Zantac Exposure: Uncharted Waters

The heartburn drug ranitidine, released under the brand name Zantac in the early 1980s, met with immediate commercial success and quickly reached $1 billion in annual sales.

Its fortunes nosedived in 2020, however, when reports that the drug contained unsafe levels of NDMA followed by a US Food and Drug Administration (“FDA”) recall request precipitated mass litigation against Zantac manufacturers. 

So where is the Zantac litigation likely to lead and to what extent might it expose the legal and insurance industries to uncharted waters?

Zantac’s initial success

Zantac was developed by the forerunners to GlaxoSmithKline (GSK) in the late 1970s, received FDA approval in 1983, and by 1987 had the highest global sales of any prescription drug. 

Following the expiry of GSK’s patent in 1997, Zantac was sold by Pfizer, Boehringer Ingelheim and Sanofi in the US alongside generic alternatives.

FDA intervention and subsequent US litigation

In late 2019, a Connecticut-based laboratory called Valisure reported that its scientists had discovered traces of N-Nitrosodimethylamine, commonly referred to as NDMA, in their tests on Zantac. Regulators classify NDMA as a “probable human carcinogen”.

In April 2020, the FDA released an official request that Zantac and generic products be withdrawn from sale. Months of FDA testing had shown that Zantac contained high levels of NDMA which could increase at normal room temperatures.

Since the FDA request, around 130,000 claims have been filed in the US against pharmaceutical companies alleging that Zantac caused cancer. While no such claims have been brought in non-US jurisdictions, concerns about protracted US legal wrangling and the level of potential settlements wiped $40 billion from the collective market value of GSK, Sanofi, Pfizer, and Haleon over the course of a week in August 2022. 

50,000 Zantac claims were consolidated into a Multi-District Litigation (“MDL”) in the Southern District of Florida and were subsequently dismissed in December 2022 on the basis that the plaintiffs’ experts lacked sound science proving that Zantac causes cancer. The plaintiffs plan to appeal this decision. The majority of the remaining claims have been filed in Delaware where the court is currently assessing the merits of expert evidence. 

An adverse judgment for the plaintiffs in Delaware a year after the Florida judgment may sound the death knell for Zantac claims. Citi analysts nevertheless estimate GSK will settle all Zantac cases for around $5 billion in the first quarter of 2024 to free up management time and boost investment.

Wider Implications

If, as is predicted, pharmaceutical companies reach settlements with the Zantac plaintiffs, they will likely seek coverage from insurers alongside contributions from distributors and retailers.

The fact that Zantac litigation has reached such a scale despite no conclusive evidence that the drug itself causes cancer spells trouble for pharmaceutical companies and insurers alike and illustrates the following three trends: 

1. Pharmaceutical companies favour the commercial certainty of large settlements to the reputational damage of ongoing litigation, even where such claims lack scientific evidence. Such an approach was visible in the recent Johnson & Johnson Talc litigation which was settled for $9 billion in April 2023 despite an absence of conclusive scientific evidence to substantiate the plaintiffs’ asbestos and cancer claims. 
2. Pharmaceutical companies are currently facing considerable scrutiny in the US courts – particularly in the wake of the opioids crisis which precipitated thousands of claims against drug manufacturers including Purdue Pharma LP and Johnson & Johnson. Aside from the Zantac and Talc litigation, Danish pharmaceutical company Novo Nordisk is facing an MDL in Pennsylvania with plaintiffs alleging that its Ozempic drug causes stomach paralysis, while Gilead Sciences faces a mass negligence claim in California on the basis that it set aside a safer HIV drug to maximise patent profits on an older medication.
3. Large settlements are inspiring further speculative claims based on inconclusive science and these will inevitably increase the number of insurance claims. 

The Zantac litigation highlights the speed at which mass litigation can take off following a trigger – in this case, the FDA intervention – and the irresistible commercial pressures that accompany it. Insurers would be well advised to remain alert to developments in the pharmaceutical sphere and keep their policy wordings under constant review to safeguard their interests against an expected rise in coverage claims.