Glaxo Writes Off $2.36 Billion to Cover Legal Costs

Pharmaceutical company GlaxoSmithKline will set aside $2.36 billion in the second quarter of 2010 to deal with the cost of legal cases related to the drugs Avandia and Paxil, the company said.

“The charge we have announced today reflects the company’s ongoing efforts to resolve certain longstanding legal cases,” Glaxo’s general counsel, Dan Troy, said in a statement. “This represents a substantial proportion of G.S.K.’s outstanding litigation.”

Earlier this week, the company agreed to a $460 million settlement with about 10,000 plaintiffs who claim that the company hid evidence of Avandia’s side effects. Some studies have linked the drug to increased risk of heart attack and stroke. Yesterday, a federal advisory panel voted to keep the drug on the market with added restrictions. The Food and Drug Administration will make the final decision about the drug’s fate.

The charge also includes costs from the settlement of product liability and antitrust litigation related to Paxil, a drug used to treat anxiety and depression.

According to the company, it has already settled “the vast majority of product liability cases” for Paxil and “the substantial majority” of Avandia cases.

In addition, the charge will cover a $750 million settlement with the the United States Attorney’s Office in Massachusetts and the Justice Department over an investigation into quality control problems at its former factory in Puerto Rico.

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