Drug giant Glaxo seals £1.9bn deal over US fines

Drugs giant GlaxoSmithKline yesterday agreed to one of the largest fines ever levied on a pharmaceuticals firm as it settled a trio of long-running disputes with the US government.

The UK firm will pay $3 billion (£1.9bn) to end separate legal cases that stretch back to 1997 and relate to the sales and marketing of nine drugs.

Shares nudged almost 2 per cent higher as analysts said the payment cleared up some of the uncertainty surrounding Glaxo’s US litigation, especially as the firm did not expect to have to pay any additional cash in the final settlement.

Glaxo said it had already made provisions for the fine in its accounts. The Brentford-based firm set aside $4bn in its last financial year to cover long-standing legal claims, including many relating to its controversial diabetes drug Avandia, which was taken off the market in Europe following allegations it caused an increased risk of heart attack.

Chief executive Andrew Witty said: “This is a significant step toward resolving difficult, long-standing matters which do not reflect the company that we are today.

“In recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the US to ensure that we operate with high standards of integrity and that we conduct our business openly and transparently.”

The legal actions related to the sales and marketing of anti-depressants Paxil and Wellbutrin, the Medicaid Rebate Program, and Avandia.

Glaxo added that, since 2008, its US sales team was paid on an assessment of how effective treatments were rather than the number of prescriptions written.

Dr Mike Mitchell, healthcare analyst at Seymour Pierce, said: “Today’s news reflects Witty’s clear desire to present the wider business as one having delivered a step-change in terms of compliance and marketing and selling practices and that resolution of legal issues allows long-standing matters to be brought to a head.

“We remain convinced of the fundamental positioning of the business.”