid overcharges, disgorgement of profits from deceptive conduct, and funds earmarked to address the public-health costs the campaign had imposed on the state.