A federal court in Philadelphia was all set to hear a liability lawsuit against GlaxoSmithKline today, but an 11th-hour settlement took that case right off the docket. GSK made a deal with the family of Avandia patient James Burford to resolve claims that the diabetes drug caused his fatal heart attack. GSK recently took a $3.5 billion charge for legal expenses, including new Avandia litigation filed in the U.S.
The settlement lets GSK avoid the risk of a jury trial, Matrix Corporate Capital analyst Navid Malik told Bloomberg. Investors had worried that a trial "could lead to substantial punitive damages," Malik said. "GSK needs to successfully settle as many of these cases as possible."
Two other suits brought by the same plaintiff attorneys were also settled. "GSK has resolved the Burford case scheduled for trial today in the U.S. District Court in Philadelphia, and all cases represented by attorneys Joseph Zonies and Thomas Cartmell," GSK said in a statement, which also emphasizes that, "GSK continues to stand behind the safety and efficacy of Avandia when used appropriately and according to its label."
Avandia's safety, particularly its potential link to heart attack risks, has been under debate for several years, and GSK has already resolved some 10,000 liability suits with a $460 million settlement. In September, European regulators banned Avandia, saying its risks outweighed its benefits. The FDA stopped short of withdrawing the drug, but sharply restricted its use, and GSK agreed to stop promoting it. About 2,000 more lawsuits remain outstanding.