Glaxo Pay Out $460 Million

14/7/10

Glaxo pays $460 million to resolve Avandia suits

It was facing more than 13,000 claims alleging that it hid the diabetes drug's heart-attack risk.

GlaxoSmithKline P.L.C. agreed to pay about $460 million to resolve a majority of lawsuits alleging that the company's Avandia diabetes drug can cause heart attacks and strokes, people familiar with the accords said.

Glaxo, the British pharmaceutical company that has major operations in the Philadelphia area, agreed to settle about 10,000 suits for an average of at least $46,000 apiece, the people said.

The company had been facing more than 13,000 suits alleging that Glaxo hid the drug's heart-attack risk, according to UBS AG analyst Gbola Amusa. The settlements come as Glaxo is set to face its first Avandia trial in federal court in Philadelphia in October.

"This is exceptionally good news, given the market has discounted $6 billion in liability" for Avandia litigation, Amusa said. "We had outlined an absolute worst-case scenario where $500,000 per case would have to be paid." At that amount for 13,000 cases, the total would have been $6.5 billion.

Glaxo is settling Avandia claims as a U.S. Food and Drug Administration advisory panel met Tuesday to consider whether Avandia's ability to control blood-sugar levels outweighs a possible increase in heart attacks, strokes, and deaths from cardiovascular disease.

The panel is to conclude its two-day session Wednesday. The FDA is asking the group to untangle the mess of data that has stumped its own scientists for more than three years.

The advisers will vote on recommendations to the agency, including possible withdrawal of the drug from the market. The FDA will make a final decision in coming months.

In 2007, a similar group of experts voted to keep Avandia on the market despite an analysis of dozens of studies suggesting it increased the risk of heart attack. The agency is not required to follow the group's advice, though it often does.

FDA Commissioner Margaret Hamburg opened the meeting by advising panelists to "follow the science wherever it leads and the rest will fall into place."

But it became clear that the FDA's own staff have reached vastly different conclusions from the same science.

Mary Anne Rhyne, a Glaxo spokeswoman, declined to comment about a settlement.

Glaxo's American depositary receipts rose 1.7 percent, or 60 cents, to $35.72 on the New York Stock Exchange.

Avandia generated $1.1 billion in sales last year for Glaxo, only about a third of the revenue it had before researchers linked the medicine in 2007 to a 43 percent increased risk of heart attacks. Avandia was once the world's best-selling diabetes pill, generating $3 billion in annual revenue.

A former FDA official, Dr. Rosemary Johann-Liang, said Glaxo withheld from regulators a study showing Avandia may cause heart attacks, according to two people familiar with her deposition in a suit against the drugmaker.

Glaxo disputes Johann-Liang's contentions that it didn't turn over a 2001 review of Avandia's health risks to federal regulators, Rhyne, the company spokeswoman, said last week in an e-mailed statement.

By Jef Feeley and Trista Kelley - Bloomberg News

http://www.philly.com/inquirer/business/20100714_Glaxo_pays__460_million_to_resolve_Avandia_suits.html

More on this story:

http://www.reuters.com/article/idUSTRE66B4F020100712?feedType=nl&feedName=ushealth200
http://www.bloomberg.com/news/2010-07-09/glaxo-withheld-avandia-study-former-fda-manager-said-to-testify-in-suit.html

 

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