Lilly is the latest company to come under investigation in the Philadelphia U.S. Attorney's ongoing probe into prescription drug marketing practices.

The Philadelphia U.S. Attorney's office advised Lilly that "it has commenced a civil investigation relating to the company's marketing and promotional practices," the company said March 25.

"Based on the information provided by the U.S. Attorney's office, Lilly believes that the company products likely to be involved include Evista , Prozac and Zyprexa ." Lilly said it will cooperate with the government in its investigation.

Philadelphia Associate U.S. Attorney James Sheehan has spearheaded the investigation into the pharmaceutical industry, which focused initially on pharmacy benefit managers' business practices.

Now that the Philadelphia office has filed a lawsuit against Medco, it appears to be turning its attention to how manufacturers' practices might affect what the government pays for drugs.

One issue the government has expressed an interest in is "nominal pricing" for drugs. Medco's access to nominally priced Abbott medicines is cited in the lawsuit as an "inducement" accepted by the PBM. (Abbott has not been accused of any wrongdoing.)

The Philadelphia office also issued a subpoena to Schering-Plough in 2002 seeking information on whether the company offered nominal pricing to secure formulary status for its drugs.

The government's concern is that nominal pricing deals could be an effort by manufacturers to circumvent Medicaid "best price" rebate rules. Zyprexa is one of the largest individual line items in state Medicaid budgets.

In its March 15 10-K filing with the Securities & Exchange Commission, Lilly predicted that Zyprexa would likely come under investigation after several other companies marketing neuroscience products received subpoenas from the U.S. Office of Personnel Management.

OPM, which runs the Federal Employees Health Benefits Program, has asked Wyeth ( Effexor ), Forest ( Celexa ) and Johnson & Johnson ( Risperdal ) for documents about marketing practices (¹ Also see "Effexor Latest Target Of U.S. Office Of Personnel Management Investigation Into Rx Marketing" - Pink Sheet, 30 January, 2004.).

The OPM investigation is understood to be coordinated with the Philadelphia U.S. Attorney. One focus of the Medco case is on the PBM's handling of the mail order portion of the Blue Cross/Blue Shield Association's FEHBP contract.

Lilly has previously disclosed two subpoenas from the Department of Justice Office of Consumer Litigation regarding marketing practices for Evista.

Lilly disclosed the subpoenas the same day that the U.S. Attorney took its first depositions in the case against Medco.

- Scott Steinke

Lilly Is Latest Target Of Philadelphia U.S. Attorney's Rx Investigation

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