The firestorm over the safety of GlaxoSmithKline's diabetes drug Avandia could hurt profit at one of the Triangle's largest employers, weigh on its stock and provide new ammunition for lawsuits.
A Senate committee report released over the weekend contends that GSK knew about heart attack risks linked to Avandia years before the evidence became public. The controversy also raises the possibility that the drug could be pulled from the U.S. market.
The report questioned why the Food and Drug Administration is allowing a continuing clinical trial of Avandia after agency scientists concluded that the drug caused 83,000 heart attacks between 1999 and 2007.
On Monday the FDA announced that regulators plan an advisory committee meeting in July to consider Avandia's safety. For now, the agency is advising patients to continue taking the drug unless their doctors tell them to stop.
GSK asserts that Avandia is safe. The Senate committee report ignores scientific evidence and mischaracterizes the company's efforts to communicate results to regulators, doctors and patients, GSK said. It said the FDA already considered the data cited in the Senate report.
The new questions about Avandia are the latest blow for GSK, a British company that employs about 5,000 people in the Triangle, home to its North American headquarters. Federal regulators also are worried about the safety of another key drug, the asthma treatment Advair.
GSK has been slashing costs and thousands of jobs worldwide in recent years to offset slowing sales, and could make further reductions if it must pull Avandia off the market or pay high legal damages. Avandia and Advair are packaged at GSK's Zebulon factory.
"Avandia lawsuits have been going on for quite a while," said Don Beskind, a Duke University Law School professor who also practices personal injury law. "It has been known for some time that this is, at least allegedly, a troubled drug."
While awaiting the recommendations of its advisory committee, FDA head Dr. Margaret Hamburg plans to meet with agency scientists and outside experts about the drug.
More bad news
The news comes at a difficult time. GSK this month announced more layoffs. Last week U.S. regulators warned that long-term use of Advair, GSK's best-selling drug, and competing asthma medications has been linked with serious health risks.
The potential impact of the Avandia news isn't as severe as it might have been a few years ago. Sales of the drug, introduced in 1999, have been declining since 2007, when the company agreed to add to the packages a warning - highlighted with a black box - about heart attack risks.
Even before the Senate report, Edward Jones pharmaceutical analyst Linda Bannister projected that Avandia sales would be about 2 percent of the company's revenue this year, down from 7 percent in 2006.
Worldwide sales of Avandia totaled $1.2 billion last year.
Analyst Jeffrey Holford of Jefferies International forecast that pulling Avandia from the U.S. market would reduce GSK's profit less than 1 percent this year and about 1 percent next year.
Analysts also point out that Avandia's patent protection is expected to expire in 2012, opening the way to cheaper generic competition.
Investors haven't panicked. Shares of GSK's American depositary receipts, akin to common stock for foreign companies, fell 94 cents to $37.32 on Monday. They are down nearly 12 percent this year.
"We could see the stock stuck in the mud ... until we hear from the FDA," Bannister said.
Beskind, the law professor, said that although the Senate report will strengthen the hand of lawyers suing over Avandia, the issue of whether GSK concealed health risks is a small piece of the litigation. "Any individual person still has to prove that it was the problem with the drug that gave them their heart attack," he said.
firstname.lastname@example.org or 919-829-4877