• The New York Times, Thursday, January 31, 2008 12 PM

Eli Lilly could pay more than $1 billion to federal and state governments under the terms of a settlement being discussed with federal prosecutors over the company's marketing of the anti-psychotic drug Zyprexa, according to sources involved in the investigation. The fine would be in addition to $1.2 billion that Lilly has paid to settle 30,000 lawsuits from people who claim that Zyprexa caused them to develop diabetes or other diseases.

Lilly may also plead guilty to a misdemeanor criminal charge as part of the agreement, the sources say. But the company would be allowed to keep selling Zyprexa to Medicare and Medicaid, the government programs that are the biggest customers of the drug.

If a deal is reached, the fine would be the largest ever paid by a drug company for breaking the federal laws that govern how drug makers can promote their medicines. Lilly, which maintains that is has always followed state and federal laws when promoting Zyprexa, would neither confirm nor deny the settlement talks.

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