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Reckitt hammered by $1.4bn opioid settlement bill

Case centres on Subaxone marketing practices

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Reckitt Benckiser (RB) has agreed to pay an eye-watering $1.4bn to the US government to resolve criminal and civil litigation over the marketing of its opioid addiction treatment Suboxone.

The settlement is the largest recovery for opioid drug mis-marketing in US history, according to the Department of Justice, and is made up of $647m to the federal government, $700m to states and $50m to the Federal Trade Commission.

The amount is more than three times the $400m provision that Reckitt had set aside to cover its liabilities, but the company reckons it can fund the remainder through “existing borrowing facilities and cash generation.”

The federal investigation centred on a former Reckitt pharmaceutical subsidiary – spun off in 2014 and renamed Indivior – and marketing practices it deployed for Suboxone between 2006 and 2015.

Suboxone, which is based on the powerful opioid drug buprenorphine, is approved for use by recovering opioid addicts to avoid or reduce withdrawal symptoms while they undergo treatment.

The US government alleged that the pharma unit made unsubstantiated claims that a newer film version of the product was less vulnerable to diversion and addiction, and as a result defrauded state Medicaid programmes.

Indivior is also in the firing line, and in April was indicted for over what the DoJ claims was fraudulent marketing practices to drive up sales of the drug, which is seeking at least $3bn in fines. A criminal trial against Indivior is scheduled to begin in May next year, and Reckitt has also agreed to co-operate with the DoJ in the case against its former subsidiary.

In a statement, Reckitt said that while it denies all wrongdoing, it had decided the settlement – while hefty – avoids the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment.

“Opioid withdrawal is difficult, painful, and sometimes dangerous; people struggling to overcome addiction face challenges that can often seem insurmountable,” commented assistant attorney general Jody Hunt in a statement.

“Drug manufacturers marketing products to help opioid addicts are expected to do so honestly and responsibly.”

Reckitt’s settlement is only the latest in a series of actions brought by federal and state authorities against companies accused of fraudulent marketing practices for opioid drugs, which have contributed to an epidemic of overdose deaths across the US in the last few years.

Purdue Pharma paid $600m to settle federal actions, but still faces a number of state-level lawsuits. Meanwhile, Insys was hit by a $225m judgment in June that has caused it to file for bankruptcy, and Johnson & Johnson has just failed in an attempt to extricate itself from a landmark trial in Oklahoma. Teva paid $85m to settle the Oklahoma action in May.

Purdue has also said its future could be threatened after agreeing to pay $270m to settle the Oklahoma claims.

Article by
Phil Taylor

11th July 2019

From: Marketing

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