GSK to Settle 80,000 Zantac Lawsuits for up to $2.2b

GSK to Settle 80,000 Zantac Lawsuits for up to $2.2b

Introduction

GSK has agreed to pay up to $2.2 billion to settle the majority of pending U.S. state court lawsuits alleging that a discontinued version of the heartburn medication Zantac caused cancer.

This settlement, reached with ten plaintiffs' law firms, resolves approximately 80,000 cases, accounting for 93% of pending lawsuits nationwide, without admitting any wrongdoing.

The legal action began after the U.S. Food and Drug Administration (FDA) requested the removal of Zantac from the market in 2020 due to concerns that its active ingredient, ranitidine, could degrade into NDMA, a known carcinogen, over time or when exposed to heat.

Zantac, which received U.S. regulatory approval in 1983, became the world’s best-selling drug in 1988 and was one of the first medications to exceed $1 billion in annual sales. The current Zantac available on the market contains a different active ingredient and does not include ranitidine.

Earlier this month, GSK Plc's CEO  focused on keeping most employees aligned with the company's core mission, rather than getting distracted by the ongoing Zantac litigation, which has adversely affected the company's stock for years.

She stated, “I work really hard to make sure that 99.9% of the company is not spending one minute thinking about Zantac.” A dedicated team is managing the legal aspects of consumer claims alleging that Zantac caused cancer, claims that GSK firmly denies.

The CEO refrained from commenting on whether GSK would seek a settlement for the numerous Zantac-related lawsuits, akin to Johnson & Johnson's handling of talc litigation. She emphasized that GSK's strategy relies on scientific evidence, a strong defense of its position, and prioritizing shareholder interests, while acknowledging that the Zantac litigation poses a significant concern for the company.

Plaintiffs argue that the active ingredient in Zantac, ranitidine, can convert into the carcinogen NDMA under specific conditions, prompting the U.S. Food and Drug Administration (FDA) to request the removal of all ranitidine-based drugs from the market in 2020. GSK has been settling individual cases quietly, with its stock declining about 10% since August 2022 due to heightened litigation concerns.

Investors are anxious about potential settlement costs, projected between $3 billion and $4 billion, with GSK expected to bear roughly half of that amount. Other companies, like Sanofi and Pfizer, have already reached settlements in related lawsuits.