AstraZeneca Plc, the U.K.’s second- biggest drugmaker, agreed to pay about $55 million to settle around 5,500 lawsuits related to side effects of the antipsychotic Seroquel, people familiar with the accords said.
The settlements, with an average payout of about $10,000 per case, resulted from mediation involving 26,000 suits filed over Seroquel, the people said. The London-based company previously agreed to pay $2 million to resolve more than 200 allegations that Seroquel causes diabetes in some users, people familiar with those accords said last month.
“It implies that the overall exposure is very low” for AstraZeneca, Navid Malik, an analyst at Matrix Corporate Capital in London, said today in an interview. “$10,000 per patient doesn’t seem high” to settle drug-safety suits.
AstraZeneca is moving to resolve Seroquel claims as it faces expiring patents on the drug and the ulcer treatment Nexium in the next four years. Seroquel, the company’s second- biggest seller after Nexium, generated sales of $4.87 billion last year, or 15 percent of AstraZeneca’s total revenue.
The 5,500 settlements include 4,000 that AstraZeneca acknowledged in a July 29 regulatory filing, the people said. The company hasn’t disclosed terms of the accords and wouldn’t comment on them yesterday. The settlements stemmed from mediation ordered by the judge in Orlando, Florida, who was overseeing all federal-court litigation over the drug.
AstraZeneca “continues to participate in good faith in the mediation process, with multiple mediation sessions scheduled throughout the summer,” Tony Jewell, a company spokesman in Wilmington, Delaware, said in an e-mailed statement. He declined to comment further, citing the mediator’s request for confidentiality.
AstraZeneca’s American depositary receipts, each representing one ordinary share, fell 18 cents to $51.38 at 12:11 p.m. in New York Stock Exchange composite trading.
Neither returned calls for comment on the settlements. Michael Kelly, AstraZeneca’s lead lawyer in the mediation, didn’t return calls for comment.
The lawyers met last week with Stephen Saltzburg, a George Washington University Law School professor who is the mediator in the case, the people said. Saltzburg said in a February court filing that AstraZeneca faces as many as 26,000 suits over Seroquel and a global settlement wasn’t likely.
“I wish there were a magic wand that could be waved to settle all Seroquel cases instantly,” Saltzburg said in the filing. “Such wand does not exist.”
The mediation sessions are set to continue for several months, the people said. AstraZeneca wants to resolve as many cases as possible for about $10,000 each, the people said. The settlements are probably “so modest” because of the difficulty of establishing that Seroquel caused a plaintiff’s diabetes, Malik said.
“The real issue is proving liability,” he said.
Former Seroquel users contend research has tied Seroquel to the disease and AstraZeneca’s own researchers acknowledged the link in internal documents.
Ken Bailey, a Houston-based lawyer who represents Seroquel users, said he plans to go to trial with claims that AstraZeneca hid Seroquel’s health risks. Federal cases consolidated in Florida are being returned to their home courts, he said.
“We have not been involved in any negotiations and expect most of our cases to end up in the federal court in Boston,” Bailey said yesterday in a phone interview. “We are looking forward to going to trial in that venue.”
AstraZeneca won the first trial over Seroquel in March, when a New Jersey jury found that the company properly warned a Vietnam veteran’s doctors about the diabetes risk posed by the antipsychotic drug.
AstraZeneca said earlier this year that it had paid about $656 million to defend itself in Seroquel cases. In addition, the company agreed in April to pay $520 million to resolve U.S. allegations that it illegally marketed Seroquel for unapproved uses.
The consolidated Seroquel case is In re Seroquel Products Litigation, 06-MD-01769, U.S. District Court, Middle District of Florida (Orlando).