Glaxo Said to Pay $120 Million to End Denture-Cream Suits
Stock Chart for GlaxoSmithKline PLC (GSK)
GlaxoSmithKline Plc (GSK) has paid at least $120 million to resolve claims that some of its Poligrip products have caused neurological disorders because the denture cream contains zinc, two people familiar with the accords said.
Glaxo, the U.K.’s biggest drugmaker, resolved more than 100 lawsuits over the past nine months alleging it failed to warn consumers about Poligrip’s zinc-related health risks, the people said. The accords averaged more than $1 million apiece said the people, who declined to be identified because they weren’t authorized to speak publicly.
“GSK has been dogged by litigation over a variety of its products and has been moving aggressively to resolve those cases,” Navid Malik, a London-based analyst with Matrix Corporate Capital LLP, said in a phone interview. “I see these settlements as part of that effort.”
Officials of London-based Glaxo agreed in February to remove zinc from its line of denture-cream products after researchers linked some neurological problems, including nerve damage, to heavy use of zinc-laden denture adhesives. The company’s Super Poligrip Original, Ultra Fresh and Extra Care products all contained the ingredient, which improves adhesive power.
Bethany Burtyk, a U.S.-based spokeswoman for Glaxo, said the company doesn’t comment on cases in litigation.
Glaxo, which said in July 2010 that it had resolved some Poligrip suits, noted this year in a U.S. Securities and Exchange Commission filing it had “reached agreements in principle to settle the vast majority of the current cases.” Glaxo officials didn’t comment in the filing on the value of the settlements.
The drugmaker was willing to pay hefty settlements in the denture-cream cases to clear away “legacy issues so it can once again position itself as a growth company,” Malik said.
Glaxo announced Jan. 17 it was taking a $3.5 billion charge to cover expenses linked to a U.S. probe of its sales practices and product-liability lawsuits related to its Avandia diabetes drug. The reserve brought to $6.4 billion the amount the drugmaker has set aside for legal costs tied to Avandia and its Paxil antidepressant.
In February, Glaxo posted its second loss in three quarters because of legal costs tied to the Avandia investigation and the lawsuits.
On April 27, Glaxo officials reported a 14 percent increase in first-quarter profit after selling its stake in Quest Diagnostics Inc. The sale of the drugmaker’s interest in the medical-testing firm generated $405.5 million, executives said.
The drugmaker also sold its U.S. and Canadian rights to the Zovirax herpes cream to Mississauga, Ontario-based Valeant Pharmaceuticals International Inc. (VRX)
Glaxo and Procter & Gamble Co. (PG), the Cincinnati-based maker of the competing Fixodent denture cream, had lawsuits filed against them consolidated before a federal judge in Florida in 2005.
Procter & Gamble, which hasn’t announced any settlements of suits alleging the world’s largest consumer-products company hid Fixodent’s zinc-related health risks, is facing its first trial June 20 in Miami, according to court filings.
Kris Parlett, a Procter & Gamble spokesman, declined to comment today on whether the company had settled any of the Fioxdent suits.
Andres Alonso, a New York-based lawyer leading the plaintiffs steering committee in the consolidated case before U.S. District Judge Cecilia M. Altonaga in Miami, didn’t return calls seeking comment on the Glaxo settlements.
“I’m not surprised that the per-case average of the settlements is around $1 million because that reflects the seriousness of the injuries alleged in these cases,” Carl Tobias, who teaches product-liability and mass-tort law at the University of Richmond, said in a phone interview.
Lawyers for Glaxo and Procter & Gamble argued in court filings that zinc-laden denture cream is safe when used in accordance with labeling instructions.
The companies said consumers who applied the creams more than once a day to slipping dentures were overusing the product and subjecting themselves to increased levels of zinc.
Consumers’ lawyers countered in their court filings that the drugmakers knew for years that their products contained harmful levels of zinc and failed to warn customers.
They contend zinc poisoning can purge the body of copper, which can lead to nerve damage. Such damage may result in weakness in the arms and legs, balance problems and memory loss, according to researchers.
A wave of suits followed a 2008 study of patients suffering from neurological problems done by doctors at the University of Texas Southwestern Medical Center in Dallas. Results of the study linked the cause of those ailments to denture-cream use.
In the case set for trial next month, lawyers for Florida resident Marianne Chapman alleges Procter & Gamble defectively designed Fixodent by including zinc in its formulation, according to court filings. Zinc poisoning caused Chapman to suffer “severe neurological injuries,” her lawyers said in an April 22 filing.
Procter & Gamble’s attorneys countered in their own April 22 filing that Chapman’s overuse of Fixodent during an eight- year period caused the spinal-cord disease that produced the neurological symptoms for which she’s seeking compensation.
Glaxo’s American depositary receipts, each representing two ordinary shares, fell 6 cents to $43.56 in New York Stock Exchange composite trading. The shares rose as much as 41 cents, or about 1 percent, earlier today. The company rose 10.5 pence to 1,316 pence in London trading.
The consolidated case is In Re Denture Cream Products Liability Litigation, 09-02051, U.S. District Court, Southern District of Florida (Miami.)
To contact the editor responsible for this story: Michael Hytha at email@example.com.
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.