Bayer Healthcare LLC announced Monday that it settled a false-advertising lawsuit against Eli Lilly & Co., filed after its Elanco division sent an anti-Bayer Dear Doctor letter to thousands of veterinary practices in April.

The settlement, entered Friday in the U.S. District Court for the Southern District of New York, prohibits Elanco from making unsubstantiated claims to veterinarians that Bayer's policy of selling flea and tick medications through retailers is hurting sales of those products in veterinary clinics. The agreement also bans Elanco from claiming that its own products are not available through Internet pharmacies and from claiming that Bayer does not support veterinarians. The settlement was non-monetary.

The Dear Doctor letter suggested that veterinary clinics have lost sales due to Bayer's decision in 2010 to market its Advantage and K9 Advantix flea and tick prevention products through retailers as well as through the traditional veterinary-clinic channel. Bayer's suit, filed in May, claimed that Elanco's campaign had caused many veterinarians to cancel their accounts with Bayer.

Unlike Bayer, Elanco markets its medications only through veterinary practices. The company's advertising campaign aimed to convince veterinarians of the benefits of that policy. In the Dear Doctor letter, Elanco promoted the effectiveness of its "Track and Trace" program. The program is meant to identify and stop veterinarians who are engaging in diversion, the practice of reselling pharmaceuticals to distributors who then supply retailers. Elanco says it has caught and disciplined — by cutting off sales — more than 300 veterinarians who were diverting flea and tick medications.

Nonetheless, Elanco's Comfortis brand continues to be sold through online retailers such as PetMed Express.

Diversion of flea and tick medications is widespread and by some estimates worth hundreds of millions of dollars annually. While generally not illegal, the practice is controversial within the veterinary community because clinicians who engage in it are arguably undercutting others' sales. Bayer is the only major drugmaker that openly sells its pet parasiticides through retailers.

While the settlement will keep Elanco from claiming that Bayer's retail sales policy hurts veterinarians, Elanco noted in a news release that the company is still allowed to advertise about the fact that flea and tick products — including Bayer's — are available outside the veterinary channel and to promote its tracking system. In the release, Eric Graves, senior director of Elanco Companion Animal Health, said the company continues to deny Bayer's allegations.