22 Jun 2004, 18:32 GMT - A lawsuit alleging that GlaxoSmithKline's [GSK.L] Seroxat (paroxetine) is a defective product under the Consumer Protection Act will be the latest in a string of legal cases concerning the drug. These recent cases, especially Eliot Spitzer's, are expected to weaken shareholder confidence in the short-term, with huge implications for the pharmaceutical industry if GSK loses.
Lawyers representing the UK Seroxat Users Group are planning to launch a multi-million pound lawsuit against GSK next month. The 3,500 members of the group allege that the antidepressant is a defective product under the Consumer Protection Act. The members say that they experienced dependency/withdrawal symptoms and will claim compensation for the use of the drug as well as the cost for them to safely come off the drug.

This will be the latest case in a series of lawsuits that GSK faces in relation to Seroxat/Paxil. Earlier this month, New York Attorney General Eliot Spitzer made the move to sue the company on the unprecedented grounds that it withheld clinical trial data on the safety and efficacy of Seroxat/Paxil in children and adolescents from the public and medical community.

Seroxat/Paxil has never been approved for pediatric use, however, physicians had used it off-label prior to the addition of a warning to the drug label in 2003. Mr Spitzer claims that GSK knew of dangerous side-effects in children and adolescents, including suicidal thoughts, from previous clinical trials, but did not publicize the information which would have affected physicians' decision to prescribe this medication off-label.

By the time the courts reach their verdicts for these lawsuits, the results will have little effect on Seroxat/Paxil sales. It was the depression market leader in 2002 before the drug lost US patent protection, which reduced sales to $3.1 billion in 2003. It now faces stiff generic competition, which will likely reduce sales to $834 million by 2010.

For GSK as a whole, however, these cases will further weaken shareholder confidence in the short-term. On the other hand, a court decision favoring Mr Spitzer's claim will have huge implications for the pharmaceutical industry as a whole regarding the disclosure of all clinical data from trials. A ruling in favor of the UK Seroxat Users Group will set the precedence for patients taking any medicine to sue for side-effects not included on the label, which could result in spiraling litigation costs for the pharmaceutical industry.