NEW YORK’S combative attorney-general was forced to make an embarrassing climbdown yesterday over accusations that GlaxoSmithKline (GSK) had deliberately concealed evidence that its leading antidepressant made children suicidal.
Eliot Spitzer said that he had extracted $2.5 million (£1.4 million) from GSK to settle charges that the world’s second-biggest drugmaker had engaged in fraud and suppressed information about the safety and efficacy of Paxil.
Shares in GSK rose 27p to £11.31 yesterday, on relief that Mr Spitzer had not gained a huge financial settlement, as he has from Wall Street investment banks over the dot-com bubble and from fund managers over market timing abuses.
When he launched the unexpected lawsuit against GSK in June, sending its share price down by 3 per cent, Mr Spitzer said that he was seeking “disgorgement of all profits obtained by GSK” from selling Paxil for children since 1998. Analysts have estimated those profits at $250 million to $400 million.
Yesterday, however, Mr Spitzer sounded a conciliatory note, thanking GSK officials for working with his office to resolve the matter.
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The attorney-general also said that the company’s decision in June to set up a clinical trials register, containing both positive and negative studies about the safety and efficacy of all its drugs, had “set an example for the entire pharmaceutical industry”.
GSK, which has always claimed the charges were unfounded, said that it had agreed to pay the $2.5 million to “avoid the high costs and time required to defend itself in protracted litigation”.
The company said that it had agreed other conditions as part of the settlement, including running the trials register for ten years and releasing information on new studies no later than ten months after their completion.
In past interviews, J-P Garnier, GSK chief executive, has accused Mr Spitzer of “bullying” and even “extortion”.
The settlement paid by GSK is a drop in the ocean for the group, which last year had sales of £21.4 billion and pre-tax profits of £6.7 billion.