A federal judge on Tuesday threw out thousands of lawsuits over the heartburn drug Zantac, significantly mitigating a worry that had weighed on prices of a number of pharmaceutical stocks since the summer.
Drug companies passed around Zantac during its decades as a prescription and over-the-counter treatment, before the Food and Drug Administration effectively pulled it from the market in 2020 over contamination concerns.
Since then, thousands of people have sued the companies that sold the drug, claiming it caused cancer. In a ruling in a federal court in Florida on Tuesday, Judge Robin Rosenberg wrote that scientists don’t back their claims.
In late Tuesday trading, the American depositary receipts of
) were up 8.2%, while
‘s (SNY) ADRs were up 9.8%, and the ADRs of
(HLN), the consumer health company that separated from GSK earlier this year, were up 6.8%.
In her Tuesday decision, which spanned more than 300 pages, Judge Rosenberg granted summary judgment to defendants in the Zantac federal multidistrict litigation, which had been formed in 2020 to bring together thousands of individual claims.
Judge Rosenberg concluded that the plaintiffs don’t have the evidence to prove that Zantac caused the cancers that the plaintiffs claimed it caused.
“There is no scientist outside this litigation who concluded ranitidine causes cancer,” Judge Rosenberg wrote, using Zantac’s generic name. “The Plaintiffs’ scientists within this litigation systemically utilized unreliable methodologies with a lack of documentation on how experiments were conducted, a lack of substantiation for analytical leaps, a lack of statistically significant data, and a lack of internally consistent, objective, science-based standards for the evenhanded evaluation of data.”
and other firms that could have faced liabilities related to their sale of Zantac, including
(PFE), the decision amounts to a significant victory. While other complaints are progressing through state courts, and the plaintiffs are likely to appeal Judge Rosenberg’s order, the likelihood of the companies needing to make substantial payouts over Zantac liabilities now seems slimmer.
“Christmas came early for Zantac defendants,” SVB Securities analyst David Risinger wrote in a note Tuesday afternoon.
In a statement reported by Reuters, attorneys for the plaintiffs in the suit said that they expected the judge’s decision to be reversed on appeal.
Investors paid little attention to the brewing Zantac litigation until August, when one UBS analyst mentioned the cases in a note. Over the following two days, shares of Sanofi, GSK, and Haleon all tumbled.
stock fell as well, though not as steeply.
The companies pushed back at the time. Haleon, which was formerly a joint venture between Pfizer and GSK, both of which sold Zantac at different times, said that it would not be held responsible if its two predecessor firms were found liable in Zantac lawsuits, a position that seemed likely to lead to litigation.
On Tuesday, GSK said it was reviewing the decision. “We welcome today’s ruling in the Zantac federal Multi-District Litigation (MDL) in the United States District Court of Southern Florida,” a company spokesperson said in a statement. “We are reviewing the Court’s decision in full, and will respond in more detail as soon as possible.”
Write to Josh Nathan-Kazis at firstname.lastname@example.org