GSK Reaches $229 Million Settlement Over False Marketing Claims

GlaxoSmithKline announced Wednesday that it has set aside funds to settle lawsuits brought by eight state attorneys general accusing the company of falsely marketing its diabetes drug, Avandia.

The proposed $229 million settlement is mentioned in the company's second quarter earnings report, and includes false marketing claims involving other GSK drugs brought by Louisiana's attorney general. A GSK spokeswoman said the company agreed to the settlement "to avoid the expense and uncertainty of protracted litigation and trial."

"This settlement, which is covered by existing provisions, marks an important step in resolving the long-standing legal matters relating to Avandia," the spokeswoman said in an email statement. "With regards to Avandia, we believe we acted responsibly in conducting the clinical trial program for Avandia, in marketing the medicine, in monitoring its safety once it was approved for use and in updating information in the medicine's labeling as new information became available."

What the settlement means to GSK's attempts to bar state attorneys general from outsourcing enforcement duties to private lawyers working for contingency fees remains to be seen.

Louisiana, which is among the eight states in the proposed GSK settlement announced Wednesday, had also been fighting the company over the use of private lawyers. As we previously reported, Louisiana attorney general Buddy Caldwell in February 2012 called on Allan Kanner of Kanner & Whiteley to prosecute the state's Avandia false marketing suit against GSK, with Kanner only getting paid if Louisiana won a payout from the company. Last June GSK's lawyers at Morgan, Lewis & Bockius and Pepper Hamilton filed suit in Louisiana state court asking for declaratory and injunctive relief arguing that only Caldwell, acting in his official capacity as the state's top law enforcement officer, could bring "quasi-criminal proceedings" like the false marketing suits.

Nina Gussack of Pepper Hamilton told us in May that the challenge to Caldwell's use of outside lawyers sat before an intermediate Louisiana state appeals court after a lower court had declined to rule on the company's injunction bid. We reached out to Gussack Thursday to ask if GSK was ending its challenge to the attorney general's use of private lawyers as a part of the settlement. Gussack directed our question to a company spokesperson, who declined to answer.

In the case of West Virginia—also among the eight named in the proposed settlement over false marketing claims—a state supreme court last month denied GSK's attempt to disqualify private lawyers from working on the state attorney general's lawsuit.