2011 has started with a big thud for the troubled drug maker GlaxoSmithkline. The company is hoping to cure its problems by refashioning itself into a collection of small biotechs despite great skepticism in some quarters. But instead of moving forward, its legal woes are continuing to drag on. Now the company is taking a huge $3.4 legal charge on its fourth quarter earnings related to a investigation by the U.S. attorney in Colorado and additional lawsuits over the restricted diabetes drug Avandia.
Its just the latest bad legal news for Glaxo. Last year, the company paid $750 million to settle charges it produced tainted drugs and it set aside another $2.4 billion to settle lawsuits over Avandia and other drugs. The constant stream of charges indicates that Glaxo does not have its legal situation under control. It almost certainly means that there will more embarrassing revelations to come over dubious marketing practices.
Glaxo previously disclosed in its 2007 annual report that the U.S. attorney in Colorado had subpoened it regarding “nine of its largest selling products” and asked about “alleged promotion of these drugs for off-label uses.” Promotion for unapproved uses is illegal. The report said the government asked about everything from “continuing medical education” to “speaker events” and “advisory boards”.
Here is what Glaxo said in its news release:
GlaxoSmithKline (GSK) today announces that it expects to record a legal charge for the fourth quarter of 2010 of £2.2 billion ($3.4 billion) (equating to an after tax cost of £1.8 billion).
The charge primarily relates to additional provisioning in respect of the investigation by the US Attorney’s Office for the District of Colorado into the Group’s US sales and promotional practices and for product liability cases regarding Avandia (rosiglitazone).
Regarding Avandia, in July 2010 the company took a provision for product liability cases relating to the product that had been settled or received at that time. As previously stated, the company has continued to receive new product liability cases regarding Avandia in the United States. The number of new claims received is substantial and the Group has now completed its assessment of these additional cases and an estimate of likely future claims.
Monday, January 17, 2011
Will Glaxo’s Legal Woes Ever End? - Robert Langreth - Forbes
via blogs.forbes.com
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