Reckitt to Pay $1.4 Billion to Settle U.S. Opioid-Addiction Drug Probes -- 5th Update

Date : 12/07/2019 @ 07:01
Source : Dow Jones News
Stock : Reckitt Benckiser Group Plc (RB.)
Quote : 6580.0  -3.0 (-0.05%) @ 01:35
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Reckitt to Pay $1.4 Billion to Settle U.S. Opioid-Addiction Drug Probes -- 5th Update

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By Saabira Chaudhuri 

LONDON -- Reckitt Benckiser Group PLC agreed to pay up to $1.4 billion to settle U.S. investigations into whether its former pharmaceuticals unit organized a multibillion-dollar fraud to drive up sales of an opioid-addiction treatment.

The U.K. consumer-goods company, whose products include Lysol cleaner and Durex condoms, said Thursday that it had struck a deal with the U.S. Department of Justice and the Federal Trade Commission to resolve their long-running probes into the sales and marketing of Suboxone Film. It is the biggest financial penalty so far tied to the opioid crisis in the U.S.

Suboxone Film, a prescription medicine that dissolves in the mouth, is made by Indivior PLC, a Reckitt unit that became a stand-alone company in 2014. Suboxone, whose active ingredient is an opioid, is used to treat addiction to other drugs like heroin.

The Justice Department has taken separate action against Indivior.

In April, federal prosecutors charged the U.K.-based company, saying that starting in 2010 the business "illegally obtained billions of dollars in revenue" by misleading health-care providers to believe that Suboxone Film is safer and less susceptible to diversion and abuse than similar drugs.

Prosecutors also accused the pharmaceutical business of establishing a program that connected patients with doctors it knew were prescribing opioids in a "careless and clinically unwarranted manner." The Justice Department is seeking at least $3 billion and control of other property from Indivior.

Indivior has denied the charges, saying it would vigorously contest them and calling the Justice Department "fundamentally wrong." On Thursday, the company referred investors to its previous comments and said it had no additional or new information.

"We are confronting the deadliest drug crisis in our nation's history," said Jody Hunt, Justice Department assistant attorney general. "Drug manufacturers marketing products to help opioid addicts are expected to do so honestly and responsibly."

The settlement with Reckitt includes the forfeiture of $647 million in proceeds, civil settlements with the federal government and states totaling $700 million, and $50 million to settle FTC antitrust allegations that it blocked competition from generics.

"In the middle of the nation's opioid crisis, [Reckitt] allegedly sought to deny those consumers a lower-cost generic alternative to maintain its lucrative monopoly on the branded drug," the FTC said.

The settlement doesn't include any admission of wrongdoing by Reckitt or any employee. The company said it has "acted lawfully at all times and expressly denies all allegations that it engaged in any wrongful conduct, " and decided to settle to avoid the costs and distraction of protracted litigation.

Reckitt also said the settlement protects its participation in all U.S. government programs, including one that provides baby milk, allaying concerns among some investors that it could be barred. It also covers claims relating to Medicaid programs for those states choosing to participate in the settlement.

Shares in Reckitt rose 2.5% in London trading on Thursday. The stock tumbled in April after Indivior and the Justice Department failed to reach an agreement.

Reckitt has been battling various headwinds, including a cyberattack, failed innovations and protests in South Korea, where a humidifier disinfectant sold by the company killed more than 100 people. Incoming Chief Executive Laxman Narasimhan, formerly PepsiCo Inc.'s global chief commercial officer, is set to take the reins in September.

Suboxone was approved by the Food and Drug Administration in 2002. It was the first narcotic drug doctors were able to prescribe from their offices for opioid addiction, but sales waned after the patent for the tablet version expired in 2010. At that point, the company launched the Suboxone Film product and subsequently discontinued the tablet.

The U.S. indictment in April against Indivior outlined what it described as an aggressive marketing plan to transition patients from the tablet to the film, which prosecutors alleged made safety claims that weren't backed up by scientific evidence.

In recent years, federal, state and local officials have taken a more aggressive approach to fighting the opioid crisis, with various groups filing thousands of lawsuits against opioid manufacturers and distributors. Nearly 218,000 people died in the U.S. from overdoses related to prescription opioids between 1999 and 2017, according to federal data.

OxyContin maker Purdue Pharma LP -- controlled by members of the billionaire Sackler family -- is weighing a bankruptcy filing as a way to resolve the more than 1,600 lawsuits brought by states and local municipalities accusing it and other companies of starting a public-health crisis.

While Reckitt's settlement is the biggest so far related to opioids, Carl Tobias, a law professor at the University of Richmond, says there are likely to be many more settlements, and that some could be larger.

In 2017, President Trump declared the opioid crisis a public health emergency and has taken steps to crack down on international and domestic drug-supply chains.

--Adria Calatayud contributed to this article.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

 

(END) Dow Jones Newswires

July 11, 2019 16:46 ET (20:46 GMT)

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