NEW YORK (Legal Newsline) - Pharmaceuticals maker Eli Lilly & Co. has agreed to pay $22.5 million to settle a lawsuit brought by West Virginia Attorney General Darrell McGraw over its prescription anti-psychotic Zyprexa.

The settlement provides $6,750,000 for private firms hired by McGraw to pursue the lawsuit, as well as $14,750,000 for funding behavioral mental health services. Another $1 million is going into McGraw's Consumer Protection Fund.

Eli Lilly admitted no wrongdoing in the settlement, which had been sealed for three weeks.

"While it may be admirable that the bulk of the settlement is to be spent on unspecified 'behavioral health care' for our state, important questions remain about the $6.75 million reward to the private attorneys Attorney General McGraw appointed to pursue the lawsuit," said Richie Heath, executive director of West Virginia Citizens Against Lawsuit Abuse.

"At the very least, Attorney General McGraw's appointed counsel should be required to provide a specific accounting of the number of hours each appointed firm worked, along with details of how the awarded attorneys' fees will be shared among the lawyers."

U.S. District Judge Jack Weinstein ordered Special Settlement Master Michael Rozen to retain a copy of the settlement to coordinate future settlements with state attorneys general.

West Virginia was one of 12 states that still had a claim pending against Lilly. The company has already settled consumer protection claims with 33 other states for $62 million, and also agreed to pay $1.4 billion to settle federal civil and criminal claims stemming from alleged off-label marketing.

The payment also benefited the Medicaid programs of more than 30 states that collectively received approximately $362 million.

West Virginia's settlement came during a time the State was responding to Lilly's motion for judgment on the State's claim for civil penalties. The State dropped its claim for Medicaid reimbursement after Lilly requested records associated with the program.

There were approximately 400,000 Zyprexa prescriptions filled with an allegedly improper warning label in West Virginia.

"At $5,000 per violation, therefore, the State is attempting to fine Lilly approximately $2 billion for use of a product label that was approved by the FDA," the motion says.

"Such a penalty is not only grossly excessive in light of the fact that the State will not demonstrate actual harm, but a penalty of this magnitude would interfere with the FDA's regulatory scheme with respect to the labeling of prescription medications in ways similar to the fraud-on-the-FDA claims rejected by the U.S. Supreme Court."

The Medicaid claims allege states have had to pay for Zyprexa users who suffered weight gain-related effects, like diabetes and hypertension, from the drug.

West Virginia was seeking only civil penalties for any unlawful activities occurring after 2002 because that's all the four-year statute of limitations allows. It filed suit in 2006 and Lilly's $1.4 billion payment to the feds only covered any alleged activities from 1999-2001.

In October, Weinstein told the parties to take 30 days off from the case to try to work out a settlement. It did not work.

"While most states have settled their cases against Lilly for a few million dollars each, the states with cases now pending in this court -- Connecticut, Louisiana, Mississippi, Montana, New Mexico and West Virginia -- are seeking, on essentially the same theories and evidence, many billions of dollars in damages in fines," Weinstein wrote.

Eli Lilly has also paid $1.2 billion to settle more than 30,000 individual lawsuits.

H. Blair Hahn, of Richardson, Patrick, Westbrook & Brickman in Mt. Pleasant, S.C., represented West Virginia. Also representing the State were Charleston's Jerri Janeen Legato and Charleston's Troy Giatras, whose political action committee Equal Justice gave $1,000 to McGraw's campaign in 2004.

Weinstein is presiding over the cases of Idaho, Mississippi, Louisiana, Connecticut, Minnesota, Montana and New Mexico. States that have claims in state courts are Utah, Arkansas, Pennsylvania and South Carolina.

The settlement also requires Lilly disclose Zyprexa clinical trial information and the company's funding of continuing-medical education for doctors.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.