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This excerpt taken from the LLY 10-K filed Feb 22, 2010. Legal,
Regulatory, and Other Matters
In September 2009, we set a goal to reduce our expected cost
structure by $1 billion by the end of 2011. We also plan to
lower global headcount to 35,000 by the end of 2011, excluding
strategic sales force additions in high-growth emerging markets
and Japan, which could result in future periodic restructuring
charges.
In January 2009, we reached resolution with the Office of the
U.S. Attorney for the EDPA, and the State Medicaid Fraud
Control Units of 36 states and the District of Columbia, of
an investigation related to our U.S. marketing and
promotional practices with respect to Zyprexa. We recorded a
charge of $1.42 billion for this matter in the third
quarter of 2008. In 2009, we paid substantially all of this
amount, as required by the settlement agreements. In addition,
in October 2008, we reached a settlement with 32 states and
the District of Columbia related to a multistate investigation
brought under various state consumer protection laws, under
which we paid $62.0 million. However, we were served with
lawsuits brought by attorneys general of a number of states,
alleging that Zyprexa caused or contributed to diabetes or high
blood-glucose levels, and that we improperly promoted the drug
and seeking to recover the costs paid for Zyprexa through
Medicaid and other drug-benefit programs, as well as the costs
alleged to have been incurred and that will be incurred to treat
Zyprexa-related illnesses. In 2009, we incurred pretax charges
of $230.0 million, reflecting the probable and estimable
exposures in connection with these claims. We have reached
settlements or are in advanced discussions to settle all of the
remaining state claims. The Pennsylvania case is set for trial
in April 2010 in state court.
Health care reform is currently the subject of intense debate in
the U.S. Congress. The impact of reform on the
pharmaceutical industry is uncertain. Most reform proposals
intend to provide coverage for the uninsured, include increasing
existing price rebates in federally funded health care programs
and the expansion of rebates, or other pharmaceutical company
discounts, into new programs. There are also proposals that will
impose new fees on pharmaceutical industry sales of certain
prescription pharmaceutical products. Certain federal and state
health care reform proposals that go beyond providing additional
health insurance coverage for the uninsured may also place
downward pressure on pharmaceutical industry sales or prices.
These proposals include reducing incentives for
employer-sponsored health care;
20
the creation of an independent commission to propose changes to
Medicare, with a particular focus on the cost of
biopharmaceuticals in Medicare Part D, which lowers the
projections for future government spending in Medicare; and a
government-run public option with biopharmaceutical
price-setting capabilities. Additionally, various proposals
could legalize the importation of prescription drugs and either
allow, or require, the Secretary of Health and Human Services to
negotiate drug prices within Medicare Part D directly with
pharmaceutical manufacturers. In addition, the federal
government is considering creating an expedited regulatory
approval pathway for biosimilars (copies of biological
compounds) for biologic products in the U.S.; the proposals vary
as to which biologic products would be eligible, how quickly a
biosimilar might reach the market, and the ability to
interchange the biosimilar and the original biologic product at
the pharmacy. We expect pricing pressures at the federal and
state levels to become more severe, which could have a material
adverse effect on our consolidated results of operations.
In its budget submission to Congress in February 2010, the Obama
administration proposed changes to the manner in which the
U.S. would tax the international income of
U.S.-based
companies. While it is uncertain how the U.S. Congress may
address this issue, reform of U.S. taxation, including
taxation of international income, continues to be a topic of
discussion for the U.S. Congress. A significant change to
the U.S. tax system, including changes to the taxation of
international income, could have a material adverse effect on
our consolidated results of operations.
International operations also are generally subject to extensive
price and market regulations, and there are many proposals for
additional cost-containment measures, including proposals that
would directly or indirectly impose additional price controls,
limit access to or reimbursement for our products, or reduce the
value of our intellectual property protection. These proposals
are expected to increase in both frequency and impact, given the
effect of the downturn in the global economy on local
governments.
These excerpts taken from the LLY 10-K filed Oct 21, 2008. Legal,
Regulatory, and Other Matters
In October, the United States Supreme Court denied the petitions
for certiorari that were filed by Teva Pharmaceuticals and
Dr. Reddy’s Laboratories, bringing to an end the two
companies’ challenges to the validity of Lilly’s
U.S. Zyprexa patent.
In June, we received notice of two court rulings by the Canadian
Federal Court and the German Patent Court that permit the entry
of generic olanzapine (Zyprexa) by competitors into the Canadian
and German markets. Generic olanzapine is now available for sale
by competitors in Canada and Germany.
Table of Contents
We have reached agreements with claimants’ attorneys
involved in U.S. Zyprexa product liability litigation to
settle a total of approximately 31,200 claims against us
relating to the medication. Approximately 1,235 claims remain.
