Pharmaceutical company AstraZeneca will pay roughly $198 million to settle about 17,500 lawsuits, or about two-thirds of the total cases involving its antipsychotic drug Seroquel which has induced diabetes in some users.
The settlements were a result of a court-ordered mediation, the London pharmaceutical company claimed. AstraZeneca had previously agreed to distribute at least $55 million to bring closure in over 5,500 cases alleging the drugmaker was aware that Seroquel could potentially cause diabetes and neglected to warn patients, claimed individuals closely tied to those settlements.
AstraZeneca, United Kingdom’s second-largest pharmaceutical maker, is near to closing the doors on the 26,000 total Seroquel claims and at a lower cost than anticipated, analysts said. Average settlements range from $10,000 to $11,000 for past Seroquel users, according to previous announcements. The compensation is “probably lower than the worse-case estimate,” according to Jeremy Batstone-Carr of Charles Stanley & Co Ltd.
“The nagging uncertainty has been hanging over the share price and what’s interesting is the extent to which Astra has been trying to draw a line in the sand to put these legal cases in the past,” claimed Batstone-Carr during an interview, who rates the shares “accumulate”. “The market will regard $198 million as being positive even if for no other reason than it removes the uncertainty.”
AstraZeneca gained about 1.5 percent in London trading on Monday. The drugmaker's stock has risen 13 percent overall this year. AstraZeneca's American depositary receipts, each representing one common share of stock, rose 17 cents to $52.47 at 12:56 p.m. in the New York Stock Exchange composite.
The settlement does not influence AstraZeneca’s 2010 earnings guidance of as much as $6.65 a share, the company claimed. Seroquel, its second-largest seller after its ulcer pill Nexium, made up 15 percent of AstraZeneca’s total revenue last year.
“While the terms remain confidential and are subject to non-monetary agreements, we believe it was in the best interest of the company to explore resolving these cases through the mediation process,” said AstraZeneca’s spokesman Tony Jewell in an e-mailed statement. “We remain committed to a strong defense effort, but will also continue to participate in good faith in court-ordered mediation.”
The company's drug litigation lawyers and former Seroquel users consulted last week with Stephen Saltzburg, a Law School professor at George Washington University Law School who is the mediator in the case. Saltzburg exclaimed in a February court filing that AstraZeneca battles up to 26,000 suits over Seroquel and a global settlement wasn’t likely.
AstraZeneca’s earlier Seroquel settlements resulted in payments of over $10,000, the victims familiar with those accords claimed earlier. The payments declared Monday, negotiated with 16 different defective drug lawyers, provide average payments of more than $11,000 for former Seroquel users.
“AstraZeneca has negotiated settlements with a number of firms to resolve claims in the aggregate,” Jewell said in an e- mailed statement.
Company officials said earlier this month that pharmaceutical lawyers for other former Seroquel users are scheduled to meet Saltzburg to see if their claims can be resolved.
Michael Kelly, AstraZeneca’s lead lawyer in the mediation, wasn’t immediately available to comment on how many more sessions were scheduled.
Ken Bailey, among the most prominent Houston-based defective drug lawyers representing former Seroquel users who has yet to settled his cases, said he was encouraged that AstraZeneca was willing to meet about resolving the claims of affected patients.
“They started with the lawyers who hadn’t really engaged in the litigation process up to this point,” Bailey said. “We’ve been working for four years to get our cases ready for trial and we’re eager to get our day in court.”
AstraZeneca won the initial dispute over Seroquel in March, when a New Jersey jury found that the drugmaker properly warned a Vietnam veteran’s doctors about the diabetes risk posed by the drug.
AstraZeneca mentioned earlier this year that it had distributed roughly $656 million to defend itself in the series of Seroquel cases. Additionally, the pharmaceutical giant agreed in April to make payments of $520 million to resolve U.S. allegations that it illegally marketed Seroquel to users who were not approved for such medication, providing immense leverage for the defective drug lawyers representing the case.
The settlement arrives as a result the U.S. Food and Drug Administration’s previous demand that AstraZeneca stop using a promotional letter for Seroquel XR, an extended-release version of the drug that does not contain a legally required diabetes warning.
Past Seroquel users contend the research that has expressed patients have developed diabetes while taking the drug and researchers at AstraZeneca’s have acknowledged the link in internal documents.
Those experiments resulted in the FDA in 2003 and 2004 to require AstraZeneca as well as pharmaceutical competitors marketing similar antipsychotic medicines to apply warnings about potential risks of weight gain and diabetes in the content of the drug labels.
In the FDA's July letter to AstraZeneca, regulators noted that the so-called “leave behind” sheet, distributed to physicians, about Seroquel XR “omits material information from a number of risks associated” with the drug, including diabetes, which has spawned the interests of several drug lawyers.
The letter also advised that the promotional leaflet overstated the Seroquel XR's capabilities in treating depression in conjunction with other drugs.
“AstraZeneca is committed to providing accurate information to health-care practitioners and patients about all of our medicines,” Jewell noted in an e-mailed statement regarding the FDA's letter. “We are taking steps to address the contents of the letter and update our promotional materials as appropriate.”
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