Drug-Created Heartburn

Many Americans suffer from heartburn and turn to medications to get relief. Unfortunately, in the case of the once-popular remedy, Zantac (ranitidine), it may have aggravated the condition it promised to resolve. In 2019 regulators determined it contained a chemical called NDMA, a probable carcinogen. This prompted the FDA to recall all ranitidine drugs in 2020.

Once a prescription-only drug, Zantac went off-patent in 1997 and eventually was sold over the counter. As a result, several companies have been involved in its manufacture and distribution. Many of these same drugmakers face legal action, or could in the near future.

Lawsuits Loom

GSK (GSK), the drug’s original creator and manufacturer, has seen its valuation come under pressure as investors weigh litigation risks. The same is true of Sanofi (SNY) and Haleon (HLN). Pfizer (PFE), which sold Zantac for about eight years, is a defendant named in some of the suits. These companies’ shares are selling off, likely because the first trial on the matter is rapidly approaching, scheduled to begin August 22. Additional cases are set to go to trial in 2023.

To date, about 2,000 cases have been filed in the US. The companies allege the risks have been overblown and claim the financial consequences of the suits are likely to be immaterial.

Potential Settlements

Some market observers seem to agree that the impact of the suits may be minimal. This thinking may stem from the legal actions being spread over numerous companies. Others may consider the sell off an overreaction.

Still, other analysts contend the broader outcome will be determined by the courts themselves. The legal proceedings will evaluate both the cancer risk posed by Zantac and any proof of the companies’ wrongdoing.

In similar cases, settlements have reached as high as $270,000 per claimant. For Americans who took the medication trusting that it would do no harm, that may seem like trivial compensation.

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