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Billion-dollar settlement gets Reckitt out of federal opioid probes

Credit: Flickr, Be.Futureproof
  • British consumer drug company Reckitt Benckiser said it will pay up to $1.4 billion to settle all federal investigations related to the marketing of the opioid-dependence product Suboxone film by former subsidiary Indivior. The company denies all wrongdoing but said settling will avoid the “costs, uncertainty and distraction” of continued legal action.
  • Indivior, spun out in 2014, separately is facing a criminal indictment for Suboxone marketing practices, and the group said it has no new information related to that activity.
  • Reckitt’s settlement is one of many now emerging from crackdowns on opioid marketing, with Purdue Pharma and Insys paying hundreds of millions to get out from under legal threats.

The consequences of opioid over-prescribing and marketing practices continue to be felt. In Reckitt’s case, it will need to borrow money and tap its cash holdings, which was 1.5 billion pounds ($1.9 billion) at the end of 2018, to settle charges with the U.S. Justice Department and the Federal Trade Commission.

Reckitt had anticipated having to make a settlement, putting a $400 million cost line onto its balance sheet in preparation for a deal with the federal government. Today, it said it will change that provision to $1.5 billion to account for the settlement and any remaining litigation costs.

The company said it wanted to eliminate distraction as it faces organizational change. Reckitt is in the midst of a management transition, with Laxman Narasimhan taking over as CEO from Rakesh Kapoor effective September 1. In addition, it is restructuring its health and hygiene divisions as separate operating units.

The government claims Reckitt and Indivior deceptively marketed Suboxone Film as a safer, less divertable and less abusable form of opioid. Following the Reckitt settlement, these charges are still being made against Indivior, which was the target of a criminal grand jury indictment in the U.S. District Court for Western Virginia in April.

The Reckitt settlement was seen as a positive sign for Indivior, though.

Stifel analyst Max Herrmann wrote in a note to clients it signals that Indivior can make a similar deal before the criminal case goes to court in May 2020.

“Indivior continues to be willing to fight the [Justice Department] in court, but is also in parallel talking to the US Department of Health and Human Services to find a way to avoid being excluded from government contracts,” he wrote.