GlaxoSmithKline to pay $92m to settle lawsuits
Drug maker GlaxoSmithKline yesterday said it will pay $92 million to settle lawsuits accusing it of patent maneuvering aimed at protecting its Augmentin prescription antibiotic.
The Boston-based Prescription Access Litigation project brought one of the handful of antitrust lawsuits filed against GlaxoSmithKline in 2002. The group, which has filed class-action lawsuits against a raft of drug companies over marketing and patent allegations, said it will reap $29 million of the total settlement amount.
"This settlement is an important step in the fight to hold drug companies accountable for their practices, which increase and inflate the price of drugs beyond the reach of many Americans," project director Alex Sugerman-Brozan said in a statement. "We hope that other drug manufacturers will take notice of this case before they engage in similar practices."
The group filed its suit on behalf of the American Federation of State, County and Municipal Employees, the Congress of California Seniors, Consumers for Affordable Health Care, and the Tennessee Health Care Campaign. The plaintiffs argued that GlaxoSmithKline's alleged anticompetitive behavior forced consumers to pay higher prices for antibiotics.
GlaxoSmithKline agreed to settle the cases but said it did nothing wrong. It said it sought to avoid protracted litigation with an uncertain outcome.
"You have to weigh the risk," said spokeswoman Patricia Seif. "It's a sad fact that litigation is uncertain, even when you know you are right."
The London-based company, which has US headquarters in Philadelphia, said it is setting aside about $316 million to cover this and related settlements in the future. Investors seemed unconcerned. The stock rose less than 1 percent yesterday, up 12 cents to $40.75.
Aggressive marketing tactics and high drug prices in the United States have spurred heavy criticism of the US pharmaceuticals industry. Part of the ire of consumer groups has focused on patent gamesmanship employed by drug companies to block low-cost generic competition. The GlaxoSmithKline case was an example.
PAL and other plaintiffs alleged that GlaxoSmithKline, the second-largest drug company in the world, filed patents on Augmentin that were designed merely to protect its best-selling antibiotic from the introduction of cheaper generics. At one time, the drug was GlaxoSmithKline's second-biggest seller with more than $2 billion in global sales.
In 2002, when a US district court ruled that its patents were invalid, other companies quickly introduced generic versions and sales of branded Augmentin plunged. At the same time, purchasers of Augmentin raced to the courts to file their lawsuits and attempt to recover alleged overcharges.
While it disclosed the settlements with unions, wholesalers, and other drug purchasers yesterday, there was a notable exception. Still outstanding is a lawsuit against GlaxoSmithKline brought by one of the generic makers, Lek Pharmaceuticals, a company based in Slovenia that is a subsidiary of Novartis AG.
Nearly identical patent-gaming charges about another drug have also cost the company. In February, GlaxoSmithKline agreed to pay $175 million to settle claims that it brought baseless patent infringement suits to block other drug makers from selling a generic equivalent of Relafen, an arthritis medicine.
GlaxoSmithKline is facing similar allegations involving two antidepressants, Wellbutrin and Paxil. Paxil has replaced Augmentin as the company's second-largest seller, with $3 billion in global sales in 2003.
Christopher Rowland can be reached at crowland@globe.com.
