Eli Lilly 2009 Annual Report Download - page 29

Between 2003 and 2005, various municipalities in New York sued us and many other pharmaceutical
manufacturers, claiming in general that as a result of alleged improprieties by the manufacturers in the
calculation and reporting of average wholesale prices for purposes of Medicaid reimbursement, the
municipalities overpaid their portion of the cost of pharmaceuticals. The suits seek monetary and other
relief, including civil penalties and treble damages. Similar suits were filed against us and many other
manufacturers by the States of Mississippi, Iowa, Utah, and Kansas. These suits are pending either in the
U.S. District Court for the District of Massachusetts or in various state courts. All of these suits are in
early stages or discovery is ongoing. We believe these lawsuits are without merit and are prepared to
defend against them vigorously.
During 2004 we, along with several other pharmaceutical companies, were named in a consolidated
lawsuit in California state court brought on behalf of consumers alleging that the conduct of pharmaceu-
tical companies in preventing commercial importation of prescription drugs from outside the United States
violated antitrust laws. The case sought restitution for alleged overpayments for pharmaceuticals and an
injunction against the allegedly violative conduct. Summary judgment was granted to us and the other
defendants. In July 2008, the California Court of Appeals affirmed that decision. The California Supreme
Court has accepted plaintiff’s appeal, and we expect it to be heard later this year.
In July 2008, we received a request from the Civil Division of the United States Department of Justice
requesting the production of documents related to nominal pricing. In June 2009, we received a Civil
Investigative Demand from the office of the Attorney General of Texas requesting documents related to
nominal pricing of Axid; we divested the marketing rights for Axid in 2000. We are cooperating in these
matters.
Along with over 100 other pharmaceutical companies operating in Europe, in 2008 we received question-
naires from the European Commission as part of its inquiry into whether pharmaceutical companies
improperly blocked or created artificial barriers to pharmaceutical innovation or market entry of medicines
through the misuse of patent rights, settlements of claims, litigation, or other means. In July 2009, the
Commission released its report in which it concluded that the practices of companies contributed to
delays in the entry of medicines onto the market, but that shortcomings in the regulatory framework were
also a contributing factor. The Commission has subsequently requested additional information from the
companies. We are cooperating with the Commission in this matter.
Under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as
Superfund, we have been designated as one of several potentially responsible parties with respect to the
cleanup of fewer than 10 sites. Under Superfund, each responsible party may be jointly and severally
liable for the entire amount of the cleanup.
During routine inspections in 2006 and 2007, the U.S. Environmental Protection Agency (EPA) identified
potential gaps in our leak detection and repair program (LDAR). In addition, in 2006 we voluntarily
reported to the state and city environmental agencies that we had exceeded an annual limit for air
emissions. In response to these events, we have implemented numerous corrective actions and enhance-
ments to our LDAR program. We are currently working with the EPA towards resolution of this matter,
which will likely require the payment of a fine. We do not believe the amount of the fine will be material.
We are also a defendant in other litigation and investigations, including product liability, patent, employ-
ment, and premises liability litigation, of a character we regard as normal to our business.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 2009, no matters were submitted to a vote of security holders.
Part II
Item 5. Market for the Registrant’s Common Equity, Related
Stockholder Matters, and Issuer Purchases of Equity
Securities
You can find information relating to the principal market for our common stock and related stockholder
matters at Item 8 under “Selected Quarterly Data (unaudited)” and “Selected Financial Data (unaudited).”
That information is incorporated here by reference.
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FORM 10-K