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Settlement over diabetes drug to net $19 million for state

SANTA FE, N.M. — The state will net almost $19 million in a settlement over alleged misrepresentation of the diabetes drug Avandia, but individual patients won’t recover anything in the case.

The gross settlement with manufacturer GlaxoSmithKline was $24 million. An outside law firm that represented the state seeks court approval of $5.06 million in fees.

KING: Some money may go to general fund

KING: Some money may go to general fund

“The nature of this settlement is that there won’t be money going back to individuals,” Attorney General Gary King said in announcing the settlement. “The claims were made on behalf of the state of New Mexico.”

He said the money could be used for broadly defined consumer activities, including outreach and operating costs, but he also predicted the likelihood of “discussion” with the Legislature at the upcoming session about how much, if any, should be carved out for the general fund.

King could not give a specific number of New Mexicans affected. But nationally, tens of thousands of patients have filed individual lawsuits against the company, and a U.S. Food and Drug Administration investigation found that potential risks were known for years before marketing of the drug.

The lawsuit, filed in state District Court in Santa Fe in May 2012, alleged that GlaxoSmithKline downplayed or misrepresented the risk of cardiovascular disease associated with the drug.

The company has defended the drug’s reputation and criticized a 2007 study that found greatly increased risk of heart attack. The company’s patent on it expired in 2011, according to a New York Times report, and it has paid $3 billion in fines related to a variety of practices, including Avandia.

King said the lawsuit was filed by his Medicaid Fraud Unit alleging violations under the New Mexico Unfair Practices Act, the New Mexico Fraud Against Taxpayers Act and the New Mexico Medicaid Fraud Act.

The settlement resolves claims with $15 million going to the attorney general’s consumer claims unit and roughly $3.8 million to offset Medicaid expenditures on the drug, King said at a news conference.

King said the settlement amount is believed to be the largest such consumer settlement in the state’s history.

King’s office in 2009 reached a $10.9 million settlement with Eli Lilly and Company over marketing of the antipsychotic drug Zyprexa.

Assistant Attorney General Seth Cohen represented the office in the Avandia litigation, working with outside contract counsel Heard, Robins, Cloud & Black of Santa Fe and Dallas. The law firm represented New Mexico and seven other states’ attorneys general in the complex litigation.

The firm is seeking court approval for attorney fees of $5.06 million and costs of $117,000 for its work in New Mexico.

The lawsuit was dismissed late last week by 1st Judicial District Judge Francis Mathew.

King said proceeding independently returned more money to New Mexico than joint, multistate class-actions, which he estimated would have brought in about $1.5 million for consumers and nearly $803,000 for state Medicaid claims.

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