With thousands of lawsuits pending against GlaxoSmithKline PLC over the controversial diabetes drug, Avandia, the company agreed to pay about $460 million to resolve the outstanding suits on Wednesday, July 14. A www.bloomberg.com article reports that ten-thousand lawsuits will be settled for about $46,000 each. The actions alleged that GSK hid the dangers of heart damage from patients who took the drug. GSK, the United Kingdom’s biggest drugmaker, was poised to begin the first Avandia trial in a Philadelphia federal court in October.
No doubt GSK analyzed the downside. At potentially a half-million dollars per case, it will end out paying ten cents on the dollar.
The timing is not coincidental. A Food and Drug Administration advisory panel recently met to discuss whether the drug’s risk of increasing heart attacks outweighs its ability to control blood sugar levels and whether the drug should be kept on the market. All but three members said it should either be removed or the label on Avandia needs to be changed.
Testifying was a former FDA official who accused the company of withholding a study linking Avandia use to heart attacks. Dr. Rosemary Johann-Liang has been deposed by many lawyers in pending suits against GSK and the FDA may consider the information she provided to lawyers in determining whether Avandia should stay be recalled.
This is the second wave of settlement for GSK over Avandia heart trouble side effects. The first wave of 700 lawsuits was settled by Glaxo for about $60 million. There are still about 3,000 claims pending.
Avandia was once the best selling diabetes pill which generated about $3 billion annually for GSK. Even after a 2007 report linking Avandia to a 43 percent increase in the risk of heart attacks, the drug generated $1.1 billion in 2009 for GSK.
In March, Glaxo set aside $3.5 billion to settle legal and other disputes.
