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Eli Lilly and Co (LLY.N: Quote, Profile, Research, Stock Buzz) will record a $1.4 billion charge because of probes into past marketing of its top-selling Zyprexa schizophrenia drug and is in advanced talks to resolve the investigations, the company said on Tuesday.

Lilly will record the charge, which totals $1.29 a share, in the third quarter. Analysts are expecting profit of $1.02 a share before special items for the period, according to Reuters Estimates.

The company has faced long-running accusations that it improperly marketed Zyprexa to patients who were not approved users and that it played down side effects such as weight gain, which can increase the risk for diabetes.

The U.S. Attorney’s Office in Philadelphia launched a probe into the matter in early 2004, and Lilly received a grand jury subpoena for Zyprexa-related documents this past November, the company said.

The Medicaid fraud control units of more than 30 states are coordinating with federal prosecutors in the investigation of any claims related to the health insurance program for the poor savings account payday advance.

If the discussions are successfully concluded, the company expects they would settle the Zyprexa-related federal claims as well as the Medicaid-related claims of states, Lilly said. It said the $1.4 billion charge reflected the company’s “currently estimable exposure” with respect to these matters.

Eleven states, including Pennsylvania, Connecticut and Mississippi, have filed lawsuits over Zyprexa and are not participating in the coordinated investigation, Lilly said.

“The government’s investigation of Zyprexa has been ongoing for five years, and we now have a heightened sense of responsibility to all our stakeholders to intensify efforts to resolve these issues,” Lilly General Counsel Robert Armitage said in a statement. 

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