By Ashleigh Furlong and Jef Feeley | Bloomberg
GSK Plc said it will pay as much as $2.2 billion to resolve about 80,000 US court cases related to allegations that its old reflux medication Zantac was contaminated with a suspected carcinogen.
The cases represent about 93% of those against the company involving Zantac, GSK said Wednesday in a statement. Settling the cases is not an admission of liability, the company said.
Plaintiffs argued that the company knew that Zantac’s active ingredient, ranitidine, turned into the potential carcinogen NDMA under certain conditions. The US Food and Drug Administration asked companies producing Zantac to remove all ranitidine-based drugs from the US market in 2020.
GSK’s American depositary receipts rose as much as 9.9% in New York after the agreement was announced.
GSK is among a number of companies that made and sold versions of Zantac, and investor concerns about the potential settlement value has weighed heavily on the drugmaker’s share price. GSK said it “strongly believes that these settlements are in the best long-term interests of the company and its shareholders as they remove significant financial uncertainty, risk and distraction associated with protracted litigation.”
Sanofi agreed in April to pay more than $100 million to settle about 4,000 Zantac-related lawsuits. Pfizer agreed to settle more than 10,000 related cases, Bloomberg reported in May.
In a September interview with Bloomberg News, Chief Executive Officer Emma Walmsley emphasized that GSK’s “priority is start with the science, defend our position and always, always act in the interests of shareholders.”
The UK drugmaker also said it had reached an agreement to pay an additional $70 million to settle a complaint filed by Valisure, a pharmacy that tests drugs for contaminants. Valisure had alleged that GSK knew and hid the risks of Zantac from the US government.
GSK said that settlement was not an admission of liability.
GSK expects to take an incremental charge in its upcoming results of £1.8 billion ($2.4 billion) in relation to the settlements, as well as the remaining 7% of pending state court product liability cases.
GSK’s move doesn’t end litigation around Zantac as other drugmakers are still facing trials, including Boehringer Ingelheim GmbH, which is facing a jury trial in Oakland.
