Zantac Litigation – Timelines, Indemnification Dynamics & Settlement Scenario Outlook

I’d like to begin with a brief introduction and backdrop to the ongoing Zantac litigation. Could you summarise the historical sequence of events leading up until this point, and why this has suddenly come to everyone’s attention, despite the fact this isn’t necessarily new?

From my standpoint, the scientific evidence is unclear as to whether Zantac causes cancer. There’s no debate that NDMA [N-nitrosodimethylamine] is classified as a probable carcinogen, but it seems to come down to the quantity of NDMA impurity, insofar as it could cause harm in large amounts. Moreover, GSK’s press statements suggest that the NDMA levels found from the FDA tests barely exceed the amounts found in food such as grilled meat. What is your take on the totality of the scientific evidence we have today and the weight it could hold in court?

You noted that the plaintiffs will have to show that not only was NDMA a probable carcinogen, but that there was also a sufficient quantity present in the products they consumed. How can they go about proving this? Secondly, will it be easier to prove for the prescription Zantac than its OTC [over-the-counter] equivalent given prescription sales are better documented?

To your point, there are press articles that allege lack of full record disclosure and, indeed, e-mail deletion. Are there additional corporate misdemeanour and lack of due care angles here beyond product litigation?

I want to circle back to the debate on whether NDMA causes cancer – the GSK press release, which naturally needs to be put in context of GSK’s position as a defendant – states, “Even epidemiological experts hired by the multidistrict litigation plaintiff steering committee concluded in their expert reports that the evidence was not sufficient to support an opinion that the use of ranitidine can cause breast, prostate, kidney, lung or colorectal cancer.” It goes on to say that, “In the multidistrict litigation in Florida, plaintiffs identified 10 types of cancer they wish to pursue, but in November 2021 and January 2022 the plaintiffs withdrew from consideration breast cancer and kidney cancer as well as colorectal, prostate and lung, and will proceed with five, although the plaintiffs in the state courts continue to pursue claims based on types of cancers withdrawn from the multidistrict litigation.” There seems to be some conflicting messaging here with different tumour types being pursued in state vs multidistrict litigation. Could you explain what this implies?

Before moving on I want to quickly circle back to a comment you made in your opening remarks. Is the Zantac litigation limited to ranitidine-based formulations only or is Sanofi’s Zantac 360 [famotidine], which is currently being sold, potentially up for litigation too?

I’d like to talk a bit about the extent of the potential state and multidistrict litigation in terms of filed vs unfiled lawsuits, because I’ve seen estimates ranging from 55,000 to 160,000 unfiled lawsuits. Some reports point to the fact that 150,000 claims were registered for the cases as of April 2022. What is the magnitude of filed cases today, how do you see that evolving and what does that mean for the extent of unfiled cases?

How many cases have been filed to date? Forgive me if I’m asking you to repeat yourself.

How do you see the magnitude of filed cases evolving over the coming quarters to years? Perhaps you could also comment on the barriers in place for plaintiffs looking to file their claim?

How do the mechanics of the statute of limitations work in this instance? My understanding is that the general federal statute of limitations lasts five years, although this could be extended. If the market withdrawal of OTC Zantac was in 2019, why is the statute of limitations starting to expire in 2022?

What might be the other barriers to filing cases beyond statute of limitations? My understanding is plaintiffs must demonstrate proof of Zantac use for 12 months, and there has to be evidence around the severity of injury and tumour type. How significant are those barriers to plaintiffs filing cases?

To clarify, the MDL product litigation is specifically around branded Zantac?

Can you elaborate on what you mean by pre-emption? Do you believe the generic manufacturers could be implicated in a multidistrict litigation down the line or will they remain only exposed to state level litigation?

My understanding is GSK and other branded players are looking to exclude plaintiffs’ causation experts. How likely is this to happen? What are the consequences if the company is successful here?

