Byline: From Register-Guard and news service reports

Oregon is among 32 states and Washington, D.C., receiving a record $62 million settlement announced Tuesday from drug maker Eli Lilly & Co. over improper marketing of an antipsychotic drug.

Oregon Attorney General Hardy Myers,

with Illinois Attorney General Lisa Madigan, led the multi-state investigation. He alleged that Lilly improperly marketed the drug Zyprexa for uses not approved by the Food and Drug Administration and failed to adequately disclose the drug's side effects to health care providers.

"By now, we hope the entire United States' pharmaceutical industry is on notice that Oregon will not tolerate the deceptive and unfair marketing and promotion of prescription drugs," Myers said. "Not only are we securing significant changes in the operation of these huge drug conglomerates, but we are leading the way for our colleagues in the other states and territories to do the same."

In Eugene, mental health rights activist David Oaks hailed the settlement but called for tougher penalties for drug makers engaging in similar practices.

"Obviously, it's a victory," Oaks said. "While the money is great, we would also like in the long run for criminal penalties to be examined."

Drug makers have such deep pockets they can write enormous settlement checks, yet keep marketing their products inappropriately, he said.

"I hope the money will be used for advocacy to prevent his kind of abuse in the future," he said.

Zyprexa is the brand name for the prescription drug Olanzapine. The drug was first marketed for use in adults with schizophrenia in 1996. Since then, the FDA has approved Zyprexa for the treatment of acute mixed or manic episodes of bipolar I disorder and for maintenance treatment of bipolar disorder.

Lilly was accused of marketing the drug for pediatric care, for use at a high dose and for the treatment of dementia, according to a statement from the Indiana attorney general's office. Doctors are free to prescribe drugs for uses not approved by the FDA. But drug companies cannot market them for those situations.

The company did not admit wrongdoing in the settlement.

Tuesday's settlement will be divided among the states and the district based on population, said Greg Zoeller, Indiana's chief deputy attorney general. Indiana will receive $1.6 million. Oregon will receive $2.5 million.

Some of the $2.5 million will pay for investigative and legal expenses. The balance will go into the Department of Justice consumer protection and enforcement fund, which finances the vast majority of the state's consumer protection activities.

Lilly also agreed to several mandates that extend for six years beyond Zyprexa's patent expiration in 2011. The company agreed to avoid making false, misleading or deceptive claims about the drug and not to promote it outside FDA-approved uses.

The drug maker also agreed to give its medical staff, not the marketing staff, ultimate responsibility for approving the content in "all medical letters and medical references regarding Zyprexa," according to the Oregon attorney general's statement.

"The one thing that's really key here is they've agreed to have a much more transparent system," Zoeller said.

However, Lilly spokesman Phil Belt said many of the items his company agreed to were things it either already did, or was in the process of doing.

"There's no admission of wrongdoing, there's no dramatic changes in the way we're doing business," he said.

He said Lilly agreed to the settlement to avoid being wrapped up in litigation and other things it deems counter productive to drug development.

"We think its better for Lilly, better for patients, better for prescribers to have this kind of activity behind us," he said.

Lilly said it will take a related charge of 4 cents per share in the third quarter for the settlement.

Zyprexa rang up $4.8 billion in sales last year. But Lilly also has settled more than 31,000 product liability claims against the drug since 2005, shelling out more than $1.1 billion in the process.

Last year, Lilly paid $15 million to settle a lawsuit with the state of Alaska in March.

Reporter Susan Palmer and The Associated Press contributed to this report.