Pharmaceutical companies have lost tens of billions in stock market value this week ahead of a trial regarding the heartburn drug Zantac.
The Food and Drug Administration (FDA) announced in 2019 that Zantac, the brand name for the medication ranitidine, contains low levels of a carcinogenic substance called NDMA. GlaxoSmithKline — the British pharmaceutical company that developed the drug — has been named as a defendant in approximately 3,000 personal injury cases in federal and state court, according to a press release from the company.
As the first legal proceedings are scheduled for August 22, prices for shares of GlaxoSmithKline fell roughly 11.5% since Monday. Shares for Sanofi, which has also held ownership rights to the drug, were down 9.9%, while shares for Haleon, a recent spinoff from GlaxoSmithKline, were down 11.8%.
According to Barclays analyst Emily Field, no meaningful information about the upcoming litigation has been publicized. “I think the panic … really comes down to market psychology as opposed to having learned anything new,” she told Reuters.
As of 2019, Zantac ranked 53 among the most frequently prescribed drugs in the United States, according to ClinCalc. The FDA withdrew ranitidine medication from the market in 2020.
“Patients should be able to trust that their medicines are as safe as they can be and that the benefits of taking them outweigh any risk to their health,” the FDA said. “Although NDMA may cause harm in large amounts, the levels the FDA is finding in ranitidine from preliminary tests barely exceed amounts you might expect to find in common foods.”
GlaxoSmithKline, however, said in its press release that multiple motions to dismiss have been rejected by the courts despite data affirming the safety of Zantac.
“The overwhelming weight of the scientific evidence supports the conclusion that there is no increased cancer risk associated with the use of ranitidine,” the company said. “Suggestions to the contrary are therefore inconsistent with the science, and GSK will vigorously defend itself against all meritless claims alleging otherwise.”
In 2012, GlaxoSmithKline paid one of the largest health care fraud settlements in American history over failure to report safety data and the marketing of misbranded drugs, according to the Department of Justice. The company marketed Paxil as a depression treatment for patients under 18 years old, even though the FDA has never approved the drug for pediatric use. The company likewise introduced Wellbutrin for weight loss, the treatment of sexual dysfunction, substance addictions, and ADHD, even though the drug had only been approved at the time for Major Depressive Disorder.
Beyond the advent of COVID vaccines and public controversies related to subsequent mandates, the pharmaceutical industry has been impacted by worldwide supply chain issues. Last year, the FDA “asked manufacturers to evaluate their entire supply chain, including active pharmaceutical ingredients, finished dose forms, and any components that may be impacted in any area of the supply chain.”
American companies have grown increasingly reliant upon pharmaceutical imports from China and India, according to the Council on Foreign Relations. As of March 2020, 80% of active pharmaceutical ingredients and 90% of generic medicines came from the two nations.