Eli Lilly faces Texas lawsuit over alleged kickbacks for GLP-1 blockbusters
Texas Attorney General Ken Paxton has filed a lawsuit against pharmaceutical giant Eli Lilly and Co., accusing the Indianapolis-based company of running an illegal kickback scheme to encourage medical providers in Texas to prescribe some of its most profitable drugs, including the blockbuster GLP-1 medications Mounjaro and Zepbound.
Paxton alleges that Lilly offered unlawful incentives such as free nursing and reimbursement support services to influence prescribing decisions. He claims the company’s actions prioritised profits over patient welfare and violated the Texas Health Care Program Fraud Prevention Act.
“Big Pharma compromised medical decision-making by engaging in an illegal kickback scheme,” Paxton said in a written statement. “Eli Lilly fraudulently sought to maximise profits at taxpayer expense and put corporate greed over people’s health.”
The lawsuit, which also lists Health Choice Alliance LLC as a plaintiff, highlights not only Mounjaro, approved for Type 2 diabetes, and Zepbound, a weight-loss drug, but also other Lilly products such as osteoporosis treatment Forteo and breast cancer drug Verzenio.
Embed from Getty ImagesAccording to Paxton’s office, many of the prescriptions in question were covered by Medicaid, leading to millions of dollars in claims allegedly “tainted” by Lilly’s marketing tactics and quid pro quo arrangements.
The complaint describes a “Free Nurse Program” offered to providers, which plaintiffs argue was designed to capitalise on the fact that follow-up care and patient monitoring often yield low reimbursement rates under government health programmes. By providing this support, the lawsuit claims, Lilly incentivised providers to prescribe its drugs over competitors’.
Eli Lilly has rejected the allegations and vowed to fight them in court. In an emailed statement, a spokesperson for the company said: “Multiple courts and the federal government have rejected claims by this same corporate relator against Lilly as meritless. In fact, the United States government determined that the relators’ allegations lack sufficient factual and legal support in a prior case.”
The spokesperson also argued that federal healthcare programmes support ensuring patients have access to “basic product support” once a physician has prescribed medication.
Mounjaro and Zepbound, both containing the active ingredient tirzepatide, have become major growth drivers for Lilly. The company reported U.S. revenue of $3.3 billion for Mounjaro and $3.38 billion for Zepbound in the second quarter of 2025. Zepbound’s sales surged 172% year-on-year, fuelled by soaring demand despite lower realised prices.
Paxton’s lawsuit comes as Lilly faces increasing scrutiny over its marketing and pricing practices. In October, the Texas attorney general sued major insulin manufacturers, including Lilly, as well as pharmacy benefit managers, alleging a conspiracy to inflate insulin prices.
The latest complaint adds to a growing list of legal issues for Lilly, particularly concerning its GLP-1 portfolio. More than two dozen patients have sued the company in Marion County, Indiana, alleging that it downplayed or failed to adequately disclose potential side effects from drugs such as Trulicity and Mounjaro. Seventeen of those cases also name Novo Nordisk, maker of rival GLP-1 drug Ozempic, alleging similar marketing practices.
While the outcome of Paxton’s case remains uncertain, it represents a direct challenge to one of the world’s largest drugmakers at a time when GLP-1 medications are transforming the global pharmaceutical market.
If the allegations are proven, Lilly could face significant financial penalties and restrictions on how it markets its products in Texas
