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Pharmaceutical group GlaxoSmithKline (GSK) reached its first legal settlement over allegations that its heartburn drug Zantac caused cancer, avoiding a landmark trial in California that was due to start next month.
The British company said Friday it had reached a settlement with James Goetz, who filed the lawsuit in California court. GSK said the deal reflected its desire “to avoid distractions from the protracted litigation in this case,” but gave no details of the agreement.
“GSK does not admit any liability in this settlement and will continue to defend itself on the basis of fact and science in all other Zantac cases,” it added.
In August last year, investors pulled from the valuations of GlaxoSmithKline (GSK), Haleon (Haleon), Sanofi (Sanofi) and Pfizer (Pfizer) due to concerns about huge legal fees arising from a series of legal cases. In total, more than £30 billion was lost.
Shares in GlaxoSmithKline (GSK) rose more than 4% in early London trade.
GlaxoSmithKline (GSK) and other drugmakers that previously owned Zantac are facing lawsuits claiming the drug causes cancer because it contains small amounts of N-nitrosodimethylamine (NDMA). NDMA is usually ingested in small amounts, but in excess it can cause cancer in humans.
In 2019, when U.S. regulators began investigating small amounts of NDMA, Sanofi voluntarily pulled the drug from the market. In 2020, the U.S. Food and Drug Administration said Zantac appeared to produce unacceptably high levels of the chemical when heated and requested that it be pulled from the market.
The drug is also owned by privately held Boehringer Ingelheim, which this week lost an arbitration case seeking damages from Sanofi. Boehringer Ingelheim declined to comment on the arbitration award. Sanofi did not immediately respond to a request for comment.
GSK said the company, the U.S. Food and Drug Administration and the European Medicines Agency had independently concluded there was no evidence of a causal link between the active ingredient in Zantac and cancer in patients.
In December, the drugmaker scored a major victory, dismissing thousands of cases. The only reliable test of the blockbuster drug showed an “unprovable cancer risk”, the judge found.
The company believes the victory will set a precedent for cases in many U.S. states, a large portion of which will be tried in Delaware next year, but not in California, where the standard of proof is different, a person familiar with the matter said. GSK still faces three other cases in California that have not yet been scheduled.
In April, Citi analysts said in a note that they expected GSK’s stock price to react “very favorably” if it settled with the California plaintiffs before July’s case. They added they expected California’s bill to be “very modest” given that the state has only received about 3,000 cases.