GlaxoSmithKline Settles Majority of Avandia Lawsuits Ahead of FDA Panel Vote

GlaxoSmithKline (GSK), whose diabetes drug Avandia is under review by the Food and Drug Administration, has agreed to pay about $460 million to resolve a majority of lawsuits about that same drug, Bloomberg reported Tuesday. The lawsuits allege Avandia can cause heart attacks and strokes. The FDA is looking at precisely the same issues in its review.

Glaxo agreed to settle about 10,000 suits for an average of at least $46,000 apiece, sources told Bloomberg. Glaxo is set to face its first Avandia trial in federal court in Philadelphia in October.

Despite the settlement news, Glaxo shares closed up some 1.7%, as market analysts had expected the company to end up with up to $6 billion in liability for Avandia, with each case settling for as much as $500,000. Based on this settlement deal, Glaxo may now be able to resolve its Avandia liability for about $1.1 billion, a UBS analyst said.

The British pharmaceutical giant had set aside 2.3 billion pounds ($3.5 billion) for "legal and other disputes" as of the end of March. Sources further told Bloomberg the FDA review was a factor in the decision by Glaxo officials to start negotiating with plaintiffs' lawyers. Glaxo agreed to pay about $60 million to resolve more than 700 suits during the first round of settlements. At least 3,000 cases are still pending.

In 2007, FDA required the drug carry a black box label warning regarding the elevated cardiac risk. Sales of Avandia, which topped $2.6 billion in 2006, fell to $1.2 billion in 2009 following an additional study that suggested the drug poses increased risk for serious heart problems.

Accusations of Hidden Data

FDA scientists remain divided on the subject of whether the drug should be taken off the market. Meanwhile, in Tuesday's panel debate, the credibility of the data about Avandia's safety was brought into question: A former FDA official said Glaxo withheld from regulators data showing Avandia may cause heart attacks.

The statements are included in a letter sent by Sen. Charles Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) of the Senate Finance Committee sent to the agency. The letter also included additional information concerning Glaxo's internal records about Avandia, The Wall Street Journal reports. The two senators have been investigating Glaxo and Avandia for some time now.

And according to documents obtained by The New York Times, Glaxo secretly held a drug trial for Avandia in the beginning of 1999. When the results showed that Avandia was no better than Actos from rival drugmaker Takeda, and indicated Avandia was riskier to the heart, Glaxo chose not to post the results or submit them to federal drug regulators, as is required in most cases by law.

A GlaxoSmithKline spokeswoman, told The New York Times that the company had not provided the results of its study because they "did not contribute any significant new information." She also told The Wall Street Journal that the documents in the senators' letter, "are a small subset of the 14 million pages of documents that have been provided in the litigation by GSK." She added that they have been "intentionally taken out of context" and that Glaxo has been entirely forthcoming with the FDA and the Senate committee.