GSK takes record £2.2bn charge

[Pharma Newshound]

Source: FT.com

GlaxoSmithKline has unveiled a record-breaking £2.2bn ($3.5bn) charge to settle product liability lawsuits and regulatory fines linked to past sales practices by the UK-based pharmaceutical company in the US.

The fourth-quarter provision, which the company said would be reduced to £1.8bn after tax deductions, outstrips the previous largest settlement imposed on a pharmaceuticals company, when Pfizer paid $2.3bn to US regulators last year.

GSK’s latest charge comes amid a series of escalating legal actions launched against drug companies in the US by regulators and patients over allegations of aggressive marketing and side-effects caused by medicines.

It relates to sales practices and ill-health linked to different drugs, is the company’s best estimate of the size of the settlements that it will ultimately pay, but the total could still increase.

GSK would not split out the precise breakdown of the £2.2bn figure, but the bulk of it relates to the estimated settlement from an investigation led by the US attorney’s office for the District of Colorado for US sales and promotional practices between 1997 and 2004, including for its anti-depressant treatments Paxil and Wellbutrin.

Such probes typically focus on “off-label” promotion by drug companies to doctors of their medicines for uses beyond the official “label” of indications that have been formally approved by the US Food and Drug Administration.

The charge also includes an unspecified amount to cover continuing product litigation claims by patients linked to Avandia, GSK’s former blockbuster diabetes drug that was all but withdrawn in the US and Europe late last year after concerns about cardiovascular side-effects.

It comes as Andrew Witty, the chief executive appointed in 2008, moves to bring to an end protracted investigations around drug company activities in the past as he attempts to champion a more ethical approach to business.