Avandia Legal Problems Lead Glaxo to Take $3.4 Billion Charge
Legal fees are wiping out profits for British drug maker GlaxoKlineSmith. This week the company announced that it will set aside $3.4 billion to pay for U.S. government investigations and product liability cases relating to the diabetes drug Avandia. This one time charge is expected to exceed the company’s fourth-quarter earnings.
European regulators banned Avandia back in September 2010 and the U.S. Food and Drug Administration severely restricted its use because of evidence that the drug increased the risk of heart attacks.
Avandia was once the world’s top-selling diabetes medicine, before it was revealed that tens of thousands of patients taking the medication suffered heart attacks. GlaxoSmithKline knew of the risks for years, but failed to warn physicians or patients.
The company previously set aside more than $2 billion to cover litigation costs. Although many of the cases closed out this year, new claims continue to come in