I understand there are additional class actions alleging economic injury, and then there’s a third-party payer class action that has been filed in federal court. From what I gather, the court ruled in favour of the defendants with respect to the third-party payer class action and the plaintiffs opted not to replead their action, and these issues are now on appeal. On the medical monitoring and economic loss side of things, I think those class actions are allowed to move forward, although generics retailers and packagers have been dismissed from the cases. Could you walk us through the magnitude of the potential litigation or liabilities associated with the medical monitoring and economic loss class actions?

What’s the risk of the litigation spreading outside of the US? There are several class actions outside of the US, and I believe in excess of 100 personal injury cases pending against GSK in Canada, along with a class action in Israel.

Do you think the USD 500,000 settlement by the generic manufacturers is indicative of what branded players may have to pay, or might those generic drug companies have paid a premium here?

What will the average settlement per case look like for a branded prescription and OTC player? You mentioned Vioxx earlier, although this seems to be an old case and by contrast to Vioxx, Zantac was primarily sold OTC. What proxies can we look to that could help guide our thinking?

A key input in your calculation was the 3,000 filed cases, but, presumably, that’s going to increase over a number of years. How do you see that changing the calculus?

My understanding is GSK did not settle in the 22 August Illinois trial. Is this purely because the consumer only used generic drugs, not branded, or are there other factors at play?

Could you summarise the Zantac ownership over the past few years, given Zantac OTC has been owned and marketed by multiple companies over the years? How would indemnification work in a case such as this where, essentially, the rights were sold from one party to another and everyone is just trying to deflect their liability onto the other party in the chain?

I understand the exact wording around the indemnification provisions among Haleon, Pfizer and GSK are non-public at the moment, but if you look at the timelines, GSK only sold prescription Zantac between 1983 and 2019. Is it therefore safe to assume GSK is on the hook for products sold on a prescription basis, but otherwise indemnified against any damages from subsequent OTC sales by other companies?

What’s the likelihood of GSK only being on the hook for the Rx [prescription] vs also some of the OTC litigation?

Some reports note GSK allegedly continued to make various formulations of OTC Zantac after the NDA [New Drug Application] was transferred. Is there any substance to those allegations?

Is there any data you can share on the percentage of total Zantac sales that comes from Rx vs OTC?

I’ve seen analyst estimates suggesting GSK bears roughly 30% of the risk based on the number of years it held the NDA for prescription Zantac. Is that roughly in line with your thinking? Does that sound reasonable to you or do you think that’s a bit off the mark?

In how many of the filed cases is Haleon mentioned specifically?

Haleon’s statement regarding indemnification notes that “To the extent GSK and/or Pfizer are held liable in respect of OTC Zantac during the periods outlined below, Haleon may be required to indemnify GSK and/or Pfizer only if the following conditions are met. GSK and/or Pfizer are unable to recover in respect of OTC Zantac from any third parties who are ahead of Haleon and who have given indemnities under previous transfer of rights to OTC Zantac.” Which third parties could be ahead of the company in indemnifying GSK or Pfizer based on the timelines or anything else that we know?

What do you think is more likely – Boehringer Ingelheim and Sanofi indemnifying GSK or Haleon?

Sanofi is seeking indemnity from Boehringer Ingelheim, stemming from when Sanofi acquired Boehringer Ingelheim’s consumer health business in an asset swap in 2017. I believe there’s ongoing arbitration between the two regarding the language around that indemnity, but as it stands today, do you think Sanofi is limited in its exposure?

There are two scenarios – the first being that Sanofi wins the arbitration against Boehringer Ingelheim at the end of 2022 and it is indemnified by Boehringer Ingelheim, and the second scenario is Sanofi loses the arbitration. What might be the company’s theoretical liability in either event?

I'd like to reconcile the different variables we’ve been discussing. If we take the midpoint of the range you quoted earlier, so a USD 5bn aggregate settlement value, how do you see that being split across the incumbents?

The 22 August Illinois trial has been dismissed by the plaintiff for personal health reasons, and I believe the next trial would be the state trial in California on 13 February 2023, followed by Illinois on the same month. Is that the case?