AstraZeneca pays $198m to drug victims

AstraZeneca yesterday agreed to pay $198m (£124m) to settle 17,500 cases brought by patients claiming side effects from its anti-psychotic drug Seroquel.

The Anglo-Swedish drugs giant faces ongoing litigation over claims its best-selling drug, which is used to treat schizophrenia and bi-polar disorder, also carries an increased risk of passing on diabetes.

Seroquel, which last year generated $4.9bn in global sales, accounts for 15 per cent of the firm’s sales and is the fifth-highest selling drug in the world. Each claimant will receive an average of $11,300, which is modest compared to recent drug company payouts.

Astra said: “We remain committed to a strong defence effort, but will also continue to participate in good faith in court-ordered mediation.”

However this deal does not cover a further 4,500 cases, although Astra says over half of these have been dismissed.

Last month, the US Food & Drug Administration wrote to the pharmaceutical group warning it that information it released to doctors about Seroquel was “misleading” for overstating efficacy and omitting material facts and risks associated with the drug.

Astra said: “We are taking steps to address the contents of the letter and update our promotional materials as appropriate.” The firm said the settlement would not affect its full-year core earnings guidance.

Despite the announcement of the deal, Astra’s share price closed up 1.5 per cent at £33.05.

The UK’s number two pharmaceutical group after GlaxoSmithKline, specialising in a range of prescription medicines to fight disease.

It reported first half sales of £10.5bn and pre-tax underlying profit of £4.6bn this year.

The drugs that ran into trouble...

GlaxoSmithKline has faced nearly 1,000 lawsuits over its anti-depressant Paxil, which is alleged to cause birth defects when mothers use it during pregnancy. In October last year a lawsuit in America ended with the jury awarding $2.5m (£1.57m) to the victim. GlaxoSmithKline said last week that it expects to take a $2.36bn (£1.48bn) charge against its second-quarter earnings for settlements for legal cases over Paxil and other drugs.

Merck withdrew arthritis drug Vioxx in 2004, after a study said that from its approval in 1999 until 2003, nearly 28,000 heart attacks and sudden cardiac deaths would have been avoided if a competing drug was taken instead.

It has faced litigation ever since and although Merck placed a final $4.1bn (£2.57bn) payment to its Vioxx settlement fund earlier this year it could face further lawsuits.

US drug group Pfizer acquired rival Wyeth last year but picked up with it the hundreds of lawsuits against the company over its hormone replacement drug Prempro, which victims claim gave them breast cancer.

Earlier this year the US Supreme Court rejected Pfizer’s appeal of a verdict in favour of an Arkansas woman, leaving intact a $2.7m (£1.7m) award that may grow with punitive damages, marking the first federal verdict over Prempro.