April 26, 2007
Public Citizen Secures Improved Settlement for Parents of Children Who Were Prescribed Paxil
Revised Settlement Will Provide Greater Compensation for Those Who Cannot Provide Documentation of Their Drug Purchases
WASHINGTON, D.C. - Public Citizen today secured an improved settlement for the parents of thousands of children who were prescribed the popular antidepressant Paxil. Under the new settlement, negotiated in cooperation with class counsel Korein Tillery LLC, defense counsel and other objectors, members of the class who cannot provide documentation for their purchases will receive far greater compensation than under the original proposed settlement.
The complaint, Hoormann, et al. v. SmithKline Beecham Corporation, sought economic damages against GlaxoSmithKline, the maker of Paxil, alleging that the company misled parents by not disclosing that the drug was dangerous and ineffective when taken by children younger than 18. Under the agreement, Glaxo is required to put $63.8 million into a settlement fund to pay class members’ out-of-pocket expenses and attorney fees.
On Feb. 23, Public Citizen filed an objection to the proposed settlement on behalf of a class member whose daughter was prescribed Paxil in 2002 and 2003, and the Prescription Access Litigation Project, a national coalition of more than 125 organizations, including consumer, senior citizen, heath care, labor, legal services and women’s health advocacy organizations.
In its objection, Public Citizen argued that class members would not receive the full value of the settlement fund because it required that they submit proof of out-of-pocket expenses for their purchases to recover any money, even if their purchases were made more than a decade ago. Class members who were unable to prove out-of-pocket expenses would receive at most $15 - and only a pro rata share of $300,000 if more than 20,000 undocumented claims were made, no matter how much money remained in the settlement fund.
Public Citizen maintained that the settlement was unfair because of the small amount of money set aside for those unable to obtain sufficient documentation, especially when compared to the size of the settlement fund, which is more than 200 times greater. Public Citizen also expressed concern that the cap on recovery for undocumented claims could allow the bulk of the settlement fund to revert to Glaxo instead of being used to benefit the class.
At a hearing today, Judge Ralph J. Mendelsohn of the Third Judicial Circuit of Madison County, Illinois, granted approval of the revised settlement, subject only to receiving a proposed final order next week. The new settlement will provide up to $100 for class members who are unable to produce documentation and eliminates the $300,000 cap. Mail and e-mail notices will be sent to membership organizations at the end of May, June and July, encouraging the groups to contact class members. Members can also receive information about the new settlement at http://www.paxilpediatricsettlement.com. The deadline to submit a claim is Aug. 31, 2007.
"The revision significantly improves the value of the settlement, particularly to those class members who are unable to document their claim," said Jennifer Soble, an attorney with Public Citizen. "We want to encourage class members to file their claims before the claims period expires at the end of August."
To read the Feb. 22 objection, click here.