California will recover 112 million for Medi Cal Program fraud.

Attorney General Edmund G. Brown Jr. today announced that California will recover $112 million for its Medi-Cal program as part of a national settlement with Eli Lilly and Company for the unlawful off-label marketing of its anti-psychotic drug Zyprexa, which the company aggressively marketed for such unapproved uses such as treatment for depression, anxiety, irritability, disrupted sleep, nausea and gambling.

“This settlement means that Eli Lilly can no longer reap massive profits by aggressively marketing this drug for unapproved uses at the expense of state health care programs for seniors and the infirm,” Attorney General Brown said. “California’s Medi-Cal program will receive almost $112 million, which is more than welcome at a time when the state faces massive budget deficits.”

Eighteen percent of the $112 million recovered for the Medi-Cal program will go to relators (whistleblowers) – the remainder will be split between the State, which will receive $54 million and the federal government, which will receive $41 million.

Beginning in 2001, Eli Lilly launched a marketing campaign called “Viva Zyprexa!” which encouraged physicians to prescribe Zyprexa for children, adolescents, and dementia patients.

In October 2008, the California Attorney General entered a settlement with Eli Lilly over the Zyprexa marketing campaign. In his original complaint, Attorney General Brown alleged that Eli Lilly engaged in unfair and deceptive practices when it marketed Zyprexa for off-label uses and failed to adequately disclose the drug’s potential side effects (including diabetes and hyperglycemia) to healthcare providers.

Under this settlement, Eli Lilly agreed to change its marketing practices and to cease promotion of its off-label uses. Off-label uses are those not approved by the FDA when it approves the sale and use of a particular drug. Physicians are allowed to prescribe drugs for off-label uses, but federal law prohibits pharmaceutical manufacturers from marketing products for off-label uses.

The total settlement is $1.415 billion—the largest recovery in a health care fraud investigation in U.S. history. The settlement includes $800 million in civil damages to be paid to the States and $615 million as a result of criminal charges brought against the company for illegal marketing.

Although both California and the U.S. contribute 50% to the funding of the Medi-Cal program, California’s share is larger than the federal share due to the federal Deficit Reduction Act, which provides monetary incentives to states to use False Claims Acts to pursue Medicaid fraud.