AstraZeneca settles heartburn drug lawsuits for $425mn

AstraZeneca has settled disputes on stomach drugs Nexium and Prilosec for a combined total of $425mn, “effectively” resolving product liability claims in some US states.

The Anglo-Swedish drugmaker said on Tuesday it continued to believe the claims, which concern its side-effects warnings, “are without merit” and admitted “no wrongdoing in the settlement agreement”. It added that the settlements on the drugs used to treat gastric symptoms would allow it to avoid continued, costly litigation.

The company has taken a provision for the $425mn settlement, it said. A single case remains pending in Louisiana, with a trial scheduled to take place in April next year.

Drug litigation can be a costly side effect for drugmakers, which are sometimes hit with hefty lawsuits years after treatments first reach the market. In the case of Nexium and Prilosec, thousands of lawsuits have been filed in recent years accusing AstraZeneca of doing too little to warn doctors and patients of the risk of kidney disease from taking the drug.

The cases that settled were being fought in New Jersey and Delaware. AstraZeneca said the specific terms of the agreement remained confidential.

Analysts at SEB said the litigation had been a “relatively modest overhang” for the company’s shares, adding there had been broad consensus the settlement would be a “blockbuster” one, of about $2bn. They said Monday’s update was a “clear positive outcome”.

London-listed shares were little changed in early morning trading, ticking around 0.5 per cent higher on the news. AstraZeneca shares are down about 4.5 per cent in the year so far.

Nexium and Prilosec, two “proton pump inhibitors”, are prescription only drugs used to treat acid-related symptoms and diseases, including ulcers in the stomach and duodenum. They work by inhibiting the production of acid in the stomach. Both drugs are also available over the counter to treat heartburn and have netted AstraZeneca billions in sales since they were first approved.

Another heartburn treatment made by rival GSK has weighed heavily on its own share price, because of allegations that the drug, called Zantac, could cause cancer.

In June GSK reached its first legal settlement over the allegations, avoiding a blockbuster trial that was due to go ahead in California the following month. The UK company reached the settlement without providing any details.

Investors had wiped a combined £30bn from the valuations of GSK, its consumer spin-off Haleon, Sanofi and Pfizer over two days in August last year over fears about lawsuits related to Zantac, and the size of any potential legal bill.