As a result of our product liability exposures, since the
beginning of 2005, we have recorded aggregate net pretax charges
of $1.61 billion for Zyprexa product liability matters.
In March 2004, we were notified by the U.S. Attorney’s
office for the Eastern District of Pennsylvania (EDPA) that it
had commenced an investigation relating to our
U.S. marketing and promotional practices for Zyprexa,
Prozac®,
and Prozac
Weeklytm.
In November 2007, we received a grand jury subpoena from the
EDPA requesting documents related to Zyprexa.
In the United States, the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) continues to
effectively provide a prescription drug benefit under the
Medicare program (known as Medicare Part D). Various
measures have been discussed
and/or
passed in both the U.S. House of Representatives and
U.S. Senate that would impose additional pricing pressures
on our products, including proposals to legalize the importation
of prescription drugs and either allow, or require, the
Secretary of Health and Human Services to negotiate drug prices
within Medicare Part D directly with pharmaceutical
manufacturers. Additionally, various proposals have been
introduced that would increase the rebates we pay on sales to
Medicaid patients. We expect pricing pressures at the federal
and state levels to continue.
In 2007, the Centers for Medicare and Medicaid Services released
a final rule seeking to implement sections of the Deficit
Reduction Act of 2005. This rule relates to the Medicaid program
and among other things, sets out a methodology for the
calculation and use of Average Manufacturer Price and Best Price
for pharmaceuticals. We have implemented the final rule, which
has the effect of reducing net selling prices for Medicaid
sales; however, we do not expect the impact to be material to
our consolidated results of operations, liquidity, or financial
position.
International operations also are generally subject to extensive
price and market regulations, and there are many proposals for
additional cost-containment measures, including proposals that
would directly or indirectly impose additional price controls or
reduce the value of our intellectual property protection.
Legal, Regulatory, and Other Matters In October, the United States Supreme Court denied the petitions for certiorari that were filed by Teva Pharmaceuticals and Dr. Reddy’s Laboratories, bringing to an end the two companies’ challenges to the validity of Lilly’s U.S. Zyprexa patent. In June, we received notice of two court rulings by the Canadian Federal Court and the German Patent Court that permit the entry of generic olanzapine (Zyprexa) by competitors into the Canadian and German markets. Generic olanzapine is now available for sale by competitors in Canada and Germany.
Table of ContentsWe have reached agreements with claimants’ attorneys involved in U.S. Zyprexa product liability litigation to settle a total of approximately 31,200 claims against us relating to the medication. Approximately 1,235 claims remain. As a result of our product liability exposures, since the beginning of 2005, we have recorded aggregate net pretax charges of $1.61 billion for Zyprexa product liability matters. In March 2004, we were notified by the U.S. Attorney’s office for the Eastern District of Pennsylvania (EDPA) that it had commenced an investigation relating to our U.S. marketing and promotional practices for Zyprexa, Prozac®, and Prozac Weeklytm. In November 2007, we received a grand jury subpoena from the EDPA requesting documents related to Zyprexa. In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) continues to effectively provide a prescription drug benefit under the Medicare program (known as Medicare Part D). Various measures have been discussed and/or passed in both the U.S. House of Representatives and U.S. Senate that would impose additional pricing pressures on our products, including proposals to legalize the importation of prescription drugs and either allow, or require, the Secretary of Health and Human Services to negotiate drug prices within Medicare Part D directly with pharmaceutical manufacturers. Additionally, various proposals have been introduced that would increase the rebates we pay on sales to Medicaid patients. We expect pricing pressures at the federal and state levels to continue. In 2007, the Centers for Medicare and Medicaid Services released a final rule seeking to implement sections of the Deficit Reduction Act of 2005. This rule relates to the Medicaid program and among other things, sets out a methodology for the calculation and use of Average Manufacturer Price and Best Price for pharmaceuticals. We have implemented the final rule, which has the effect of reducing net selling prices for Medicaid sales; however, we do not expect the impact to be material to our consolidated results of operations, liquidity, or financial position. International operations also are generally subject to extensive price and market regulations, and there are many proposals for additional cost-containment measures, including proposals that would directly or indirectly impose additional price controls or reduce the value of our intellectual property protection. These excerpts taken from the LLY 10-K filed Feb 29, 2008. Legal,
Regulatory, and Other Matters
In October, the United States Supreme Court denied the petitions
for certiorari that were filed by Teva Pharmaceuticals and
Dr. Reddy’s Laboratories, bringing to an end the two
companies’ challenges to the validity of Lilly’s
U.S. Zyprexa patent.
