There is such a thing as too much of a good thing.
The company will have to pay $62 million to the states, but Lilly actually looks like it's getting off pretty easy. It'll take a $0.04 charge to earnings per share in the third quarter, but the settlement works out to less than $2 million per state -- though California alone will receive $5.6 million according to one report. Of course, that is much cheaper than the $15 million it had to pony up just to Alaska earlier this year on a different matter involving the same drug.
Eli Lilly joins a list of companies that have gotten in trouble with the government for hocking their drugs a little too aggressively. Cephalon
Fortunately, Lilly can afford this settlement and previous ones. Sales of Zyprexa came in at a whopping $2.36 billion in the first six months of this year. That towers over competing drugs like Pfizer's
Unfortunately companies are going to get in trouble with the government from time to time. In this case, though, investors needn't be worried about Eli Lilly's snag. It's just a small bump in the road that's now behind it.
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of Pfizer, which is an Inside Value recommendation. The Fool has a disclosure policy.