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Paxil Lawsuit Damages Approach $1 Billion

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GlaxoSmithKline PLC, the drugmaker of antidepressant Paxil, is reported to have spent almost $1 billion in efforts to resolve lawsuits over the drug. The $1 billion figure includes moneys paid to settle about 450 cases of patients who have either committed or attempted suicide while on the drug, with about a dozen yet to be settled, and does not include moneys paid toward settling more than 600 remaining claims that Paxil causes birth defects. About 10 birth defect cases have been settled, averaging about $4 million. Paxil was introduced to the market in 1993.

So far, Glaxo has paid approximately $390 million in response to the above suicides, $200 million to settle addiction and birth-defect cases, and $400 million to end “antitrust, fraud and design claims” reported Bloomberg.com.

The actual settlement totals have yet to be fully released publicly in company filings.

A Glaxo spokeswoman commented, “Paxil has been on the market in the U.S. since 1993. Like many other pharmaceutical products, it has been the subject of different kinds of litigation over the years. It would be inappropriate and potentially misleading to aggregate payments in these various types of litigation.”

On October 13, 2009, a Philadelphia jury delivered a verdict of $2.5 million to the family of Lyam Kilker. Lyam’s mother took Paxil while she was pregnant, potentially linking the drug to the heart-defect Lyam was born with. As a result, analysts are expecting the company to face additional verdicts in response to birth-defect claims.

One commentator said what makes Paxil stand out is that it has been the source of three major personal injury litigations involving suicide, birth defects, and withdrawal cases.

Over the years, the profit returns from sales of Paxil have been steadily decreasing. From 1997 up until 2006, sales of Paxil totaled $11.7 billion. In 2002 sales totaled $2.12 billion, the last year before the introduction of generic competition. In 2008 sales totaled $129 million, and this year, up until September, sales of Paxil totaled $52 million. Lawsuits regarding the side effects of Paxil have been brought up against Glaxo since 2003.

In addition to cases addressing suicide and birth-defects, Paxil has paid an average of about $50,000 to settle about 3,200 cases linking the drug to addiction problems. Although Glaxo did not admit liability in the addiction settlements, the company stated in its 2008 annual report that it had reached a “conditional settlement agreement” with Paxil users who claimed to have gone through withdrawal symptoms while on the drug back in January of 2006.

Unrelated to the personal injury suits, Glaxo paid $87.6 million in 2003 to the U.S. and 49 states for repackaging and privately labeling Paxil and Flonase for a health maintenance organization at discount prices. In addition, Glaxo paid $165 million in 2004 to settle two antitrust suits “over allegations it engaged in sham patent infringement litigation to stall approval of generic versions of the drug.”

Other settlements include $2.5 million in 2004 to the state of New York to resolve allegations that the company withheld safety information regarding the effects of the drug on children, $64 million in 2006 to settle suits filed in Illinois by parents for the money they spent on Paxil for their children, and $40 million in 2008 to settle suits filed by third-party payers (mostly insurance companies). The company denies liability in those cases.

While Glaxo added a “black-box warning” to Paxil in 2005 at the behest of the FDA, stating the potential risk of increased suicidal thoughts in adolescents, insurers claim that Glaxo “knew the drug ‘was neither safe nor effective for the treatment of depression in persons under the age of 18.”