Said to Have Paid $1 Billion Over Paxil Suits
Plc has agreed to pay more than $1 billion to resolve more than 800 cases
alleging its Paxil antidepressant caused birth defects in some users’
children, according to people familiar with the settlements. The
accords, which provide an average payout of more than $1.2 million to families
of affected children, leave more than 100 birth-defect cases pending, the
people said. Officials of Glaxo, the U.K.’s biggest drugmaker, said
July 15 they set aside $2.4 billion to resolve litigation over Paxil and
its Avandia diabetes drug.
looks as if this should be covered in the liabilities to be charged in the
second-quarter numbers,” Nick Turner, an analyst at Mirabaud Securities
in London, said today in an interview. “If there are further liabilities
to be disclosed in the third-quarter numbers, that would be very disappointing.”
birth-defect settlements bring to more than $2 billion the amount Glaxo
has agreed to pay to resolve a variety of Paxil-related suits, including
claims it caused suicides or attempted suicides and addiction problems,
the people said. Glaxo officials confirmed yesterday they agreed to settle
some Paxil birth-defect cases filed against the drugmaker. They refused
to comment on the terms of the settlements.
company has agreed to these settlements, despite its litigation defenses,
in order to avoid the costs, burdens and uncertainties of ongoing litigation,”
Sarah Alspach, a Glaxo spokeswoman, said in an e-mailed statement.
Billion in Sales
believes it acted properly and responsibly in conducting its clinical trial
program, in marketing the medicine, in monitoring its safety once it was
approved for use and in updating pregnancy information in the medicine’s
label as new information became available,” Alspach added.
in 1992 for U.S. use, Paxil generated about 523 million pounds ($793 million)
in sales in 2009, or about 1.8 percent of Glaxo’s total revenue. The
company had $11.7 billion in U.S. Paxil sales for nine years starting in
1997, according to documents made public last year in a Pennsylvania trial
over birth-defect claims.
Executive Officer Andrew Witty has moved to replace revenue lost to generic
versions of drugs such as Paxil. The drugmaker said in May it plans to double
revenue from India and China by 2015 as it cuts prices to match competitors
in emerging markets.
$2.4 billion charge Glaxo announced for Paxil and Avandia litigation “includes
provisioning for settled cases” and those still outstanding, officials
said in an e-mailed statement.
charge “reflects the company’s ongoing efforts to resolve certain
long-standing legal cases,” Dan Troy, the company’s general
counsel, said in the release. “This represents a substantial portion
of GSK’s outstanding litigation.”
declined today to specify how much of the $2.4 billion charge is devoted
to resolving Paxil litigation and how much has been set aside to deal with
Avandia lawsuits. She also declined to say how much of the reserve will
be used to pay legal fees for both cases. The company has agreed to pay
more than $500 million so far to settle suits alleging Avandia posed an
increase risk of heart attacks and strokes in diabetics, people familiar
with those accords said earlier this month.
$1.25 million average recovery in the Paxil birth- defect cases reflects
the seriousness of the injuries and the fact that many of cases involved
children with heart defects, Carl Tobias, a professor at University of Richmond
Law School who teaches classes on mass-tort law, said in an interview.
think the settlement size was influence by who was injured and the type
of injuries,” Tobias said.
birth-defect settlements came after a Philadelphia jury ordered Glaxo in
October to pay $2.5 million in damages to the family of Lyam Kilker, a 3-year-old
boy born with a heart defect after his mother took Paxil while pregnant.
In Kilker’s case, jurors concluded Glaxo officials “negligently
failed to warn” the doctor treating Lyam’s mother about Paxil’s
risks and concluded the medicine was a “factual cause” of the
child’s heart defects. The panel declined to award punitive damages
against the drugmaker.
the Kilker trial, the family’s lawyers made public internal Glaxo
documents showing executives talked about burying negative studies about
Paxil’s links to birth defects and that its own scientists were alarmed
by the rising number of children who had been affected by the drug in the
womb. Many of the cases involved children with heart defects.
the verdict in Kilker’s case, an analyst estimated the company may
be facing more than $1 billion in additional verdicts in the more than 600
birth-defect cases waiting to be tried in Pennsylvania.
liability totaling $1.5 billion is possible,” Savvas Neophytou, a
Panmure Gordon analyst in London, wrote in a note to investors the day after
the verdict. He still recommended buying Glaxo shares because the award
was likely to be reduced on appeal.
majority of the birth-defect suits filed in Philadelphia have been settled,
including Kilker’s case, the people familiar with the accords said.
Sean P. Tracey, the attorney who represented Kilker’s family in the
case, declined to comment on the settlement.
lawyers who have settled their Paxil cases include Mark Robinson and Karen
Menzies, two Los Angeles-based attorneys, and Clayton Clark, a Houston-based
plaintiffs’ lawyer, the people said. Robinson and Menzies didn’t
return calls for comment. Clark declined to comment on the settlement of
his more than 500 cases.
who continue to press birth-defect claims against Glaxo include Houston
litigators Andy Vickery and Ed Blizzard, the people said. Alspach noted
yesterday that Glaxo is facing three birth-defect cases that are set for
trial in Philadelphia in September.
didn’t return a call for comment. Vickery said he was preparing for
one of the September trials and wouldn’t comment on whether he’d
had settlement talks with Glaxo.
average $1.25 million payout in the birth defect cases compares with $2
million average settlements in about 150 suicide cases, the people said.
Glaxo also paid an average of $300,000 to resolve about 300 attempted suicide
cases, they said.
also paid an average of about $50,000 per case to resolve about 3,200 claims
linking Paxil to addiction problems, the people said.
paid $2.5 million to New York to resolve accusations the company withheld
safety data about the antidepressant. The company, calling the claims unfounded,
agreed to release safety studies on the medicine’s effect on children.
the company added a black-box warning to its Paxil label that the drug increased
the risk of suicidal thoughts among adolescents, following a request by
the U.S. Food and Drug Administration to do so.
a jury in Cheyenne, Wyoming, ordered Glaxo to pay $6.4 million to the relatives
of a man who shot his family to death and then turned the gun on himself
after taking Paxil. The case was settled while on appeal, according to Kevin
Colgan, a Glaxo spokesman.
fell 14.5 pence, or 1.2 percent, to close at 1,173.5 pence in London trading
today. The shares have fallen 11 percent this year. Glaxo’s American
depositary receipts, each representing two ordinary shares, rose 12 cents
to $36.37 at 4:16 p.m. in New York Stock Exchange composite trading.
Philadelphia birth-defect case was Kilker v. SmithKline Beecham Corp. dba
GlaxoSmithKline, 07-001813, Court of Common Pleas, Philadelphia County,
Feeley and Trista Kelley
the reporters on this story: Jef Feeley in Wilmington, Delaware, at email@example.com;
Trista Kelley in London at firstname.lastname@example.org.
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