Reckitt to Pay $1.4 Billion to Settle U.S. Opioid-Addiction Drug Probes -- 2nd Update

Date : 07/11/2019 @ 10:48AM
Source : Dow Jones News
Stock : Reckitt Benckiser PLC (PK) (RBGLY)
Quote : 15.64  0.38 (2.49%) @ 9:59PM
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Reckitt to Pay $1.4 Billion to Settle U.S. Opioid-Addiction Drug Probes -- 2nd Update

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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.

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. 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." A spokesman for the company didn't provide any updated comment on Thursday.

The Justice Department's case against Indivior is separate from the investigation into Reckitt. Analysts on Thursday reiterated previous warnings that Indivior is unlikely to be able to afford a large penalty, like the amount Reckitt agreed to pay.

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.

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.

Thursday's settlement protects Reckitt's participation in all U.S. government programs, the company said, allaying some investor fears that it could be barred from these. It also covers claims relating to Medicaid programs for those states choosing to participate in the settlement.

Shares in Reckitt rose 2.7% in morning trading in London. They 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 Justice Department charges outline Indivior's marketing plan to transition patients from the tablet to the film. They say Indivior falsely made safety claims about Suboxone Film and ran a referral program to connect patients with doctors that Indivior knew to be prescribing opioids in a "careless and clinically unwarranted manner."

In recent years, the U.S. government has taken a more aggressive approach to fighting the opioid crisis, with thousands of lawsuits filed 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.

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


(END) Dow Jones Newswires

July 11, 2019 05:33 ET (09:33 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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