GlaxoSmithKline, the drugs company, was today faced with its first class action law suit over the safety of its drug Avandia.

Kaplan Fox & Kilsheimer, the US law firm, said that it had filed a class action suit in the US alleging that GlaxoSmithKline misled investors over the safety of the diabetes drug.

The suit is filed in the District Court for the Southern District of New York against GlaxoSmithKline and certain of its officers, on behalf of investors who bought Glaxo shares between October 2005 and this May.

It alleges that GSK failed to make adequate disclosure of the fact that it had performed its own meta-analysis (an analysis of several separate clinical trials pooled together), which showed that Avandia caused an increased risk of heart attacks.

BACKGROUND

• GSK plan to beat fakes may be scrapped

• Why Ribena has got a new squeeze

• US Panel allows Glaxo to keep selling Avandia

• US rule on Avandia, with £1.2bn at stake for GSK

• GSK doubles buyback

No company is out of reach of activists

Shareholder activism is going to become one of the overriding themes of the second half of the year

Related Internet Links

• GlaxoSmithKline company information

• GlaxoSmithKline share price chart

• GlaxoSmithKline forecast

Related Links

• GSK 'made threats over Avandia'

• Glaxo's diabetes drug 'increases' risks

Preliminary results of this analysis were presented to the FDA, the US drug regulator, in September 2005 and updated results were disclosed to the FDA in August 2006, it said.

However, Kaplan claims, the results of GSK's meta-analysis were never adequately disclosed to the public who were investing in Glaxo shares.

When another doctor conducted his own meta analysis that was published in the New England Journal of Medicine last month, Glaxo's US listed shares dived by nearly 8 per cent on heavy trading, the law firm states in its complaint.

The filing does not name any complainants and is in effect an advert for potential disgruntled investors to come forward and make a complaint.

Glaxo's UK-listed shares today lost 6p to £13.14, making a 10.3 per cent fall from £14.64 since the New England Journal study was published.

Avandia prescriptions already contain a warning about the extra risks of heart attacks and the FDA itself did not insist on a sterner warning when it saw Glaxo's own safety study. Analysts believe that this may be a reasonable defence to any lawsuits. Glaxo insists that current studies show its drug has no greater risk than others currently on the market.

There have so far been no lawsuits filed by patients, which could be potentially much more damaging to the company.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax