Massachusetts Drug Litigation Lawyers

National Consumer Coalition Objects To $63.8 Million Settlement Of PAXIL Pediatric Class Action

Prescription Access Litigation says Illinois state court settlement not “fair or reasonable”

Boston, MA, [February 27] Prescription Access Litigation (PAL) on Friday filed an objection to a proposed class-action settlement involving GlaxoSmithKline (GSK) [NYSE: GSK] and the drugs Paxil® and Paxil CR™. PAL is the largest national coalition of consumer groups fighting illegal drug industry tactics.

The settlement, approved recently in Illinois state court (Madison County) resolves one of several nation-wide class actions alleging that GSK, the maker of Paxil, knew the drug was dangerous and ineffective when taken by children under the age of 18.  The case was brought on behalf of a nationwide class of adults who paid for Paxil on behalf of a child under 18 anytime during a period of more than a dozen years.

Under the agreement, which involves only claims for economic damages from Paxil, GSK will set aside $63.8 million into a settlement fund to pay class members’ out-of-pocket expenses and attorneys’ fees and expenses. 

The Judge in a class action case must review a settlement before it takes effect, and must find that the settlement is “fair, reasonable and in the best interests of the class.”  Class members who feel that it does not meet these criteria are permitted to object to the settlement. The Judge reviews the objections submitted before deciding whether or not to approve the settlement. If the Judge decides not to approve a class action settlement, the settlement is terminated and the lawsuit proceeds.

PAL and an individual member of the class filed an objection to the settlement, because of concerns about several of its provisions:

• In order to get full reimbursement for their Paxil payments, class members are required to submit documentation of those payments (e.g. receipts, pharmacy records). This is in contrast to other recent settlements of pharmaceutical class actions, which did not require documentation but instead only required sworn affidavits from class members. Because Paxil was approved in 1992, some class members will be required to find records that are more than a decade-old in order to recover their full out-of-pocket expenses. 
• Although class members who cannot find records can sign an affidavit swearing that they purchased Paxil, those class members will only receive up to $15.
• The settlement arbitrarily caps payments for such “undocumented” claims at $300,000 total, less than ½ of 1% of the total settlement, despite the fact that it is possible that a majority of class members will not have payment record and thus would have to submit such an “undocumented” claim. 
• If more than 20,000 class member submit undocumented claims, they will each receive a pro rata share of the $300,000 (less than $15), regardless of how much they spent on Paxil.
• Neither the notice nor the settlement agreement say what will happen to any unclaimed funds remaining at the end of the claims period. The objection strenuously opposes returning any of the funds to GSK, and instead recommends that the court award any remaining money as a cy pres distribution to non-profit organizations doing work that benefits the members of the class.
• No matter how small the amount of money that actually goes to class members, the lawyers bringing the case will get paid before any consumer receives their money. The lawyers could get the full amount of attorneys’ fees they’ve requested - $16 million even if the class members receive significantly less.

“Class action lawsuits remain the most important tool available to compensate consumers for corporate wrongdoing,” said Alex Sugerman-Brozan, director of Prescription Access Litigation, “But the Paxil Pediatric settlement is a bad apple in the class action barrel, and should not be approved as currently designed.”

Prescription Access Litigation and its members have been involved in seven settlements of pharmaceutical class action lawsuits with a combined total of $438 million in settlement funds, including in three cases against GSK (concerning the drugs Augmentin, Relafen, Zofran, Kytril and others). PAL advocates for such settlements to include provisions that make it easier for consumers to learn about the settlement and submit claims for payment, including making published notices easier to understand, allowing consumers to submit claims online, setting minimum payment amounts that consumers will receive to make submitting a claim worthwhile, and others. 

“There have been numerous innovations in recent class actions to make sure that the money owed to consumers actually gets into their pockets,” added Sugerman-Brozan, “But the Paxil Pediatric settlement incorporates none of these and represents a low-water mark in recent prescription drug cases.”

PAL’s full objection can be found at prescriptionaccess.org/docs/PALPaxilObjection.pdf. The objection will be heard by the Court at a fairness hearing scheduled for April 25, 2007, at 9 a.m. in the Madison County Courthouse in Edwardsville, IL. Details about the settlement, including instructions and forms for class members wishing to file claims, can be found at www.paxilpediatricsettlement.com

CONTACT: Mark Snyder - (617) 275-2931, msnyder@communitycatalyst.org

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