US & World

Glaxo To Take $2.4 Billion Charge To Cover Avandia Cases, Other Legal Woes

Drugmaker GlaxoSmithKline will take a big profit hit to pay for legal costs, but the amount isn't as high as some analysts expected.

Even for a flush drugmaker like GlaxoSmithKline, $2.4 billion dollars is a lot of money to wipe off the books in a single quarter.

Yet, just hours after a panel of U.S. experts voted in favor of keeping Glaxo's diabetes pill Avandia on the market, despite known heart risks, that's what the drugmaker said it would do in its second quarter.

All that money wil go to cover the cost of a bunch of legal problems, including the settlement of lawsuits over harm allegedly linked to Avandia.

The company said "the substantial majority of the product liability cases relating to Avandia have now been settled." Glaxo hasn't disclosed how much money that involves. But Bloomberg reported the company has already agreed to pay about $460 million to put those cases to rest.

It could have been worse. Before the meeting of experts advising the Food and Drug Administration on Avandia concluded Tuesday, some analysts figured the Avandia costs could run as high as $6 billion, Reuters reported.

What other legal cases is Glaxo ready to pay up for? Well, there's a longstanding federal investigation of a problem-plagued factory in Puerto Rico that made the antidepressant Paxil and diabetes drug Avandamet, a combination of Avandia and metformin.

Five years ago Glaxo signed a consent decree with the federal government over persistent quality problems at the plant.

Last, but not least, Glaxo said it had finally settled antitrust litigation and most of the product liability cases involving Paxil.

The matters covered by the charge represent "a substantial proportion of GSK’s outstanding litigation," said Dan Troy, Glaxo's general counsel and a former top lawyer at the FDA. Copyright 2010 National Public Radio. To see more, visit