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 …

With sales slipping and retailers bracing for recession, J.C. Penney chairman and CEO Myron "Mike" Ullman III says the retailer will announce plans today to merge the buying and marketing operations for store and online sales, cutting as many as 200 jobs. Penney's December same-store sales fell 7.5% compared with the year-earlier period, more than the company expected. Ullman says he sees opportunity in a slowing economy for Penney, however, which counts half of U.S. households as customers, but only gets 7% of their shopping dollars. Its biggest opportunity in the downturn, he says, "is to make every …

Ford Motor will pump up incentive spending this year, target regions and older vehicles, and will give dealers more say over where and how the money is spent, sources familiar with the plan say. Key dealers were told about the plan during a meeting in Dearborn earlier this month, according to people who attended the session. Cutting Ford's reliance on discounts and deals has been an important part of CEO Alan Mulally's turnaround strategy, which is aimed at transforming Ford into a smaller but profitable company. Ford sources say the decision to increase incentive spending does not represent a …

Costco, the warehouse retailer, is readying its first line of private-label beers. Brewed by San Francisco-area craft brewer Gordon Biersch and dubbed Kirkland Signature Hefeweizen, the rollout is most likely to hurt sub-premium brands, such as Anheuser-Busch's Busch and Natural Light, Miller Brewing's Milwaukee's Best Light and Coors' Keystone, says Stifel Nicolaus analyst Mark Swartzberg. But craft-beer styles might appeal more to drinkers who would otherwise be buying Michelob or Sam Adams, or expand the market. Big-box stores such as Costco have been a lucrative source of case sales for brewers and any additional competition in the channel will …

As the economic downturn squeezes its aspirational low- and moderate-income customers, Target faces the task of replacing a major revenue generator for its clothing business: designer Isaac Mizrahi, who is becoming creative director for the Liz Claiborne brand. Mizrahi's line did about $300 million at Target and analysts estimate the retailer will have to replace $400 million to $500 million of lost revenue upon his departure, given that shoppers buying Mizrahi clothes also bought other products while there. Meanwhile, Wal-Mart has tweaked its George collection to give it more currency and is selectively expanding its fast-fashion line, …

Facing slowing sales growth and increased competition nationwide, Starbuck's founder and recently reinstalled CEO Howard D. Schultz is scheduled to roll out a revitalization plan today that will almost certainly involve shutting down stores in the United States while accelerating expansion overseas. Details remained under wraps. Schultz faces a difficult task: He has to slow down the company to make stores feel more like hip neighborhood coffeehouses, while also delivering the steady growth that investors have come to expect. Marc Greenberg, an analyst at Deutsche Bank, says the primary problem for Starbucks is simple: "It's being overbuilt, classic …

From the U.S. to Norway to Belgium, watchdog groups are trying to police against the rise in bogus environmental marketing, a practice known as greenwashing. In most cases, these groups are set up by the ad industry and run by a third party, and they operate on the honor system. Marketers agree to abide by the watchdogs' rulings, which often means dropping ads that are deemed deceptive. Marketers who fail to do so run the risk of bad publicity or possibly litigation. Only in a few countries, such as Norway, can regulators impose fines. In the U.S., the …