Indianapolis ? Eli Lilly and Co. said Wednesday it has agreed to plead guilty to a federal misdemeanor and pay $36 million to settle charges that it illegally marketed and promoted its Evista osteoporosis drug for two unapproved uses.

The Department of Justice said an investigation that began in July 2002 found that some Lilly sales representatives promoted Evista in 1998 as useful for preventing and reducing the risk of breast cancer and for reducing the risk of heart disease.

The Food and Drug Administration has approved neither use.

Lilly Chairman and Chief Executive Sidney Taurel said in a statement that the Indianapolis-based company regrets its conduct and plans to “continue to take steps designed to assure that Lilly’s promotional activities remain fully compliant.”

A federal judge in Indianapolis must approve Lilly’s plea agreement. The settlement includes a permanent injunction and a consent decree under which Lilly promises not to engage in the type of marketing and promotion practices that put it in violation of the Food, Drug, and Cosmetic Act.

Sidney Taurel, chairman and chief executive officer for Eli Lilly and Co., was grinning earlier this month when he said that the company would post earnings per share at the high end of its forecast for 2005. On Wednesday, Taurel said that Lilly had agreed to plead guilty and pay 6 million to settle charges that it illegally marketed its osteoporosis drug for unapproved uses.

Don Woodley, a principal with Woodley Farra Manion Portfolio Management Inc. in Indianapolis, said he and many others in the investment community were surprised that Lilly had promoted any drug for unapproved uses.

The plea agreement is good news for Lilly executives and investors because it will allow the company to put the problem behind them, he said.

“I think they were totally embarrassed by this situation,” he said. “This settlement is very reasonable and affordable. It’s chump change for a company of Lilly’s size.”

The company reported that its net income grew to $794.4 million in the third quarter, or 73 cents a share.

Under the settlement, Lilly agreed to a $6 million criminal fine, a $6 million forfeiture to the government and payment of $24 million to settle the civil action. The company already recorded a charge in the fourth quarter last year to cover the pending settlement.