Last week, pharmaceutical manufacturer GlaxoSmithKline announced that it would take a $3.4 billion charge to cover the legal fallout from investigations into its controversial Avandia diabetes pill. In total, Glaxo has taken over $6 billion in charges to cover ongoing legal problems related to Avandia, which was banned in Europe last fall.
The drug has been under intense scrutiny since 2007, when a published analysis revealed a link between Avandia and an increased risk of heart attacks. The $3.4 billion charge recognized by Glaxo – sufficient to wipe out all of the company’s earnings for the fourth quarter of 2010 – is intended to cover in excess of 13,000 products liability lawsuits as well as an investigation by the United States Attorney’s Office in Denver, Colorado into Glaxo’s sales and marketing practices of Avandia. The charge greatly exceeds Avandia’s sales, which amounted to $1.2 billion last year and which have been in decline since the drug’s potentially deadly side effects were made public.
For more information see: http://www.pharmalot.com/2011/01/now-glaxo-takes-a-34-billion-charge-for-avandia/