In June, we received notice of two court rulings by the Canadian
Federal Court and the German Patent Court that permit the entry
of generic olanzapine (Zyprexa) by competitors into the Canadian
and German markets. Generic olanzapine is now available for sale
by competitors in Canada and Germany.
We have reached agreements with claimants’ attorneys
involved in U.S. Zyprexa product liability litigation to
settle a total of approximately 31,200 claims against us
relating to the medication. Approximately 1,235 claims remain.
As a result of our product liability exposures, since the
beginning of 2005, we have recorded aggregate net pretax charges
of $1.61 billion for Zyprexa product liability matters.
In March 2004, we were notified by the U.S. Attorney’s
office for the Eastern District of Pennsylvania (EDPA) that it
had commenced an investigation relating to our
U.S. marketing and promotional practices for Zyprexa,
Prozac®,
and Prozac
Weeklytm.
In November 2007, we received a grand jury subpoena from the
EDPA requesting documents related to Zyprexa.
In the United States, the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) continues to
effectively provide a prescription drug benefit under the
Medicare program (known as Medicare Part D). Various
measures have been discussed
and/or
passed in both the U.S. House of Representatives and
U.S. Senate that would impose additional pricing pressures
on our products, including proposals to legalize the importation
of prescription drugs and either allow, or require, the
Secretary of Health and Human Services to negotiate drug prices
within Medicare Part D directly with pharmaceutical
manufacturers. Additionally, various proposals have been
introduced that would increase the rebates we pay on sales to
Medicaid patients. We expect pricing pressures at the federal
and state levels to continue.
In 2007, the Centers for Medicare and Medicaid Services released
a final rule seeking to implement sections of the Deficit
Reduction Act of 2005. This rule relates to the Medicaid program
and among other things, sets out a methodology for the
calculation and use of Average Manufacturer Price and Best Price
for pharmaceuticals. We have implemented the final rule, which
has the effect of reducing net selling prices for Medicaid
sales; however, we do not expect the impact to be material to
our consolidated results of operations, liquidity, or financial
position.
International operations also are generally subject to extensive
price and market regulations, and there are many proposals for
additional cost-containment measures, including proposals that
would directly or indirectly impose additional price controls or
reduce the value of our intellectual property protection.
Legal, Regulatory, and Other Matters In October, the United States Supreme Court denied the petitions for certiorari that were filed by Teva Pharmaceuticals and Dr. Reddy’s Laboratories, bringing to an end the two companies’ challenges to the validity of Lilly’s U.S. Zyprexa patent. In June, we received notice of two court rulings by the Canadian Federal Court and the German Patent Court that permit the entry of generic olanzapine (Zyprexa) by competitors into the Canadian and German markets. Generic olanzapine is now available for sale by competitors in Canada and Germany. We have reached agreements with claimants’ attorneys involved in U.S. Zyprexa product liability litigation to settle a total of approximately 31,200 claims against us relating to the medication. Approximately 1,235 claims remain. As a result of our product liability exposures, since the beginning of 2005, we have recorded aggregate net pretax charges of $1.61 billion for Zyprexa product liability matters.
In March 2004, we were notified by the U.S. Attorney’s office for the Eastern District of Pennsylvania (EDPA) that it had commenced an investigation relating to our U.S. marketing and promotional practices for Zyprexa, Prozac®, and Prozac Weeklytm. In November 2007, we received a grand jury subpoena from the EDPA requesting documents related to Zyprexa. In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) continues to effectively provide a prescription drug benefit under the Medicare program (known as Medicare Part D). Various measures have been discussed and/or passed in both the U.S. House of Representatives and U.S. Senate that would impose additional pricing pressures on our products, including proposals to legalize the importation of prescription drugs and either allow, or require, the Secretary of Health and Human Services to negotiate drug prices within Medicare Part D directly with pharmaceutical manufacturers. Additionally, various proposals have been introduced that would increase the rebates we pay on sales to Medicaid patients. We expect pricing pressures at the federal and state levels to continue. In 2007, the Centers for Medicare and Medicaid Services released a final rule seeking to implement sections of the Deficit Reduction Act of 2005. This rule relates to the Medicaid program and among other things, sets out a methodology for the calculation and use of Average Manufacturer Price and Best Price for pharmaceuticals. We have implemented the final rule, which has the effect of reducing net selling prices for Medicaid sales; however, we do not expect the impact to be material to our consolidated results of operations, liquidity, or financial position. International operations also are generally subject to extensive price and market regulations, and there are many proposals for additional cost-containment measures, including proposals that would directly or indirectly impose additional price controls or reduce the value of our intellectual property protection. | EXCERPTS ON THIS PAGE:
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