AP, LTW

Pharmaceutical company GlaxoSmithKline (NYSE: GSK) says it expects to take a $2.36 billion charge against second-quarter earnings for legal costs involving the anti-depressant Paxil and diabetes drug Avandia.

The announcement Thursday morning came after a U.S. FDA panel on the market.

The company said Thursday that the charge includes settlement agreements for long-standing legal cases.

Glaxo said it has settled the vast majority of product liability cases involving Paxil, which has been linked to birth defects, and a substantial majority of liability cases involving Avandia, which has been associated with a higher risk of heart disease.

"With respect to both Paxil and Avandia, the legal charge announced today includes provisioning for settled cases and an estimate for those cases which we have received and are still outstanding. Terms of the settlements reached are confidential," GSK said in a statement.

The charge also includes an agreement to pay $750 million to settle an investigation of problems at the company’s plant in Cidra, Puerto Rico.

“The charge we have announced today reflects the company’s ongoing efforts to resolve certain long-standing legal cases. This represents a substantial proportion of GSK’s outstanding litigation. This progress is helping us to reduce financial uncertainty and risk for shareholders," said Dan Troy, general counsel for GSK.

"Provisions are made, after taking appropriate legal and other specialist advice, when a reasonable estimate can be made of the likely outcome of the dispute. The ultimate liability for legal claims may vary from the amounts provided and is dependent upon the outcome of litigation proceedings, investigations and possible settlement negotiations. The Group’s position could change over time, and there can, therefore, be no assurance that any losses that result from the outcome of any legal proceedings will not exceed the amount of the provisions reported in the Group’s financial accounts by a material amount."

GSK maintains its U.S. headquarters in Research Triangle Park, N.C.

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