Reckitt to Pay $1.4 Billion to Settle U.S. Opioid-Addiction Drug Probes -- 4th Update

Date : 07/11/2019 @ 5:29PM
Source : Dow Jones News
Stock : Reckitt Benckiser Group Plc. (PC) (RBGLY)
Quote : 15.49  -0.14 (-0.90%) @ 8:59PM
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Reckitt to Pay $1.4 Billion to Settle U.S. Opioid-Addiction Drug Probes -- 4th 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. 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.

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

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 13:14 ET (17:14 GMT)

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

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