Eli Lilly 2012 Annual Report Download - page 33

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we will indemnify Takeda for their losses and expenses with respect to the Canadian litigation. We believe
these claims are without merit and are prepared to defend against them vigorously.
In October 2012, we were named as a defendant in a purported class-action lawsuit in the U.S. District Court
for the Central District of California (Saavedra et al v. Eli Lilly and Company) involving Cymbalta. The plaintiffs
assert claims under the consumer protection statutes of four states and seek declaratory, injunctive, and
monetary relief for various alleged injuries arising from discontinuing treatment with Cymbalta. The plaintiffs
purport to represent a class of all persons within the U.S. who purchased and/or paid for Cymbalta. We
believe these claims are without merit and are prepared to defend against them vigorously.
Marketing Practices Investigations
In August 2003, we received notice that the staff of the SEC was conducting an investigation into the
compliance by Lilly's Polish subsidiary with the FCPA. Subsequently, we were notified that the SEC had
expanded its investigation to other countries and that the DOJ was conducting a parallel investigation. In
December 2012, we announced that we had reached an agreement with the SEC to settle its investigation.
The settlement relates to certain activities of Lilly subsidiaries in Brazil, China, Poland, and Russia from 1994
through 2009. Without admitting or denying the allegations, we consented to pay a civil settlement amount of
$29.4 million and agreed to have an independent compliance consultant conduct a 60-day review of our
internal controls and compliance program related to the FCPA. Our understanding is that the DOJ
investigation remains open.
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 January 2009, as part of the resolution of a government investigation related to our U.S. marketing and
promotional practices with respect to Zyprexa, we entered into a Corporate Integrity Agreement with the U.S.
Department of Health and Human Services Office of Inspector General which requires us to maintain our
compliance program and to undertake a set of defined corporate integrity obligations for five years. The
agreement also provides for an independent third-party review organization to assess and report on the
company’s systems, processes, procedures, and practices related to compliance with health care laws.
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.
Employee Litigation
We have 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. The case was transferred to the U.S. District Court for the Southern District of
Indiana and involves approximately 400 plaintiffs. 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 that
time. In May 2012, the U.S. Court of Appeals for the Seventh Circuit affirmed the District Court's summary
judgment ruling. In June 2012, the Supreme Court of the United States ruled, in a case against another
pharmaceutical company, that sales representatives employed by that company were exempt from the
overtime requirements of the Fair Labor Standards Act. We are waiting for the district court to rule on the
status of the remaining plaintiffs in the Schaefer-LaRose case. 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