AstraZeneca settles Seroquel lawsuits for $198 million

AstraZeneca P.L.C. will pay $198 million to settle 17,500 U.S. lawsuits that alleged its top-selling antipsychotic drug Seroquel caused diabetes, the company announced Monday.

The settlement, which was part of a court-ordered mediation, would resolve the bulk of more than 25,000 lawsuits against the company over Seroquel.

"While the terms remain confidential and are subject to nonmonetary agreements, we believe it was in the best interest of the company to explore resolving these cases through the mediation process," Tony Jewell, AstraZeneca's spokesman, said in a statement. "We remain committed to a strong defense effort, but will also continue to participate in good faith in court-ordered mediation."

The settlement figure is "probably lower than the worse-case estimate," according to Jeremy Batstone-Carr, an analyst at Charles Stanley & Co Ltd.

It also represents the latest financial hit AstraZeneca has taken over the drug, which earned the pharmaceutical giant about $4.9 billion last year.

Earlier this year, the drugmaker reported in financial filings that it had spent $656 million in Seroquel litigation.

Last month, the FDA demanded AstraZeneca stop using a promotion letter that overstated its effectiveness and failed to list a number of possible risks, including diabetes.

Seroquel has been a blockbuster for AstraZeneca for years. Approved for treatment of schizophrenia and bipolar disorder, it was the fifth best-selling drug in the United States last year, according to research firm IMS Health. It sells for more than $4 per pill and is taken one or two times a day.

AstraZeneca has come under fire on two fronts over the drug: whether it triggers diabetes and whether the company illegally marketed it for other uses.

The company has contended that any users who were found to have diabetes either had developed the condition before using the drug or were already susceptible to it.

According to documents unearthed as a result of Seroquel lawsuits, as early as 1997 a study linked the drug to a yearly weight gain of 11 pounds.

As for illegally marketing Seroquel, AstraZeneca agreed in April to pay $520 million as part of a settlement with the Justice Department. In a case that was brought in Philadelphia, the U.S. Attorney's Office accused the drugmaker of marketing Seroquel for use by children and the elderly for indications not approved by the Food and Drug Administration.

When the settlement was announced, U.S. Attorney Michael Levy said the company had "turned patients into guinea pigs in an unsupervised drug test."