Glaxo To Book GBP1.57B To Settle Litigation, Including Avandia

15th Jul 2010 08:15

By Steve McGrath Of DOW JONES NEWSWIRES LONDON (Dow Jones)--GlaxoSmithKline PLC (GSK) Thursday said it would book a legal charge of GBP1.57 billion in the second quarter to settle long-standing legal cases relating to its Paxil and Avandia drugs and a U.S. government probe into a Puerto Rican manufacturing facility. The move comes a day after a U.S. Food and Drug Administration panel voted to recommend that GlaxoSmithKline's diabetes drug Avandia remain on the market despite concerns the product could raise the risk of heart attacks. The panel recommendations will be taken into consideration by the FDA, which will make the final decision about whether Avandia stays on the market. In 2007, a similar FDA panel overwhelmingly voted to keep Avandia on the market and the FDA agreed with that advice. Avandia's safety has been in question since a 2007 article in the New England Journal of Medicine by Cleveland Clinic cardiologist Steven Nissen showed it raised the risk of heart attacks by more than 40%. Nissen's study was an analysis of 42 existing studies, most of which lasted a year or less. GlaxoSmithKline has argued that long-term studies don't show such a risk. Heart failure from excess fluid retention has been a long-recognized problem with Avandia and Actos, and both products already carry the FDA's toughest boxed warning discussing that risk. The issue with Avandia is whether it raises the risk of heart attacks and other cardiovascular problems more than other diabetes treatments. Avandia was once a multibillion-dollar-a-year medicine and one of Glaxo's top-selling drugs. Since the drug has come under attack, sales have slumped. In the first quarter of this year, worldwide sales of Avandia were about $245 million, down 10% from a year earlier. Glaxo has faced a raft of legal action in the wake of the negative studies on Avandia, but Thursday said it has provisioned for settled cases as well as an estimate of those still outstanding. It said terms of the settlements reached are confidential and the substantial majority have been settled. The total charge, which equates to an after-tax cost of GBP1.35 billion, also includes GBP500 million to settle an investigation by the U.S. Attorney's Office for the District of Massachusetts and the U.S. Department of Justice into the company's Cidra manufacturing facility in Puerto Rico, as well as settlement related to antidepressant drug Paxil. At 0709 GMT, Glaxo's shares were up 1 pence, or 0.1%, at 1182 pence, outperforming a small decline in the FTSE 100. -By Steve McGrath, Dow Jones Newswires; 44-20-7842-9284; [email protected] (END) Dow Jones Newswires July 15, 2010 03:15 ET (07:15 GMT)