By Saabira Chaudhuri
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 12, 2019).
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 12, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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