By Mike Oboh

KANO, Nigeria, Feb 27 (Reuters) - Nigeria is close to a settlement in a multi-billion dollar lawsuit against Pfizer Inc <PFE.N> over a 1996 drug trial it says caused the death of 11 children and left dozens more disabled, lawyers said on Friday.

Nigeria's federal government and its northern state of Kano sued Pfizer in May 2007 for a total of $8.5 billion in damages over the testing of the antibiotic Trovan in Kano during a 1996 meningitis epidemic, which killed 12,000 children.

The New York-based drugmaker denies all charges and argues meningitis, not Trovan, killed the children or damaged their health. It said Trovan saved lives and was as effective as a more established drug used for comparison in the study.

"We have presented our final position to Pfizer and what we are going to do at the next meeting is to cross the 'T's and dot the 'I's," Kano state's Attorney-General Aliyu Umar said.

"I can assure you we are going to resolve the issue before the next April court date ... If Pfizer refuses to agree with our terms we will continue with the case, but I doubt that very much," he told Reuters.

Pfizer's lead counsel in the case, Anthony Idigbe, also said he was confident a deal would be reached in the coming weeks.

"I would not say there is a deal as at today, but we are close to a deal and I expect that before the end of March or maybe even sooner we will have arrived at some deal in principle," he told Reuters by telephone.

He said the focus was on settling the Kano case, which addressed the main issues, and that there were already tentative agreements on side issues covered by the federal case.

The civil and criminal cases launched by the Nigerian authorities have grown into a tangle of unresolved petitions and side issues, dragging from one adjournment to the next. No witness has been heard and no substantive issue tackled.

Pfizer said in October it hoped to reach an out-of-court settlement with Nigeria, but talks over a settlement have been slowed by disagreements over liabilities and compensation.

Court sources said almost a year ago that Pfizer had proposed to pay $10 million in compensation, rehabilitate the hospital where the Trovan study took place, and upgrade Kano's state-owned drug manufacturing company.

But Umar, Kano's lead attorney, said last April the government wanted "a better package for the victims".

Pfizer has said in the past that prosecution lawyers have failed to provide evidence to support their monetary claims but that it wants an amicable resolution.

The company has said it has proposed to set up a fund for participants in the study, underwrite projects to improve and expand healthcare in Nigeria, and provide assistance to cover legitimate legal expenses incurred by the government. (For full Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/) (Writing by Nick Tattersall; Editing by Andrew Macdonald)

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