AstraZeneca Plc agreed to pay $150 million to settle more lawsuits claiming its antipsychotic drug Seroquel causes diabetes, pushing the amount the drugmaker has paid to resolve cases over the medicine to almost $350 million, people familiar with the accords said.
AstraZeneca, the U.K.’s second-biggest drugmaker, will resolve about 6,000 cases alleging the company knew Seroquel could cause diabetes and failed to adequately warn patients, two people familiar with the settlements said. They spoke on the condition of anonymity because they weren’t authorized to speak publicly about the accords. The cases settled for an average of about $25,000 each, the people said.
The settlements signal AstraZeneca is seeking to put the Seroquel litigation behind it as it works to overcome setbacks in its drug-development pipeline, said Jeremy Batstone-Carr, London-based analyst for Charles Stanley & Co., who rates the drugmaker’s shares as “accumulate.”
“Legal cases represent one of the great imponderables that can act on shareholder sentiment,” Batstone-Carr said. “You try to clear the decks and get investors as great a degree of certainty as possible.”
The settlement, which resulted from a court-ordered mediation, leaves AstraZeneca now facing about 4,000 Seroquel claims, according to a regulatory filing. The London-based drugmaker announced last summer it had resolved about two-thirds of the 26,000 suits over the drug that had been filed in courts around the U.S.
$198 Million Settlement
The company agreed in August to pay about $198 million to settle 17,500 suits, providing average payouts of more than $11,000. The company won the first jury trial over Seroquel in March 2010.
Tony Jewell, a U.S.-based spokesman for AstraZeneca, declined to comment on the settlements in an e-mailed statement, saying they were confidential.
Seroquel, with 2010 sales of $5.3 billion, is the company’s second-biggest seller after the cholesterol-reducing drug Crestor. AstraZeneca trails only London-based GlaxoSmithKline Plc among U.K. drug companies.
AstraZeneca has had setbacks with three experimental products in the past eight months. The company, which also makes the ulcer treatment Nexium, lowered its forecast for sales from new products in January.
In a January filing with the U.S. Securities and Exchange Commission, AstraZeneca officials said they reached settlements with a total of 24,591 former Seroquel uses.
3,950 Cases Left
As of December 2010, company executives were “aware of approximately 3,950 Seroquel U.S. product-liability claims that have not been settled in principle,” according to the Jan. 27 filing. The majority of those cases are in state courts in New York and New Jersey, officials added in the filing.
AstraZeneca officials also noted in the filing that the company had paid a total of $738 million to defend Seroquel as of December 2010. In addition, the company agreed last year to pay $520 million to resolve U.S. allegations that it illegally marketed Seroquel for unapproved uses.
Since 2006, all Seroquel cases filed against AstraZeneca in U.S. federal courts have been consolidated in Orlando, Florida, for pretrial evidence gathering.
The cases were gathered together as part of the Multi-District Litigation program intended to save money by streamlining document exchanges and avoiding duplication. The company also faces cases in state courts in Delaware, New Jersey and New York, according to court filings.
The judge overseeing the cases asked Stephen Saltzburg, a George Washington University Law School professor, to serve as mediator in hopes of reaching settlements on those cases.
AstraZeneca lawyers and Ken Bailey, a lawyer representing former Seroquel users, reached the most-recent settlements as part of talks sponsored by Saltzburg, the people familiar with the accords said.
Bailey, of Houston’s Bailey Perrin Bailey law firm, declined to comment on the settlements. Michael Kelly, a Wilmington, Delaware-based lawyer for AstraZeneca who serves as the drugmaker’s lead negotiator in the settlements, didn’t return a call seeking comment.
“Looks like they have done well out of the settlement,” Navid Malik, a drug-industry analyst at Matrix Corporate Capital in London. “The cost looks to be at the lower end of expectations to me.”
AstraZeneca fell 22 pence to 3,013 pence in London Stock Exchange trading at 8:52 a.m. The company’s shares have risen 3.1 percent this year.
The case is In Re Seroquel Products Litigation, 06-MD-01769, U.S. District Court, Middle District of Florida (Orlando).