Washington, DCGlaxoSmithKline, maker of Avandia and Paxil, announced it expects legal charges of approximately $2.4 billion for the second quarter of 2010. According to reports, included in the $2.4 billion legal bill are charges related to the company's former factory in Puerto Rico and antitrust and product liability lawsuits concerning Paxil.
The 7/15/10 edition of the New York Times reported that GlaxoSmithKline reached an agreement in principle with the US attorney's office in Massachusetts and the US Department of Justice to pay $750 million to settle an investigation into the company's manufacturing plant in Cidra, Puerto Rico.
According to industry.bnet.com on 7/15/10, the Cidra facility was cited in 2002 by the FDA for poor quality control. Some of the Paxil tablets manufactured at the facility lacked the active ingredient, and others lacked a controlled-release factor, which caused the tablets to split inappropriately and patients to receive inappropriate doses of the medication.
In 2005 the factory was raided by US Marshalls, and GlaxoSmithKline was accused of ignoring public health standards for drug manufacturing. The same year, GlaxoSmithKline agreed to correct problems at the Cidra plant, where both Paxil and Avandamet were manufactured. The plant was ultimately closed.
GlaxoSmithKline is also paying for product liability cases related to Paxil. Those may include lawsuits alleging GlaxoSmithKline failed to disclose information about the use of Paxil by children under the age of 18. GlaxoSmithKline also faced litigation from Apotex Inc., a maker of generic drugs, which accused GlaxoSmithKline of violating federal antitrust and advertising laws.
"The charge we have announced today reflects the company's ongoing efforts to resolve certain longstanding legal cases," the general counsel, Dan Troy, said in a statement quoted in the New York Times. "This represents a substantial proportion of G.S.K.'s outstanding litigation."
GlaxoSmithKline settled approximately 190 Paxil birth defects lawsuits in June 2010. It is not clear whether the $2.4 billion charge includes settlements with remaining birth defects plaintiffs. These lawsuits allege GlaxoSmithKline failed to adequately warn physicians and plaintiffs about the risk of birth defects when pregnant mothers took Paxil. Birth defects linked to Paxil include persistent pulmonary hypertension of the newborn (PPHN) and congenital heart defects, including holes and malformations in the heart.
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