And that’s final, the U.S. Supreme Court says: GlaxoSmithKline will have to face claims that it conspired to rip off payers by downplaying the risks of its diabetes drug Avandia.
The drugmaker had asked the high court to take up the case, which pits several labor union funds against the company. But SCOTUS declined, leaving intact an appeals court ruling that allowed the class action to move forward.
The three funds sued GSK between 2007 and 2010 under the Racketeer Influenced and Corrupt Organizations Act, otherwise known as RICO, a law originally conceived to target organized crime, but has since been used against mainstream business.
They claim that Glaxo caused them to overpay for Avandia by concealing risks of cardiovascular problems in the years leading up to FDA-ordered warnings on the med, instituted in 2007. The agency later restricted Avandia use, but last year, after reviewing the data again, lifted those restrictions.
The case does not end now; the Supreme Court's decision not to review the lower court's ruling only means that GSK has to fight the funds' actual allegations.
Nine years ago now, researchers flagged an apparent increase in the risk of heart attack for Avandia users. The safety questions and FDA “black box” warnings drove Avandia revenues down from a peak of $3 billion before the controversy to $183 million in 2011, just before generics hit the market.
Along the way, the company faced a raft of lawsuits filed by patients and state governments, and eventually settled more than 25,000 of them. In 2010, GSK took a $2.4 billion charge to cover related litigation costs; then, in 2013, the company agreed to pay $229 million to a group of U.S. states to settle one set of lawsuits. As of February 2015, the company had settled most of the Avandia-related liability claims, GSK's annual report notes.
Avandia also figured into GSK’s marketing settlement with the Justice Department, a $3 billion deal that wrapped up allegations that it stepped over the line in promoting the seizure drug Lamictal and the antidepressant Paxil in addition to Avandia. It pleaded guilty to three charges, including one involving its failure to report Avandia safety data to the FDA.
In its petition for a SCOTUS hearing, GSK had argued that the lower court’s ruling conflicted with other circuit court decisions, including one case involving another Big Pharma. The 11th Circuit had found that a third-party payer can’t pursue a RICO claim based only on a failure to warn about a drug’s risks.
“GSK is disappointed that the Supreme Court chose not to hear our appeal, but we will continue to defend our position that health insurers do not have a valid case for economic injury when their subscriber patients cite no adverse effects and, in fact, benefit from a medicine,” the company said in a statement.
- see GSK’s request for a SCOTUS hearing
GSK's Avandia is free and clear at the FDA, 8 years after heart-safety controversy began
GlaxoSmithKline to pay states $229M to wrap Avandia suits, other claims
Supreme Court exposes GlaxoSmithKline to Humana's Avandia-spending claims