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GSK, a leading pharmaceutical group, has reached its first legal settlement concerning allegations that its heartburn medication Zantac is linked to cancer. As a result, it will avoid a significant trial scheduled to take place in California next month.
On Friday, the UK company announced its settlement with James Goetz, who filed a lawsuit in a California state court. GSK expressed its desire to avoid prolonged litigation in this case and stated that it does not admit any liability in the settlement. Additionally, the company affirmed its commitment to vigorously defending itself based on facts and scientific evidence in other Zantac-related cases.
Last August, concerns about potential legal costs caused a combined £30bn valuation loss for GSK, Haleon, Sanofi, and Pfizer.
In early trading in London, GSK’s shares were up by over 4%.
GSK, along with other previous owners of Zantac, is facing numerous lawsuits alleging that the drug, which contains small amounts of N-nitrosodimethylamine (NDMA), causes cancer. Although small amounts of NDMA are commonly ingested without harm, increased consumption can lead to cancer in humans.
In 2019, Sanofi voluntarily withdrew Zantac from the market when the US regulator started investigating NDMA levels. The Food and Drug Administration (FDA) later requested the drug’s removal from the market in 2020 after finding excessively high NDMA levels when exposed to heat.
Privately held Boehringer Ingelheim, another former owner of the drug, lost an arbitration case seeking indemnification from Sanofi. Both Sanofi and Boehringer Ingelheim have yet to comment on the matter.
GSK maintains that there is no evidence of a causal association between Zantac’s active ingredient and the development of cancer, as concluded independently by the company, the FDA, and the European Medicines Agency.
In December, the drugmakers achieved a significant victory when thousands of cases were dismissed. The judge determined that the only reliable testing of the drug showed an “unprovable risk of cancer.”
GSK believed this victory would establish a precedent for cases in various US states, except California, which has different standards for evidence. However, GSK still faces three other cases in California, although they have not yet been scheduled.
In April, analysts at Citi predicted that GSK’s stock would react positively if the company settled with plaintiffs in California before the upcoming case in July. They also anticipated that the bill in California would be relatively modest considering the relatively low number of cases filed in the state (around 3,000).
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