Diabetics’ Deaths: Glaxo to Pay $60 Million in Avandia Settlements

FDA regulators urged Glaxo to withdraw Avandia from the market in 2008 because it was causing 500 avoidable heart attacks a month but Glaxo officials sought to intimidate doctors who criticized the drug

GlaxoSmithKline Plc is said to have agreed to pay about $60 million in the first settlements of lawsuits alleging the company’s Avandia diabetes drug causes heart attacks and strokes in some users, people familiar with the accords said (reports Bloomberg).

Glaxo, the UK’s biggest drugmaker, agreed to resolve more than 700 Avandia suits filed by three attorneys, including Houston-based plaintiffs’ lawyer Mark Lanier and Philadelphia- based litigator Sol Weiss, the people said. The settlements come as Glaxo is scheduled to face its first Avandia trial in state court in Philadelphia in July.

The settlement works out to about $86,000 for each case, less than the average $500,000 per case forecast by Gbola Amusa, an analyst at UBS AG in London. While more than 4,000 Avandia lawsuits already have been filed, the company faces at least another 9,000 claims over the drugs that haven’t yet been filed under an agreement with Glaxo, the people familiar with the settlements said. Such “tolling” agreements are common in US mass-tort cases.

“We take the $86,000 per case liability as a key positive and look for more insights on other potential settlements,” Amusa said in a note to clients today. “We continue to believe science favors Avandia’s place in the US market.”

Glaxo officials yesterday declined to comment on the settlements. They said the company continues to prepare for trials over Avandia scheduled for this year.

“GlaxoSmithKline stands by Avandia and is fully prepared to defend any litigation,” Bernadette King, a company spokeswoman, said in an e-mailed statement.

Regulators approved Avandia for sale in the US in 1999 and the medicine generated annual revenue of $3 billion by 2006, including sales of a combination of Avandia and another drug.

Avandia was the world’s best-selling diabetes pill before safety concerns emerged. Sales plunged after a May 2007 report in the New England Journal of Medicine linked the drug to a 43 percent increased risk of heart attacks, prompting US and European regulators to order Glaxo to strengthen its warnings.

Last month, Glaxo reported first-quarter profit that beat analysts’ estimates. The reserves budgeted for legal matters for the quarter increased by 210 million pounds ($312 million) because of “the progress we are making toward settlement of existing cases,” according to an April 28 statement.

The settlement may reduce Glaxo’s liability in the cases from initial estimates ranging from $1 billion to $6 billion, UBS’s Amusa said. “Settlement implies liability at or below the low end of our $1 billion to $6 billion range,” Amusa said in today’s note.

The Food and Drug Administration is reviewing Avandia’s safety profile and will present its findings to an advisory committee in July, officials said in a March 30 letter to two U.S. senators who released a critical report about the drug.

London-based Glaxo’s decision to settle cases before they come to trial will save the company time, money and embarrassment, said Richard Nagareda, a Vanderbilt University law professor who teaches classes on mass-tort law.

It sounds like they’ve beaten down the price on these cases to the point that there isn’t that much benefit from taking them to trial,” Nagareda said in an interview.

Lanier, who won the first jury verdict against Merck & Co. over its withdrawn painkiller Vioxx in 2005, resolved more than 500 Avandia cases, the people said. Weiss, who was among a group of plaintiffs’ lawyers who negotiated a $3.75 billion settlement of suits over Wyeth’s diet drugs in 2000, resolved more than 200 Avandia cases, the people added.

Weiss announced at a status conference last month in Philadelphia Common Pleas Court that he had earlier settled his Avandia cases slated to be tried there, the people said.

Glaxo officials contend former Avandia users who suffered heart attacks can’t link them to the drug and the drug maker didn’t hide the medicine’s health risks.

Glaxo is “confident that when courts and juries look at actual clinical data, the manner in which we communicated with the FDA and physicians and our openness in posting studies on our website, the facts will support our position,” King, Glaxo’s director of product communications, said in the e-mail.

Andrew Witty, Glaxo’s chief executive officer, said in an interview last week that he was confident about Avandia’s “risk-benefit profile” and the company’s handling of the drug.

The only thing I ask for is that qualified scientists with the right evidence and data calmly look at the information,” he said. “The company’s done all the right things in terms of sharing that data with the regulators and working with the regulators to update the label.”

Glaxo’s officials also are in settlement talks with attorneys for other former Avandia users, such as Los Angeles-based plaintiffs’ lawyer Mark Robinson and Manhattan-based litigator Benedict Morelli, the people said.

Robinson helped win a $4.9 billion jury verdict in a case against General Motors Corp. in 1999 over exploding fuel tanks in passenger cars. Morelli won a $22.5 million verdict against a Wyeth unit last year in a case over a polio vaccine.

In their Avandia suits, consumers contend Glaxo officials refuse to take the drug off the market even though studies have shown it poses an increased risk of heart attack and stroke compared with competing medicines.

A report by two US senators in February noted FDA regulators urged Glaxo to withdraw Avandia from the market in 2008 because it was causing 500 avoidable heart attacks a month.

The report, by Senators Max Baucus and Charles Grassley, also said Glaxo officials sought to intimidate doctors who criticized the drug. Dr. John Buse, a University of North Carolina Medical School professor, gave presentations highlighting Avandia’s risks, the senators said.

Glaxo officials complained to Buse’s supervisor and threatened to take legal action over the statements, the report said. Buse later agreed to stop criticizing the drug, according to the report.

Glaxo officials rejected the senators’ contentions that it concealed safety information about Avandia or used improper marketing tactics. They said the report contained “errors of fact, omission and inference and shouldn’t have been published.”

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