$2.36B Glaxo Charge Covers Avandia, Paxil Litigation, Other Legal Costs

$2.36B Glaxo Charge Covers Avandia, Paxil Litigation, Other Legal Costs

LONDON - (Mealey's) GlaxoSmithKline PLC (GSK) on July 15 said it expects to take a $2.36 billion charge against earnings to settle several legal issues, including settling "the substantial majority" of Avandia product liability cases and the "vast majority" of Paxil product liability cases.

Avandia is an anti-diabetes drug that carries a heart risk and faces possible increased restrictions on its use.  Paxil is an antidepressant linked to heart birth defects and withdrawal symptoms.

GSK did not say how much of the $2.36 billion will go to settle Avandia cases or how many cases will be settled.  Previously, the company has said that it faces about 13,000 Avandia product liability cases.

The company said the charge will include settlements, agreements in principle to settle and other provisions for "long-standing legal cases" including: 

  • An agreement in principle to settle an investigation by the U.S. attorney for the District of Massachusetts and the U.S. Justice Department investigation of GSK's former manufacturing plant in Cidra, Puerto Rico, for $750 million.
  • Final settlement of antitrust litigation involving its Paxil brand antidepressant and its generic equivalent, paroxetine, made by generic drug manufacturer Apotex Inc. of Toronto, Canada.

GSK said the charge includes provisions for settled Paxil and Avandia cases and "an estimate for those cases which we have received and are still outstanding."  It said terms of agreed settlements are confidential.

The company said it continues to work to resolve an investigation by the U.S. attorney for the District of Colorado into GSK's sales and promotional practices.  According to previous filings with the U.S. Securities and Exchange Commission, the U.S. attorney in 2004 subpoenaed information about off-label promotion and payments to doctors involving nine drugs, including Wellbutrin, an antidepressant.

In January, GSK said it was taking a $400 million charge related to the Colorado investigation.

[Editor's Note:  Full coverage will be in the July 22 issue of Mealey's Emerging Drugs & Devices.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

For more information, call editor Tom Moylan at 610-205-1120, or e-mail him at tom.moylan@lexisnexis.com.