Reckitt to Pay $1.4 Billion to Settle U.S. Opioid-Addiction Drug Probes -- 3rd Update
July 11 2019 - 11:27AM
Dow Jones News
By Saabira Chaudhuri
LONDON -- Reckitt Benckiser Group PLC will 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 -- which owns Lysol cleaner and
Durex condoms -- on Thursday said it struck a deal with the U.S.
Department of Justice and the Federal Trade Commission to resolve
their long-running investigations into the sales and marketing of
Suboxone Film. It is the biggest financial penalty so far tied to
the opioid crisis.
Suboxone Film, a prescription medicine that dissolves in the
mouth, is made by Reckitt's former pharmaceuticals business,
Indivior, which became a stand-alone company in 2014. Suboxone,
whose active ingredient is an opioid, is used to treat addiction to
other drugs like heroin.
Federal prosecutors charged Indivior in April, saying that
starting in 2010 it "illegally obtained billions of dollars in
revenue" by deceiving health-care providers into believing that
Suboxone Film is safer and less susceptible to diversion and abuse
than similar drugs. It also accused the company of setting up 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 that the Justice Department is "fundamentally
wrong." On Thursday, the company referred investors to its previous
comments and said it had no additional or new information.
The Justice Department's case against Indivior is separate from
the investigation into Reckitt. The DOJ and the FTC didn't
immediately respond to requests for comment on the settlement.
Reckitt said it has "acted lawfully at all times and expressly
denies all allegations that it engaged in any wrongful conduct."
The company said it was settling to avoid the costs and distraction
of protracted litigation. The settlement doesn't include any
admission of wrongdoing by Reckitt or any employee.
Reckitt has been working through a series of 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.
The company said Thursday's settlement protects Reckitt's
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 2.7% in afternoon trading in London. The
stock had tumbled in April after Indivior and the Justice
Department failed to reach an agreement.
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 struggled after
the patent for the tablet version expired in 2010. At that point,
the company launched the Suboxone Film product and discontinued the
tablet in 2013.
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 it alleged made safety claims
about the product 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 11:12 ET (15:12 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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