Legal: The Lilly Red Book: Feds Take Control Of Evista

- Jim Edwards

Within the next 90 days, executives on Eli Lilly's Evista brand will be required to read and sign an agreement with the U.S. Department of Justice, which will control almost all their marketing of the osteoporosis drug for the next five years.

The move, which Lilly agreed to on Dec. 21, will end a federal criminal investigation of Lilly's Evista marketing. That probe resulted in a $36 million payment to the DOJ and the company's plea of guilty to illegally promoting its drugs for unapproved uses. Lilly had wrongly claimed Evista also aided against breast cancer and cardiovascular disease, the plea agreement states.

Such agreements often result in massive fines. For example, Serono, Boston, paid $704 million in October to end an investigation of its human growth hormone marketing. So at first glance, Lilly's $36 million settlement looks like a slap on the wrist.

But the fine print introduces a high level of federal scrutiny into Lilly's future Evista marketing, giving the feds control over the tiniest details of its marketing.

"This is pretty strong," said Donald Sulllivan, an associate professor of pharmacy practice at Ohio Northern University, Ada, Ohio. "I don't know that I've seen anything taken this far with a pharmaceutical manufacturer for a while."

Among the requirements:

• Evista staffers must read and sign Lilly's "Red Book" code of conduct, and agree to stay within prosecutors' new rules.

• The decree will cover all "marketing, promotion, detailing, advertising and selling" of Evista, including speaker programs and marketing research.

• Lilly must hire an outside organization to audit its marketing every year.

• Another outside organization must report to the feds the content of Lilly's drug rep sales pitches.

• Lilly must maintain a whistleblower hotline for execs to report illegal behavior. Information from that line must be reported to the government.

• Failure to abide by the agreement will result in prosecutions, the decree states.

Lilly said last week that it was already complying. "We've had enough time to prepare for some of the activities" in the decree, said Lilly representative Philip Belt. "Some of these things are already embedded in our standard operating procedures."

Tom Hayes, principal at The New England Consulting Group, Westport, Conn., believes the outside auditing might be the most serious part of the agreement. "Having to hire and use an outside organization to conduct reviews, that seemed to be the major thing," he said. "My guess is that Lilly will be a lot more sensitive after this."

Hayes also expressed surprise that Lilly had gotten into this mess, given the company's reputation for straight shooting. The regulatory environment "gets grayer and grayer every year," he said.

The decree is also an indicator of how long a federal probe can haunt a company—the allegations go back to 1998. That year, Lilly failed to meet a $401 million sales goal for Evista, and downgraded its target to $120 million, according to the indictment. Almost immediately, the Evista brand team began positioning Evista as a "women's health drug" for osteoporosis, breast cancer and cardiovascular disease. "Sales representatives were trained to prompt or bait questions by doctors in order to promote Evista for unapproved uses," the indictment said.

In 1999, the Food and Drug Administration sent Lilly a warning letter about an ad in Prevention that made unsubstantiated claims. Usually, companies yank their ads after such letters—which Lilly did. In this case, however, the warning signalled a deeper pattern of off-label promotion.

Richard Samp, chief counsel at the Washington Legal Foundation, a conservative think tank that often criticizes federal interference in drug marketing, believes Lilly got a raw deal. "I think its extremely onerous. It seems to suggest that Lilly has no right to speak truthfully about off-label uses of its products," he said.

Lilly declined to name the executives responsible for the off-label positioning. The indictment describes their titles—"district manager," "salesman," "brand team member" and so on, but not their names.

There is currently no Evista advertising running, Lilly's Belt said. Evista's sales were more than $1 billion in 2004, according to Lilly's annual report.