Glaxo Pays $90 Million to Settle States’ Avandia Claims
GlaxoSmithKline Plc (GSK), the U.K.’s biggest drugmaker, agreed to pay $90 million to settle claims by 37 U.S. states and the District of Columbia that the company illegally promoted the Avandia diabetes medicine.
The settlement resolves claims by state attorneys general that Glaxo misled consumers about whether Avandia caused heart attacks and strokes to pump up sales. The company already has paid more than $3 billion to resolve government probes of its marketing of Avandia and other medications, as well as patient lawsuits over the diabetes drug.
“This settlement, which is covered by existing provisions, marks an important step in resolving long-standing legal matters,” Bernadette King, a U.S.-based spokeswoman for the company, said in an e-mailed statement.
The settlements are part of London-based Glaxo’s push to resolve legal issues stretching back more than a decade. Company officials agreed in July to plead guilty to misdemeanor criminal charges and pay $3 billion to settle U.S. criminal and civil investigations into whether Glaxo illegally marketed Avandia and other medications. One of the criminal charges stemmed from the company’s failure to properly report clinical safety date about Avandia, according to court filings.
The company also agreed to pay more than $700 million to settle patients’ claims that Avandia caused heart attacks and strokes, people familiar with the accords said last year.
The settlement with the states, which requires Glaxo to make changes to the way it discloses and uses safety data about its drugs, “is tough, fair and it holds GlaxoSmithKline accountable for how the company marketed Avandia,” Tom Horne, Arizona’s attorney general, said in an e-mailed statement. Arizona will get more than $3 million under the accord, he said.
Six states -- Louisiana, Mississippi, South Carolina, Utah, New Mexico and West Virginia -- opted out of the multistate accord, King said. Other states declined to participate without seeking compensation, she said.
“The company chose to settle the matter to avoid the expense and uncertainty of protracted litigation and trial,” King said in the statement. “The company did not admit to any wrongdoing or liability of any kind under these states’ consumer protection laws in this settlement.”
Under the accord, Glaxo is barred from making false or misleading claims about any diabetes drug and must ensure that safety claims are supported by “substantial evidence or substantial clinic experience,” Catherine Cortez Masto, Nevada’s attorney general, said in an e-mailed statement. The state is receiving more than $1.5 million as part of the deal.
During the next eight years, Glaxo also must post summaries of company-sponsored safety studies about diabetes drugs, Masto said.
The company said in 2010 it would stop promoting Avandia worldwide after regulators said the treatment would be withdrawn from the market in Europe and sales would be limited in the U.S. because of studies linking the drug to increased risks of heart attacks.
Avandia sales fell 43 percent in the wake of the restrictions, Glaxo said. Avandia was once the world’s best- selling diabetes pill, generating $3 billion in annual sales.
Glaxo said last year that it took a $3.5 billion charge to cover expenses linked to investigations and suits over Avandia and other drugs. The reserve brought to more than $6.4 billion the amount the drugmaker has set aside for legal costs tied to Avandia and other drugs, such as its Paxil anti-depressant.
The federal criminal case is U.S. v. GlaxoSmithKline LLC, 12-10206, U.S. District Court, District of Massachusetts (Boston).
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