GlaxoSmithKline agreed to pay about $460 million to resolve a majority of lawsuits alleging the company's Avandia diabetes drug can cause heart attacks and strokes, people familiar with the accords said.
Glaxo, the U.K.'s biggest drugmaker, 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 Glaxo hid the drug's heart-attack risk, according to a UBS AG analyst. 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 liability," for Avandia litigation, said Gbola Amusa, an analyst at UBS in London. "We had outlined an absolute worst-case scenario where $500,000 per case would have to be paid."
Glaxo, the U.K.'s largest drugmaker, is settling Avandia claims as a U.S. Food and Drug Administration advisory panel is meeting today in Washington to consider whether Avandia's ability to control blood-sugar levels outweighs a possible increase in heart attacks, strokes and deaths from cardiovascular disease. Mary Anne Rhyne, a spokeswoman for Glaxo, didn't immediately return a call seeking comment.
Avandia generated $1.1 billion 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 in heart attacks. Avandia was once the world's best-selling diabetes pill, generating $3 billion in annual revenue for London-based Glaxo.
An FDA panel agreed in 2007 that the drug carried risks though it should remain available. Almost a dozen more clinical trials and studies have been completed in the past three years, prompting the agency to re-examine the issue.
The panel could recommend Glaxo pull Avandia from the market, which might prompt more suits, Amusa said.
The FDA review was a factor in the decision by Glaxo officials to start negotiating with lawyers for former Avandia users, the people said.
During a first round of settlements of Avandia cases, Glaxo agreed to pay about $60 million to resolve more than 700 suits filed by attorneys such as Houston-based litigator Mark Lanier and Philadelphia-based plaintiffs' lawyer Sol Weiss, the people said.
Among lawyers settling Avandia cases in the second round of resolutions are Michael J. Miller, an Alexandria, Va.-based attorney who represents about 1,500 consumers who took the drug, the people said. J. Paul Sizemore, a Los Angeles lawyer with more than 1,000 Avandia cases, also has agreed to resolve the claims, the people said.
Neither Miller nor Sizemore returned calls seeking comment on the settlements. On his law firm's website, Miller said the advantage of the accords is that they provide a "prompt resolution" of claims that have taken three years to get to the pre-trial stage.
"It's a compromise that allows both sides to put this behind them and move on," Miller said in a note to clients.
Avandia claimants' cases generated individual settlements ranging from $46,000 to almost $70,000, depending on the strength of the claims, the people said.
The settlements add more support to the idea that Glaxo may be able to resolve its Avandia liability for about $1.1 billion, said Amusa. He and other industry analysts have previously said that the company might pay as much as $6 billion to resolve all Avandia litigation.
There are still at least 3,000 Avandia claims pending, either on court dockets or subject to so-called tolling agreements, the people said. These accords allow lawyers to stockpile claims without filing lawsuits while they investigate the cases or negotiate with the company.
Glaxo Settles Avandia Lawsuits for $460 Million
GlaxoSmithKline agreed to pay $460 million to resolve a majority of lawsuits alleging the company's diabetes drug can cause heart attacks and strokes.
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