* Case due to go to court in Philadelphia on June 1 settled
* Glaxo says settlement terms remain confidential
* First U.S. Avandia liability case now expected in October
* Multi-district litigation still pending in federal court
(Recasts and adds further Glaxo comment, paragraphs 3-4)
By Ben Hirschler
LONDON, June 1 GlaxoSmithKline Plc (GSK.L) has
settled more lawsuits alleging its Avandia diabetes drug caused
heart attacks, heading off the first trial in the United States
concerning the medicine.
The company said on Tuesday that terms of the settlement
remained confidential. It declined to specify how many claimants
"We can confirm that the case that was scheduled for the
first trial in state court in Philadelphia, for June 1, 2010,
has been settled," company spokeswoman Claire Brough said in an
"The next case scheduled for trial is in that court and is
scheduled for October 2010. GSK has not settled the
multi-district litigation pending in federal court."
The latest move follows reports by plaintiff lawyers last
month that about 700 cases had been settled for around $60
Analysts estimate that Glaxo had faced a total of 13,000
claims for damages involving Avandia, of which they speculated
around 5,000 were consolidated in Philadelphia, and there had
been fears it could face damages of up to $6 billion.
However, last month's relatively modest settlement deal and
the latest settlement in Philadelphia suggests the amount paid
out by the British-based drugmaker is likely to be a lot lower,
"This implies that close to half of the cases have now been
settled and should ease some fears about Vioxx-type liabilities," said Deutsche Bank analyst Mark Clark.
He believes the cost is likely to be comfortably covered by
the company's 2 billion pounds ($2.9 billion) of litigation
And the total could be a lot less than that. Assuming the
average pay-out rate of around $86,000 per claimant for the
first 700 cases was applied to all 13,000, the amount would be
just over $1.1 billion.
Glaxo has never confirmed the numbers involved in the
Merck & Co Inc (MRK.N) agreed a $4.85 billion settlement
with plaintiffs in 2007 after its arthritis pain drug Vioxx was
pulled from the market in 2004.
Commercially, Avandia is no longer a major product for
Glaxo, with sales declining sharply following controversy over
the drug's heart risks in 2007, and the medicine is set to lose
exclusivity in the United States in 2012.
But worries about liability claims have spiked since
February, when two U.S. Senators published a highly critical
report on Avandia. A Food and Drug Administration advisory panel
will consider possible further restrictions on the drug in July.
In the first quarter of 2010, Glaxo reported increased legal
costs of 210 million pounds, up from 51 million in the year-ago
period, which it said reflected progress towards settling a
number of cases.
Glaxo has consistently defended the safety record of Avandia
and says it acted properly in communicating with regulators and
physicians about the medicine's potential cardiovascular risks.
(Editing by Jon Loades-Carter and Will Waterman)