The United States Supreme Court on Monday rejected a bid by GlaxoSmithKline to avoid a lawsuit brought by three health plans, which claimed they overpaid for the Avandia diabetes pill because the drug maker hid some of the safety risks.
In their lawsuit, the health plans contended Glaxo deliberately concealed significant side effects associated with Avandia and continued to promote the pill as a safer treatment for diabetes despite heart attack risks. As part of that effort, the drug maker allegedly manipulated scientific literature and ran ad campaigns with false and misleading statements, among other things, in order to increase Avandia sales.
We asked Glaxo for comment and will update you accordingly. [UPDATE: A Glaxo spokeswoman sent us a note saying the company is “disappointed that the Supreme Court chose not to hear our appeal, but we will continue to defend our position that health insurers do not have a valid case for economic injury when their subscriber patients cite no adverse effects and, in fact, benefit from a medicine.”]
The rejection comes eight months after a federal appeals court upheld a lower court ruling that was issued two years ago. That ruling found that Glaxo could face racketeering claims alleged by the health plans, since they appeared to suffer economic injury based on the savings that could have been realized if they paid for less expensive diabetes treatments than Avandia.
Last October, the appeals court noted “a one-month supply of Avandia has sold for $90 to $220, with the (payers) covering between $135 and $140 per prescription and the patient paying the balance. This was a dramatic increase in the cost of type 2 diabetes treatment. Previously, the most prevalent oral drug therapy, metformin, cost approximately $45 to $55 for a one-month supply.”
The lawsuit is just one of many that stemmed from the headline-grabbing Avandia safety scandal, which has regularly been cited as an example of bad behavior by the pharmaceutical industry, notably the concern that the drug maker failed to disclose safety data.
The episode came to a head in 2012, when Glaxo agreed to pay $3 billion to resolve criminal and civil allegations of illegally marketing the diabetes pill and other drugs, as well as paying kickbacks to doctors to induce them to write more prescriptions.
“The federal government already settled the public insurance cases with Glaxo for hundreds of millions of dollars over fraud in the sale and promotion of Avandia,” said Samuel Isaacharoff, a New York University law school professor who represents Allied Services Division Welfare Fund, an employee benefit and compensation plans agency. “The denial (by the Supreme Court) allows the private insurance companies to have their day in court to challenge the exact same conduct by Glaxo directed at the private insurance market.”
Glaxo first began marketing Avandia in the United States in 1999, but the Food and Drug Administration required new warning labels in 2007 after a controversial study in The New England Journal of Medicine found an increased risk of heart attacks associated with the pill. The drug maker responded with an ad campaign to downplay the findings, but the FDA later restricted use of the medicine between 2010 and 2013.