GSK shares have plunged this morning after a US court ruled on Friday that it would have to face trial by jury regarding the potential cancer-causing properties of its heartburn pharmaceutical Zantac.
On Friday, a Delaware judge allowed almost 80,000 lawsuits against the pharmaceutical company to go ahead, arguing that the company’s expert witness opinion had lacked scientific support.
The ruling could expose GSK to tens of billions of dollars in potential liabilities and legal redress. In 2022, Morgan Stanley estimated the potential liability for the industry at up to $45bn (£35.3bn).
GSK shares were trading down by as much as 10 per cent in early deals this morning.
Judge Vivian Medinilla of the Delaware Superior Court said instead, the strength of each side should be decided by a jury.
In her conclusion, Medinilla said: “In Delaware . . . trial courts entrust questions of science to the scientists . . . it would be improper to simply dismiss these experts as ‘poseurs or witnesses for hire’.”
“Delaware courts are loath to step into the heart of technical debate between opposing scientists,” she added.
Brent Wisner, who helped bring the cases in the Delaware and California state courts, said: “This case has always been about getting the science in front of a jury . . . Now the writing is on the wall. GSK, Boehringer Ingelheim, and Sanofi will need to answer for their 40 years of misconduct.”
GSK set to appeal the ruling
GSK said today it will be appealing the ruling, adding: “The ruling does not mean that the court agrees with plaintiffs’ experts’ scientific conclusions, and it does not determine liability.”
Launched in 1988, Zantac was one of the first ever drugs to reach over $1bn (£800m) in yearly sales and was one of the top products of GSK, but was later sold to Pfizer and other pharmaceutical companies.
The drug eventually became the top-selling pharmaceutical in the world, but in 2019 some manufacturers pulled it from shelves after a chemical called NDMA, which causes cancer, was detected in some doses.
Tests showed that ranitidine, the active ingredient in Zantac, could change into NDMA when exposed to heat.
However, GSK, Pfizer and the other companies that have owned it maintain there are no cancer-causing properties to the drug.
“Following the 16 epidemiological studies looking at human data regarding the use of ranitidine, the scientific consensus is that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer,” GSK said today.
Total Zantac liability
The US Food and Drug Administration eventually asked manufacturers to pull Zantac off the market in 2020.
Currently, GSK and the other pharmaceutical companies that have owned the rights to the drug are facing almost 80,000 cases against them in Delaware, along with 4,000 in California and another 2,000 scattered across the US.
However, before last week’s ruling, the company had some success in getting the cases thrown out. For example, in Florida, a federal judge dismissed about 50,000 lawsuits against the company.
Last month, in the first case to go before a jury, GSK and one of its peers won a case in Illinois.
“The decision by the state court contradicts the federal court’s MDL ruling under the same legal standard, which dismissed all cases alleging five cancer types,” GSK said in a statement today, referencing the previous ruling.
It added that the ruling had no impact on its investment plans or capital allocation policies.