GlaxoSmithKline (GSK) would have Wall St. think that its diabetes drug Avandia has been safe all along. Even though concerns were raised several years ago about whether the product caused heart problems. According to The Wall Street Journal, the first doctor to bring this up was bullied by the company.
Then, a few weeks ago, a prominent cardiologist wrote in The New England Journal of Medicine that a series of studies showed that the drug was not safe. The FDA took a closer look at the matter and said that containers for Avandia might have to carry a special label.
Though all of this, Glaxo’s position has been that everyone else is wrong about the drug and that it is right. The company said the The New England Journal of Medicine article was "political" and not based on good science. It also said that its own trials indicated that the drug was OK, although subjects started to drop out of the tests when the potential heart problems came to light.
Not surprisingly, the number of doctors ordering the drug for their patients has slipped sharply in the past few weeks.
To the surprise of no one, except perhaps Glaxo, some of its shareholders have filed suit saying that the "company didn’t properly disclose that it had performed an analysis that linked Avandia to a higher risk of heart attacks," according to The Wall Street Journal. It would not be unusual if the shareholder suit emboldened patients to begin legal actions a la the court cases against Merck (MRK) for problems with its drug Vioxx.
What Glaxo wants its investors and the press to believe is that the company was unaware of risks associated with the drug. Whatever risks there were should be considered acceptable because they were similar to those for other drugs. All of the outside criticism and complaints were wrong and the firm’s scientists could prove that.
No one believe Glaxo, and that has been true for some weeks now. Perhaps the company could have reacted differently, but the course it took ended up being something of a disaster. And, shareholders will almost certainly pay for that.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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