The U.S. State of Texas has launched a lawsuit against Eli Lilly (LLY), alleging that the pharmaceutical giant bribed doctors to prescribe its medications.
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Texas Attorney General Ken Paxton announced the lawsuit on Aug. 12, claiming that Eli Lilly has been “bribing” doctors and other medical providers to prescribe its medications for their patients. The state further claims that Eli Lilly bribed and illegally induced medical providers to prescribe its most profitable drugs, including the weight-loss medicine Zepbound.
“Big Pharma compromised medical decision-making by engaging in an illegal kickback scheme,” said Attorney General Paxton in announcing the lawsuit that seeks unspecified damages from Eli Lilly. The pharma company did not immediately respond publicly to the Texas lawsuit.
Fraud and Abuse
The lawsuit states that the Texas Attorney General aims to hold drug manufacturers accountable for fraud and abuse. Last year, the Texas Attorney General’s office sued insulin manufacturers, including Eli Lilly, and pharmacy benefit managers alleging that they colluded to artificially raise the price of insulin.
The lawsuit in Texas comes as LLY stock has been reeling after the company issued clinical trial results for its new weight-loss pill that came in below Wall Street’s expectations. Following the trial results being made public, Eli Lilly’s share price fell 15% for its biggest decline since the 2008 financial crisis.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 21 Wall Street analysts. That rating is based on 17 Buy and four Hold recommendations issued in the last three months. The average LLY price target of $946.89 implies 51.35% upside from current levels.
