If the first round of Avandia settlements sets the trend, GlaxoSmithKline (NYSE: GSK) could suffer a lot less from the thousands of lawsuits filed over the diabetes drug. Sources tell Bloomberg the company has agreed to pay $60 million to resolve more than 700 Avandia suits, which amounts to about $86,000 per case. That's way below the $500,000 per case that some analysts had forecast.
Back in 2007, a New England Journal of Medicine study linked taking Avandia to an increased risk of heart attack, touching off a debate over the drug's safety that continues to this day. FDA warnings have been applied; new data has surfaced; Avandia sales have dropped. And along the way, Avandia users have sued the company, claiming that the drug caused their heart attacks and strokes. As Reuters notes, Morgan Stanley recently said that GSK's stock is discounting a $6 billion liability risk from those lawsuits.
In all, some 13,000 Avandia suits have been filed, Reuters says. And as the first trial nears, news of this settlement has surfaced. The company wouldn't comment, but says it's prepping for Avandia trials scheduled for later this year. "GlaxoSmithKline stands by Avandia and is fully prepared to defend any litigation," spokeswoman Bernadette King tells Bloomberg.
Still, analysts cheered the settlement news. "We take the $86,000 per case liability as a key positive and look for more insights on other potential settlements," UBS analyst Gbola Amusa says in a note to clients. "We continue to believe science favors Avandia's place in the U.S. market."
ALSO: A major trial of Avandia puts patients at risk and should be stopped, a U.S. advocacy group said on Tuesday in calling on regulators to halt the global study of the controversial GlaxoSmithKline diabetes drug. Report