Glaxo takes £1.57bn charge for Avandia, Paxil

[Guest guest]

http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandchemicals/7891589/Glaxo-takes-1.57bn-charge-for-Avandia-Paxil.html

Glaxo takes £1.57bn charge for Avandia, Paxil

GlaxoKline, the British drug maker, is to take a £1.57bn

charge to cover settlements and legal actions relating to its diabetes

pill Avandia and antidepressant Paxil.

Published: 7:54AM BST 15 Jul 2010

The second-quarter charge also includes £500m to settle a US

Government investigation into its former manufacturing site at Cidra,

Puerto Rico. This is still subject to negotiation, Glaxo

said

in a statement.

With respect to Paxil and Avandia, the charge includes provisions

for settled cases and an estimate for outstanding cases. Terms of the

settlements reached are confidential, Glaxo said.

The after-tax cost of the legal charge, which covers settlements,

agreements in principle to settle, and other provisions, will be £1.35

bn.

Glaxo's announcement follows a recommendation on Wednesday by advisers

to the US medicines regulator that Avandia should be allowed to stay on

the market but with additional warnings over heart risks.

The company did not specify how much it was setting aside to settle

liability claims over the diabetes pill.

Having spent two days hearing conflicting evidence over whether or not

Avandia can pose a risk to the heart, 20 members of a 33-strong

advisory committee to the Food and Drug Administration (FDA) voted to

keep Avandia on the market while 12 voted to pull it and one member

abstained.

However, 17 members of the panel advised that the drug should be sold

with new restrictions or warnings, while three panel members said no

changes were needed to the drug's prescribing information.

The FDA is not obliged to follow the recommendations of advisory

panels, but often does.

Earlier in the day, the panel had voted that there was an increased

concern about heart attacks with Avandia versus other diabetes drugs,

but they voted against finding a greater risk of death with Avandia.

Controversy has dogged Avandia since 2007 when a study first claimed it

could be linked to cardiac risks. But, GSK has vigorously defended the

drug, saying that since then, six clinical trials have shown it to be

safe.

Responding

to

the vote, GSK's chief medical officer, Dr Ellen

Strahlman, said: "We would like to acknowledge the efforts made by the

FDA to apply scientific rigour to the debate and understanding of the

benefit-risk profile of Avandia,"

She added: "Following [the] recommendations, we will, of course,

continue to work with the FDA in the best interest of diabetes patients

who face this chronic and serious disease."

Mike Ward, an analyst at Ambrian, said last night: "I think [the vote]

is stronger in favour than many people would have thought."