GlaxoSmithKline settles US drug rows for $3.8 billion

LONDON - GlaxoSmithKline Plc said on Thursday it had agreed to settle its most significant disputes with the US government over the way it marketed and developed drugs, at a cost of US$3 billion (S$3.8 billion), which is covered by existing provisions.

The final settlement, over both civil and criminal claims, is expected to be finalised in 2012. It includes a Department of Justice investigation into the company's controversial diabetes drug Avandia, which has been linked to heart risks.

Britain's biggest drugmaker already took massive charges last year related to legal liability claims from patients who had been taking Avandia.

The deal in principle to resolve the latest legal disputes follows a clampdown in the United States on unfair pharmaceutical industry practices that has forced major drugmakers to rethink the way they do business in the world's biggest market.

Since 2000, the number of industry settlements with US states and the federal government has soared as authorities have taken an increasingly tough line on practices that are perceived to put commercial goals above the interests of payers and patients.

GSK said it had implemented fundamental changes to US selling procedures in recent years and Chief Executive Andrew Witty said the cases now being settled "do not reflect the company that we are today".

The cases being settled include a marketing investigation in Colorado and Massachusetts, and a probe into rebates offered under the federal Medicaid programme, as well as the Avandia case.

The settlement of US$3 billion is covered by existing legal provisions and GSK said payments would be funded through existing cash resources.

In mid-2010, GSK took a $2.4 billion charge after settling most patient liability claims relating to Avandia, as well as an investigation into its former factory at Cidra in Puerto Rico, and anti-trust and product liability litigation over antidepressant Paxil. agree to open all frontline combat roles to female troops

US$3 billion is covered by existing legal provisions and GSK said payments would be funded through existing cash resources. In mid-2010, GSK took a US$2.4 billion charge after settling most patient liability claims relating to Avandia, as well as an investigation into its former factory at Cidra in Puerto Rico, and anti-trust and product liability litigation over antidepressant Paxil. agree to open all frontline combat roles to female troops