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AstraZeneca has settled a dispute over its stomach drugs Nexium and Prilosec for a total of $425 million, “effectively” resolving product liability claims in some U.S. states.
The Anglo-Swedish drugmaker said on Tuesday it still believed the allegations about its side-effect warnings were “baseless” and acknowledged “there was no wrongdoing in the settlement.” The company added that the settlement over the drug used to treat stomach symptoms will allow it to avoid ongoing, costly litigation.
The company said it has set aside $425 million for the settlement. One case remains pending in Louisiana, with a trial scheduled for April next year.
Drug litigation can be a costly side effect for drug companies, sometimes resulting in huge lawsuits years after a drug first hits the market. In the case of Nexium and Prilosec, thousands of lawsuits have been filed in recent years alleging that AstraZeneca did too little to warn doctors and patients about the risk of kidney disease when taking the drug.
The settled cases are ongoing in New Jersey and Delaware. AstraZeneca said the specific terms of the agreement remain confidential.
SEB analysts said the lawsuit was a “relatively modest hangover” for the company’s stock price, adding that the settlement was widely expected to be a “blockbuster” settlement of about $2 billion. They said Monday’s update was a “clearly positive outcome.”
London-listed shares were little changed in early trading, rising around 0.5% on the news. AstraZeneca shares have fallen about 4.5% so far this year.
Nexium and Prilosec are two “proton pump inhibitors” that are prescription drugs used to treat acid-related symptoms and conditions, including gastric and duodenal ulcers. They work by inhibiting the production of stomach acid. Both drugs are also available over the counter to treat heartburn, and AstraZeneca has generated billions of dollars in sales since it was first approved.
Zantac, another heartburn treatment made by rival GlaxoSmithKline, has been hit hard by accusations that it may cause cancer.
In June, GSK reached its first legal settlement over the charges, averting a blockbuster trial in California that had been scheduled for next month. The British company reached a settlement but provided no details.
Over two days last August, investors put GSK, its consumer products spin-off Haleon, Sanofi and and Pfizer wiped out a combined £30bn from their valuations.
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