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This excerpt taken from the LLY 10-K filed Feb 22, 2010. 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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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 pharmaceutical 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 questionnaires 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 enhancements 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, employment, and premises
liability litigation, of a character we regard as normal to our
business.
During the fourth quarter of 2009, no matters were submitted to
a vote of security holders.
This excerpt taken from the LLY DEF 14A filed Mar 5, 2007. Other Matters
Section 16(a) Beneficial Ownership Reporting Compliance
Under Securities and Exchange Commission rules, our directors and executive officers are
required to file with the Securities and Exchange Commission reports of holdings and changes in
beneficial ownership of company stock. We have reviewed copies of reports provided to the company,
as well as other records and information. Based on that review, we concluded that all reports were
timely filed except that, due to administrative error, Dr. John Lechleiter was late in reporting a
sale of stock under his 10b5-1 trading plan, Mr. Gino Santini was late in reporting charitable
donations and transfers of shares to his wife and minor children, and Mr. Derica Rice incorrectly
reported the total number of shares he held at the time he became an officer. Upon discovery, these
matters were promptly reported.
Other Information Regarding the Company’s Proxy Solicitation
We will pay all expenses in connection with our solicitation of proxies. We will pay brokers,
nominees, fiduciaries, or other custodians their reasonable expenses for sending proxy material to
and obtaining instructions from persons for whom they hold stock of the company. We expect to
solicit proxies primarily by mail, but directors, officers, and other employees of the company may
also solicit in person or by telephone, telefax, or electronic mail. We have retained Georgeson
Shareholder Communications Inc. to assist in the distribution and solicitation of proxies.
Georgeson may solicit proxies by personal interview, telephone, telefax, mail, and electronic mail.
We expect that the fee for those services will not exceed $17,000 plus reimbursement of customary
out-of-pocket expenses.
By order of the board of directors,
James B. Lootens
Secretary March 5, 2007
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