Glaxo settles more Avandia lawsuits in U.S.

GlaxoSmithKline Plc has settled thousands more lawsuits brought by patients alleging its Avandia diabetes drug caused heart attacks, in a move that may defuse potentially massive claims over the medicine.

A company spokeswoman said on Tuesday that consolidated cases which had been due to come to court in Philadelphia this month had been settled. She declined to give further details and said the terms remained confidential.

The first product liability case involving Avandia will now go to court in the United States in October, she added.

The move follows the separate settlement of some 700 cases last month for about $60 million.

Analysts estimate Glaxo had faced a total of 13,000 claims for damages involving Avandia, of which around 5,000 were consolidated in Philadelphia, and there had been fears it could face damages of up to $6 billion.

However, last month’s relative modest settlement deal and the latest settlement in Philadelphia suggests the amount paid out by the British-based drugmaker is likely to be a lot lower.

“This implies that close to half of the cases have now been settled and should ease some fears about Vioxx-type liabilities,” said Deutsche Bank analyst Mark Clark.

He believes the cost is likely to be comfortably covered by the company’s 2 billion pounds ($2.9 billion) of litigation provisions.

And the total could be a lot less than that. Assuming the average pay-out rate of around $86,000 per claimant for the first 700 cases was applied to all 13,000, the amount would be just over $1.1 billion.

Merck & Co Inc agreed a $4.85 billion settlement with plaintiffs in 2007 after its arthritis pain drug Vioxx was pulled from the market in 2004.

Commercially, Avandia is no longer a major product for Glaxo, with sales declining sharply following controversy over the drug’s heart risks in 2007, and the medicine is set to lose exclusivity in the United States in 2012.

But worries about liability claims have spiked up since February, when two U.S. Senators published a highly critical report on Avandia. A Food and Drug Administration advisory panel will consider possible further restrictions on the drug in July.

In the first quarter of 2010, Glaxo reported increased legal costs of 210 million pounds, up from 51 million in the year-ago period, which it said reflected progress towards settling a number of cases. Glaxo has consistently defended the safety record of Avandia and says it acted properly in communicating with regulators and physicians about the medicine’s potential cardiovascular risks. ($1=.6852 Pound)

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By Ben Hirschler

LONDON (Reuters)