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Three weeks into the trail, yesterday it was announced that Eli Lilly has agreed to pay $15 million to settle a lawsuit brought by the state of Alaska over the popular antipsychotic medication Zyprexa. The lawsuit alleged that Zyprexa caused patients to develop diabetes after taking the medication. The state was seeking to recover Medicaid money spent on both the medication itself and the treatment of diabetes resulting from patients taking Zyprexa.

The $15 million settlement is viewed to be quite a large payment for a state with such a low population, just over 670,000 residents. Several other states have initiated similar claims or are participating in settlement talks being headed up by federal prosecutors in Pennsylvania.

While there is no way of knowing whether the $15 million payment to Alaska will represent a benchmark for the broader talks. But if it does, Lilly might need to pay billions of dollars to resolve the bigger cases. Lilly and the prosecutors have already discussed an overall settlement of the state and federal investigations and suits that would require Lilly to pay $1 billion to $2 billion in fines and restitution, according to people who have been briefed on the talks.

This coupled with the $1.2 billion spent to settle some 30,000 individual lawsuits from patients claiming that they developed diabetes from taking Zyprexa, Lilly could be looking at paying out around three billion or more to settle Zyprexa lawsuits.

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