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U.S. top court rejects Glaxo bid to throw out racketeering lawsuits

Posted On: Jun. 6, 2016 12:00 AM CST

U.S. top court rejects Glaxo bid to throw out racketeering lawsuits

(Reuters) — The U.S. Supreme Court on Monday declined to hear GlaxoSmithKline P.L.C.'s bid to throw out lawsuits by union health and welfare funds that said the company's misrepresentation of heart-related risks of its diabetes medication Avandia caused them to pay too much for the drug for insured patients.

The court left in place an October 2015 ruling by the Philadelphia-based 3rd U.S. Circuit Court of Appeals against London-based GlaxoSmithKline that allowed the class action lawsuits to proceed. The suits were filed by three labor union funds that provide medical coverage, including the cost of prescription medications, to union members and their families.

In lawsuits filed between 2007 and 2010, Allied Services Division Welfare Fund, UFCW Local 1776 and Participating Employers Health and Welfare Fund, and United Benefit Fund allege that GSK violated the Racketeer Influenced and Corrupt Organizations Act, or RICO, by fraudulently concealing the risk of cardiovascular injury.

The RICO law is used to target illegal conspiracies including organized crime.

Avandia was introduced in the United States in 1999, but the U.S. Food and Drug Administration required new warning labels in 2007 and sharply restricted its use between 2010 and 2013 after studies linked the drug to an increased risk of heart attack.

GSK has since settled claims by 46 U.S. states and thousands of users, without admitting any wrongdoing.

The health and welfare benefit funds, known as "third-party payors" or TPPs, contend they were tricked into paying for more Avandia prescriptions, and at a higher rate, than they would have done had they known the health risks posed by the drug.