Posted: 03-11-10 Categories:
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Avandia side effects lawsuit settlements could top $6 billion in liability for GSK

Avandia heart side effects lawsuits could cost GlaxoSmithKline up to $6 billion, said UBS analysts in a note made public last week.

The UBS note follows a highly critical report on the drug by the U.S. Senate Finance Committee.  Over 13,000 Avandia personal injury and wrongful death lawsuits currently are pending against the GSK, the manufacturer of the popular diabetes drug.

“As U.S. Avandia contributes 1 percent to sales, our concerns are solely on personal injury lawsuits,” analysts said in a note headed by analyst Gbola Amusa.

UBS said the poll of experts suggested Glaxo’s Avandia lawsuit liability was in the range of $1 billion to $6 billion.

“We expect liability below the midpoint of this range and note GlaxoSmithKline has underperformed by around $2.5bn already,” the note said.

The first of two Avandia lawsuit trials set to start on June 1 in Pennsylvania.  The trial and is expected to be an indicator of jury verdicts and settlements in the other cases.

The U.S. Senate report criticized GlaxoSmithKline’s handling of heart risks with the drug and charged GSK with minimizing the drug’s safety risks and withholding important data from the FDA.

In 2007, the FDA required a block box warning of Avandia heart attacks and heart-related death. A wave of Avandia lawsuits for personal injury and wrongful death damages followed soon thereafter. Cases against Glaxo were filed across the U.S. by defective drug product liability lawyers.

Glaxo defends its drug, saying that the Avandia Senate Report “mischaracterizes and distorts” the facts.

UBS said that it believes data on Avandia support the drug’s continued use, but added that “nonscientific political pressure from Congress will likely be as important as science at FDA in the coming months; and, product withdrawal, if it occurs, could put GlaxoSmithKline at the top end of our liability range.”

Time will tell what effect the Senate report will have on Avandia lawsuit settlements and jury verdicts.

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