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GlaxoSmithKline (NYSE:GSK) said it was setting aside $3.4 billion to pay for a federal investigation in the United States and product liability cases over its marketing of the diabetes drug Avandia. The set aside is expected to wipe out fourth quarter profits for the drug giant. In July 2010, the company took a $2.36 billion provision for product liability cases relating to the product that had been settled or received at that time. The company said the ultimate liability for legal claims may vary from the amounts provided and is dependent upon the outcome of litigation proceedings, investigations and possible settlement negotiations.

The U.S. Food and Drug Administration Friday announced that the U.S. District Court for the Southern District of Texas entered a consent decree of permanent injunction against Deltex Pharmaceuticals and two of its executives. The consent decree bars Deltex and permanently prohibits/stops the company, Ahmed, and Khan from manufacturing and distributing drug products until Deltex's manufacturing operations and products are in compliance with federal law and the terms of the consent decree. Deltex is a contract manufacturer and distributor of prescription and over-the-counter drug products. According to a complaint filed by the U.S. Department of Justice, Deltex failed to obtain required FDA approval for its prescription drug products, failed to comply with FDA regulations governing over-the-counter drug products, and failed to comply with current good manufacturing practice requirements.

Johnson & Johnson’s (NYSE:JNJ) McNeil Consumer Healthcare Division said it is voluntarily recalling, at the wholesale level, certain lots of versions of its Tylenol pain reliever, Benadryl, Sudafed and Sinutab products distributed in the United States, the Caribbean, and Brazil. These products were manufactured at the McNeil plant in Fort Washington, Pennsylvania prior to April 2010, when production at the facility was suspended. The company said it is initiating the recall as a precautionary measure after an extensive review of past production records found instances where equipment cleaning procedures were insufficient or that cleaning was not adequately documented. It said that it is “very unlikely” that this impacted the quality of these products.

Forest Laboratories (NYSE:FRX) and Pierre Fabre Medicament said preliminary top-line results from a late-stage study of levomilnacipran for the treatment of major depressive disorder failed to show statistically significant superiority compared to a placebo. Levomilnacipran was well tolerated in this study. Two additional placebo-controlled late-stage studies of levomilnacipran in patients with major depressive disorder are currently underway. Results from these studies are expected to be available in the second half of this calendar year.

Europe’s Committee for Medicinal Products for Human Use confirmed its previous position that Merck KGaA’s (OTCPK:MKGAY) experimental pill to treat multiple sclerosis Cladribine should not be approved for marketing. The committee said that based on the data provided by the company, the benefits of the drug do not outweigh its risks. Merck said it remains committed to completing the ongoing clinical trials with Cladribine. The Data Safety Monitoring Board that independently oversees the conduct of these trials recently concluded that they should continue. Cladribine tablets are approved and available under the trade name Movectro in Australia and Russia as a treatment for relapsing-remitting MS and are under regulatory review in other countries, including the United States where the application has been granted priority review by the U.S. Food and Drug Administration.

Source: GSK Sets Aside $3.4 Billion Over Avandia Liabilities: Biotech's Latest Tribulations