Eli Lilly 2010 Annual Report Download - page 27

FORM 10-K
and 1960s. Approximately 65 of these claimants allege that they were indirectly exposed in utero to the medicine and
later developed breast cancer as a consequence. In December 2009, a lawsuit was filed in U.S. District Court in
Washington, D.C. against Lilly and other manufacturers (Michele Fecho, et al v. Eli Lilly and Company, et al) seeking to
assert product liability claims on behalf of a putative class of men and women allegedly exposed to the medicine who
claim to have later developed breast cancer. We believe these claims are without merit and are prepared to defend
against them vigorously.
Other Marketing Practices Investigations
In November 2008, we received a subpoena from the U.S. Department of Health and Human Services Office of
Inspector General in coordination with the U.S. Attorney for the Western District of New York seeking production of a
wide range of documents and information relating to reimbursement of Alimta. We are cooperating in this
investigation.
In December 2010, we received a civil investigative demand from the Attorney General of Texas seeking production of
a wide range of documents and information related to Actos. We are cooperating in this investigation.
In August 2003, we received notice that the staff of the SEC is conducting an investigation into the compliance by
Polish subsidiaries of certain pharmaceutical companies, including Lilly, with the U.S. Foreign Corrupt Practices Act
of 1977. The staff has issued subpoenas to us requesting production of documents related to the investigation. In
connection with that matter, staffs of the SEC and the Department of Justice (DOJ) have asked us to voluntarily
provide additional information related to certain activities of Lilly affiliates in a number of other countries. The SEC
staff has also issued subpoenas related to activities in these countries. We are cooperating with the SEC and the DOJ
in this investigation.
Employee Litigation
In April 2006, three former employees and one current employee filed a complaint against the company in the U.S.
District Court for the Southern District of Indiana (Welch, et al. v. Eli Lilly and Company, filed April 20, 2006) alleging
racial discrimination. During the litigation, plaintiffs amended their complaint twice, and the lawsuit at one point
involved 145 individual plaintiffs as well as the national and local chapters of the National Association for the
Advancement of Colored People (NAACP). Although the case was originally filed as a putative class action, in
September 2009, plaintiffs withdrew their request for class certification. In September 2010, the court severed the
remaining individual claims and ordered that any plaintiff wishing to continue litigation must file an individual action.
We expect approximately 40 individual claims to be filed. We believe the claims that remain are without merit and
are prepared to defend against them vigorously.
We have also been named as a defendant in a lawsuit filed in the U.S. District Court for the Northern District of New
York (Schaefer-LaRose, et al. v. Eli Lilly and Company, filed November 14, 2006) claiming that our pharmaceutical
sales representatives should have been categorized as “non-exempt” rather than “exempt” employees, and claiming
that the company owes them back wages for overtime worked, as well as penalties, interest, and attorneys’ fees.
Other pharmaceutical industry participants face similar lawsuits. The case was transferred to the U.S. District Court
for the Southern District of Indiana, and in February 2008, the Indianapolis court conditionally certified a nationwide
opt-in collective action under the Fair Labor Standards Act of all current and former employees who served as a Lilly
pharmaceutical sales representative at any time from November 2003 to the present. As of the close of the opt-in
period, fewer than 400 of the over 7,500 potential plaintiffs elected to participate in the lawsuit. In September 2009,
the District Court granted our motion for summary judgment with regard to Ms. Schaefer-LaRose’s claims and
ordered the plaintiffs to demonstrate why the entire collective action should not be decertified within 30 days.
Plaintiffs filed a motion for reconsideration of the summary judgment decision and also opposed decertification, and
in October 2010, the court denied plaintiffs motion for reconsideration but decided not to decertify the collective
action at this time. Plaintiffs have filed an appeal of the summary judgment ruling. We believe this lawsuit is without
merit and are prepared to defend against it vigorously.
We have been named in a lawsuit brought by the Labor Attorney for 15th Region in the Labor Court of Paulinia, State
of Sao Paulo, Brazil, alleging possible harm to employees and former employees caused by exposure to heavy
metals. We have also been named in approximately 50 lawsuits filed in the same court by individual former
employees making similar claims. We have also been named, along with several other companies, in a lawsuit filed
by certain of these individuals in U.S. District Court for the Southern District of Indiana in April 2009, alleging
possible harm caused by exposure to pesticides related to our former agricultural chemical manufacturing facility in
Cosmopolis, Brazil. In November 2010, the case was dismissed with prejudice by the Court. The plaintiffs have filed a
motion to reconsider. We believe these lawsuits are without merit and are prepared to defend against them
vigorously.
Other Matters
In October 2005, the U.S. Attorney’s office for the Eastern District of Pennsylvania advised that it is conducting an
inquiry regarding certain rebate agreements we entered into with a pharmacy benefit manager covering Axid®,
Evista, Humalog, Humulin, Prozac, and Zyprexa. The inquiry includes a review of our Medicaid best price reporting
related to the product sales covered by the rebate agreements. We are cooperating in this matter.
In October 2005, we received a subpoena from the U.S. Attorney’s office for the District of Massachusetts for the
production of documents relating to our business relationship with a long-term care pharmacy organization
concerning Actos, Evista, Humalog, Humulin, and Zyprexa. We are cooperating in this matter.
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