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Pharmaceutical group GSK has reached its first legal settlement over allegations that the heartburn drug Zantac caused cancer, avoiding a groundbreaking trial due to start next month in California.
The British company announced on Friday that it had reached a settlement with James Goetz, who filed a lawsuit in California court. GSK said the deal reflects the company’s desire to “avoid confusion as this litigation prolongs,” without elaborating on the details of the deal.
“GSK has not admitted any liability in this settlement and will continue to vigorously defend itself on the basis of facts and science in all other Zantac cases,” it added.
Investors wiped out more than £30 billion from the valuations of GSK, Hareon, Sanofi and Pfizer in August last year amid concerns about huge legal costs from a spate of lawsuits.
GSK shares rose more than 4% in early London trading.
GSK and other pharmaceutical companies, which previously owned Zantac, are facing lawsuits alleging that the drug causes cancer because it contains small amounts of N-nitrosodimethylamine, known as NDMA. NDMA is usually taken in small doses, but larger doses can cause cancer in humans.
Sanofi voluntarily withdrew the drug from the market in 2019, when U.S. regulators began investigating small amounts of NDMA. In 2020, the Food and Drug Administration said Zantac appeared to produce unacceptably high levels of chemicals when exposed to heat and requested its removal from the market.
The drug was also owned by privately held Boehringer Ingelheim, which lost an arbitration suit seeking damages from Sanofi this week. Boehringer Ingelheim declined to comment on the arbitration award. Sanofi did not immediately respond to a request for comment.
GSK said the company, the US Food and Drug Administration and the European Medicines Agency have all independently concluded that there is no evidence of a causal link between the active ingredient in Zantac and the development of cancer in patients.
In December, pharmaceutical companies scored an important victory by dismissing thousands of lawsuits. The judge found that the only reliable test performed on the blockbuster drug showed an “unproven cancer risk.”
A person familiar with the matter said the company believes the win sets a precedent for lawsuits in many U.S. states, including Delaware, where most of the lawsuits are due next year. But he said that wasn’t the case in California, where the standard of evidence is different. GSK is still filing three other lawsuits in California, which are not yet scheduled.
Citi analysts said in a note in April that they expected the stock to react “very positively” if GSK settled the California plaintiffs before the July lawsuit. They added that they expected the bill in California to be “very modest” given that there are only about 3,000 lawsuits filed in the state.
