Yesterday I wrote a post about Eli Lilly & Co's (LLY) $1.4 billion dollar fine for promoting non-FDA approved uses of antipsychotic Zyprexa. I contrasted that with the 1980s when fines were significantly lower.
This fine was in addition to the $1.2 billion that had been paid to over 30,000 plaintiff at an average of $40,000 per individual. Today, Bloomberg ran an update on remaining lawsuits which may cost LLY billions more. 12 states remaining states, insurance companies, pension funds and labor unions have yet to come to an agreement; all want to get paid.
What is the message? Clearly the pharmaceutical companies understand the tremendous consequences of deceptive practices. Given that understanding, LLY's practice can only mean that such aggressive behaviors are well-entrenched in this industry.
As an analyst, I regularly see major companies with a laundry list of lawsuits. The companies regularly deride them as "without merit." Now I am paying a much greater level of attention to these suits described in SEC filings and adjusting my estimated investment value for significant liabilities.
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