GSK save £400,000,000 tax when making provision for lawsuits

GlaxoSmithKline Plc said it will have fourth-quarter legal costs of 2.2 billion pounds ($3.5 billion) because of a U.S. investigation into sales practices for some products and for product-liability cases related to the Avandia diabetes drug. The charge equates to an after-tax cost of 1.8 billion pounds, the London-based company said in a Regulatory News Service statement today. The charge primarily relates to additional provisions for the investigation by the U.S. attorney in Colorado into the company’s U.S. sales and promotional practices of certain products, Glaxo said. The money also will cover lawsuits regarding Avandia, it said. Glaxo fell 18.5 pence, or 1.5 percent, to 1,206.5 pence at 3:20 p.m. in London trading. Glaxo, the U.K.’s biggest drugmaker, said Sept. 23 it would stop promoting Avandia worldwide after regulators said the treatment would be withdrawn from the market in Europe and sales will be limited in the U.S. because of an increased risk of heart attacks. Avandia was once the world’s best-selling diabetes drug. Glaxo took a 278 million-pound charge in the 2008 fourth quarter for costs relating to the Colorado investigation, which the company said at the time looked into sales and promotional practices of “several products” from 1997 to 2004. In the second quarter last year, Glaxo recorded 1.57 billion pounds in legal charges for cases related to Avandia, to cover settlements over a U.S. government investigation into the company’s former manufacturing site at Cidra, Puerto Rico, and product-liability and antitrust cases relating to the Paxil antidepressant