LONDON ( TheStreet) -- GlaxoSmithKline ( GSK) said Monday it will record a $3.4 billion fourth-quarter charge because of legal costs related to its Avandia diabetes drug.

The London-based drugmaker said the charge is for additional costs related to an investigation by the U.S. Attorney for Colorado into Glaxo's U.S. sales and promotional practices, and for product liability cases regarding Avandia.

Data have suggested that the drug increases the risk of cardiovascular events, such as heart attack and stroke. European regulators pulled Avandia off the market in September, and in the same month, the U.S. Food and Drug Administration substantially restricted its use.

The fourth-quarter charge is in addition to a $2.4 billion charge against second-quarter earnings that GlaxoSmithKline announced in July.

The earlier charge was due to product liability cases related to Avandia that the company had settled or received at the time. But the company said Monday that it has received a "substantial" number of new claims since then.

"We recognize that this is a significant charge, but we believe the approach we are taking to resolve long-standing legal matters is in the company's best interests," said PD Villarreal, Glaxo's senior vice president of global litigation, in a company news release Monday. "We have closed out a number of major cases over the last year and we remain determined to do all we can to reduce our litigation risk."

Shares of GlaxoSmithKline finished Friday in New York up 30 cents at $39.18. U.S. markets were closed Monday in observance of Martin Luther King Jr. Day, but London shares of the drugmaker traded down 1.63% at 1,205 pence Monday afternoon in the wake of the announcement.
This article was written by a staff member of TheStreet.

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