The hitherto largest drug company marketing settlement in U.S. history -- the $2.3 billion payment made by Pfizer Inc. in 2009 for illegal marketing of its Bextra painkiller and other drugs -- has just been eclipsed by GlaxoSmithKline's agreement to pay $3 billion to resolve Avandia-related litigation.

Avandia has long been Glaxo's mainstay drug for the treatment of diabetes. As we reported in our June 30 blog post, a major study cites the potentially dangerous side effects posed by Avandia use for many persons, chiefly the development of a condition associated with blindness. One study also stated that there is a heightened heart attack and stroke risk for Avandia patients.

Glaxo has been embroiled in a number of ongoing criminal and civil investigations that stretch back for years. One financial analyst that studies the London-based drug manufacturing behemoth says that news of the settlement "essentially draws a line under a 10-year legal saga" and also "removes significant uncertainty on ongoing legal issues."

The company actually took a $3.5 billion charge against its existing cash reserves to pay for the settlement and other outstanding obligations. It has already paid more than $700 million to plaintiffs in heart-attack and stroke-related litigation.

The settlement has been adjudged as impressively comprehensive, covering complaints of drug promotion of Avandia and eight other of Glaxo's top selling products, as well as U.S. Justice Department investigations into Glaxo's involvement in a Medicaid rebate program and its marketing of Avandia.

Following report of the settlement and its effect on reducing uncertainty, Glaxo's shares rose nearly three percent on the New York Stock Exchange.

Source: Bloomberg Businessweek, "Glaxo to pay $3 billion to settle U.S. sales, Avandia cases" Nov. 3, 2011