Generic drug maker Mallinckrodt Plc announced an agreement to pay $1.6 billion to settle thousands of opioid-related claims. The news comes as opioid crisis in the U.S. is growing at an alarming rate.
Under the deal, Mallinckrodt’s Specialty Generics business, which manufactures generic opioid products, will file for Chapter 11 bankruptcy in the coming months. The settlement would become effective upon Specialty Generics’ emergence from the bankruptcy. The settlement also includes warrants for 19.99 percent of the company’s stake.
The agreement was made with a court-appointed plaintiffs’ executive committee, supported by 47 state and U.S. Territory Attorneys General. The proposed settlement is subject to court approval and other conditions.
In a statement, the company said, “This court-supervised process is expected to lead to the creation of a trust which, among other things, would establish an abatement fund to offset the expense of helping to combat opioid addiction and providing support to communities impacted by opioid abuse.”
The specialty generics-focused unit SpecGx LLC and other affiliates agreed to make the payment over eight years. The settlement would be made in structured payments. The company would pay $300 million upon Specialty Generics’ emergence from Chapter 11, and $200 million on each of the first and second anniversaries of emergence. Further, $150 million will be paid on each of the third through eighth anniversaries of emergence.
Once the Specialty Generics business emerge from bankruptcy, the trust would receive warrants, exercisable at $3.15 per share, to buy ordinary shares of approximately 19.99 percent in the company.
Mallinckrodt and its Specialty Brands-related subsidiaries would not be part of the Chapter 11 filing.
The drug industry is facing more than 2,000 actions by state and local governments accusing drug manufacturers that the companies aggressively marketed the painkillers despite knowing the risk of addiction and that they are liable for the nation’s opioid crisis.
Drug makers Johnson & Johnson and Teva Pharmaceutical Industries Ltd last year offered to pay $4 billion and $15 billion, respectively, to settle all claims related to opioid epidemic in the US.
According to U.S. Attorney General William P. Barr, “The opioid epidemic is the deadliest drug crisis this country has ever faced.” It has been estimated that more than 130 people are dying from opioid-related drug overdoses every day in the United States.
In December last year, the U.S. Government awarded more than $333 million to help communities affected by the opioid crisis in the country.
Source: Read Full Article