Glaxo Sets Aside $3.4B For Avandia Lawsuits, DOJ Probe

The drug maker GlaxoSmithKline PLC has indicated that it will set aside $3.4 billion to cover costs associated with Avandia lawsuits and a federal investigation into their actions surrounding the disclosure of potential side effects of Avandia, which has been linked to an increased risk of heart attacks and heart failure.

The set aside is expected to wipe out the company’s fourth-quarter 2010 profits, which will be announced next month. This is the second time the drug maker has put aside a large amount of funds to deal with Avandia problems.

Last summer, Glaxo took a $2.36 billion charge, which was at least partially attributed to costs associated with Avandia. Around that same time, it was reported that the drug maker had agreed to pay $460 million to settle Avandia lawsuits filed by about 10,000 people.

Glaxo continues to face several thousand lawsuits over Avandia, which all involve similar allegations that the drug maker failed to adequately warn about the risks associated with the diabetes drug.

The first Avandia trial is scheduled to begin January 24th in the U.S. District Court for the Eastern District of Pennsylvania. That lawsuit involves a claim filed by the family of James Burford, who died from a mycoardial infarction on Avandia. A second trial, involving a users who alleges he suffered congestive heart failure from Avandia, is scheduled to begin March 28th.

Avandia (rosiglitazone) was first approved in the United States in 1998 to treat type 2 diabetes by helping control blood sugar levels. The drug has been used by millions of diabetics, but sales plummeted following concerns about potential Avandia heart risks.

Some experts estimate that Avandia has caused between 60,000 and 200,000 heart attacks and deaths due to cardiovascular problems in the U.S. from 1999 to 2006, and it has been alleged that GlaxoSmithKline actively attempted to minimize the risks associated with Avandia and intimidate experts who spoke out about the dangers associated with the diabetes drug.

A black box warning was added to the medication in 2007 due to the increased risk of heart problems from Avandia. However, earlier this year, the FDA determined that the warning was not enough and has severely restricted use of the medication instead of issuing an Avandia recall.

Glaxo is also under investigation by the U.S. Department of Justice (DOJ) and several state attorneys general for potential wrongdoing. The probes seek to determine whether the drug maker attempted to cover up Avandia’s heart problems; an accusation made last year by a U.S. Senate report. The report claimed the company intimidated scientists and withheld data; accusations that the company denies.