GSK takes £1.58bn hit from legal disputes

GlaxoSmithKline is set to pay £1.58 billion to settle three long-standing legal disputes, including litigation costs for its troubled diabetes drug Avandia.

The UK-based company hopes to draw a line under three separate legal issues, including an investigation by the US government into its former manufacturing site at Puerto Rico, product liability and anti-trust litigation relating to its anti-depressant Paxil and product liability cases relating to Avandia.

By lumping these three settlements together as a single charge, the firm will end up paying £1.35 billion as an after tax cost.

In an emailed statement, GSK said that, with respect to the investigation of the Cidra manufacturing facility in Puerto Rico, the company confirms it has “reached an agreement in principle […] to pay a total of £500 million ($750 million) in settlement of this investigation”. 

Regarding Paxil, GSK said it has now “fully resolved the anti-trust litigation involving Apotex,” and has also settled the vast majority of product liability cases relating to the product.

In relation to Avandia, GSK said the majority of the product liability cases relating to its diabetes drug have now been settled. The exact cost of litigation fees that will be paid for outstanding Avandia cases was not released but it will be a portion of the £1 billion left after its Cidra manufacturing settlement.

With respect to both Paxil and Avandia, the legal charge includes “provisioning for settled cases” and an estimate for those cases that GSK has received and are still outstanding. The company said that the terms of the settlements reached would remain confidential.

Avandia to stay on the market

Meanwhile, US regulator the FDA this week ruled in favour of keeping Avandia on the market after a two-day hearing by its Endocrinologic and Metabolic Drugs and the Drug Safety and Risk Management advisory committee.

The committee voted 20 to 13 in favour of keeping the diabetes treatment on the market. Ten of the 20 who voted positively for Avandia said additional label warnings should be used and seven recommended additional warnings only.

The hearing was prompted by a number of trials and patient testimonials suggesting GSK’s diabetes treatment has led to higher rates of heart disease and fatalities, a charge the company has strenuously denied.

Avandia is still under investigation by European regulators, who are looking at its risk-benefit profile following the recent publication of an observational study and a meta-analysis of data. GSK is set to meet with EU regulatory advisors in the Committee for Medicinal Products for Human Use shortly.

Ben Adams