GSK takes £2.2bn hit from Avandia claims
pharmafile | January 18, 2011 | News story | Sales and Marketing | Avandia, GSK, GlaxoSmithKline, rosiglitazone
GlaxoSmithKline’s Avandia woes are continuing, with the company admitting it expects to take a mammoth legal charge over the troubled diabetes drug.
GSK estimates it will pay out a further £2.2 billion to settle claims linked to worries about the drug causing heart attack, heart failure and stroke in patients.
“We recognise that this is a significant charge, but we believe the approach we are taking to resolve long-standing legal matters is in the company’s best interests,” said PD Villarreal, GSK’s senior vice president of global litigation.
“We have closed out a number of major cases over the last year and we remain determined to do all we can to reduce our litigation risk,” Villareal added.
The number of new claims received in the US is described as “substantial” and the new billion dollar Avandia charge will be booked in the fourth quarter of 2010.
GSK previously reported a loss in both quarters two and three last year, with litigation costs related to Avandia (rosiglitazone) taking another £1.58 billion out of the accounts between April and June.
In what has been a year that GSK would rather forget, Avandia was withdrawn from the market in Europe and allowed to remain in the US, but only with further restrictions on its use.
The company has also been under intense media scrutiny and even accused of a cover-up by an influential group of US senators, who said internal emails show GSK attempted to downplay scientific findings about the safety of Avandia as long ago as 2000.
Sales of the drug plummeted 65% to £70 million in the third quarter of 2010 on the back of the regulatory and safety worries.
GSK says the legal charge in the fourth quarter of the year relates to an investigation by the US Attorney’s Office for the District of Colorado into GSK’s “US sales and promotional practices and for product liability cases”.
But the company warns losses from future legal proceedings could still exceed those reported in the accounts “by a material amount”.
Adam Hill
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