GlaxoSmithKline, the makers of the controversial drugs Avandia and Paxil, just reported a third quarter profit loss. Company officials are blaming government cost-cutting in Europe after European health authorities banned Avandia from its shelves and the recent FDA restrictions in the U.S. placed on Avandia and Paxil.
According to recent reports, Glaxo is holding falling prices and Obama health care reforms responsible for its poor third quarter, in which the company lost 6 percent in profits.
Andrew Witty, the company’s chief executive, says Glaxo has been forced to cut its drug prices for the European market by about 3.5 percent this year. Usually the company only cuts them 2 percent, but the larger cuts were made because the governments can’t afford to pay more than that for the drugs, according to Witty. In the end, Glaxo was hit the hardest by the European regulators banning Avandia after it was proven to pose a higher risk of patients experiencing heart problems, strokes or death. It didn’t help that at the same time, American regulators severely restricted the drug’s availability in the U.S., too.
Glaxo’s legal problems over Avandia and Paxil aren’t over yet, either. The company confirmed that it also has to answer to a subpoena from the U.S. Department of Justice on the subject of the marketing and development of Avandia as well. Glaxo has also said that they got “civil investigative demands” from more than one states attorneys general office. Under all of this scrutiny regarding the bans and restrictions surrounding drugs like Avandia and Paxil, Glaxo should be less concerned with the forced price cuts and find some satisfaction in the fact that the drugs are still on the market at all.