Drug giant OKs $3.4 billion IRS settlement

Drug giant GlaxoSmithKline agreed to pay $3.4 billion in the largest tax settlement in IRS history, resolving a dispute from the 1980s over the multinational company’s U.S. profits.

The disagreement concerned how much of the profits from certain drugs, particularly the ulcer and heartburn medication Zantac, should be attributed to U.S. subsidiaries of GlaxoSmithKline PLC and, therefore, subject to tax.

GlaxoSmithKline Holdings (Americas) Inc. agreed to pay $3.4 billion to settle taxes owed from 1989 through 2005, the Internal Revenue Service said Monday. After deductions for state and local taxes, the company will pay $3.1 billion in cash. Glaxo said it had set money aside for the dispute, and the settlement will not have a significant effect on its reported earnings.

The company also said drug prices for customers will not be affected.

As part of the settlement, Glaxo abandoned its claim for a $1.8 billion tax refund. Glaxo spokeswoman Patty Seif said the IRS had rejected the company’s refund claim and held that Glaxo owed $8.3 billion for taxes due from 1989 through 2000.

That case had been scheduled for trial at the U.S. Tax Court in February.

“Merck & Co. has agreed to tell its U.S. employees to immediately stop leaving messages about the painkiller Vioxx on the drug company’s voicemail system, according to an order from a New Jersey judge.

In an order signed Friday, New Jersey Superior Court Judge Carol Higbee in Atlantic City also said Merck, of Whitehouse Station, N.J., and its employees must securely preserve existing Vioxx-related voicemail messages.

Higbee said the order doesn’t apply to messages to and from Merck legal employees directly related to the massive Vioxx litigation, in which thousands of people have claimed the drug caused heart attacks and other health problems.

“Cingular Wireless plans to sell a new BlackBerry-like device from Nokia Corp. for as low as $150, perhaps the most aggressive entry yet in an increasingly crowded market of devices with typewriter keypads for wireless e-mail and text messaging.

The Nokia E62, a version of which went on sale overseas earlier this year, was being introduced at an industry show on Tuesday – just a week after T-Mobile USA unveiled a new consumer-oriented BlackBerry from Research In Motion Ltd. and a few months after Verizon Wireless launched the Q from Motorola Inc.