Mallinckrodt proposes $1.6bn deal to settle opioid litigation
Mallinckrodt is placing a $1.6 billion settlement package on the table as it tries to bring litigation related to the US opioid crisis to a conclusion.
The UK drugmaker is also planning to seek bankruptcy protection for its generics drug division as part of the deal, which the company says has been agreed by “a broad-based group of 47 state and US territory attorneys general.”
The specialty generics businesses covered by the deal are involved in the manufacture of opioid painkillers along with other drugs, and Mallinckrodt plc would not be covered by the Chapter 11 bankruptcy filing and the business would continue operating as normal throughout the process.
The $1.6 billion payout would be made over eight years and would go in the main towards establishing a fund that would be used to cover the costs of opioid addiction treatment.
If implemented, it would resolve all opioid-related claims against the company filed by “a court-appointed plaintiffs’ executive committee representing the interests of thousands of plaintiffs,” said Mallinckrodt chief executive Mark Trudeau on a conference call.
“To complete the proposed settlement, the company will continue to engage with the plaintiffs group to finalise the details and satisfy the terms of the agreement,” he added.
If agreed, the bankruptcy filing should take place in the first half of the year and would emerge from the process in the coming years as “a fully operational indirect wholly-owned subsidiary of Mallinckrodt plc.”
There’s still no guarantee the deal will be accepted of course, although with 47 attorneys general on board there seems to be light at the end of the tunnel for Mallinckrodt.
Earlier this month, 21 US states rejected an $18 billion proposal by pharma wholesalers McKesson, AmerisourceBergen and Cardinal Health to settle claims relating to their role in the opioid epidemic.
Those resisting the deal argued that the payments were too small to have a material impact on their businesses and so were inadequate as a penalty.
Under the proposal with Mallinckrodt, once the generics business emerges from bankruptcy protection, plaintiffs would receive $300 million, with further payments of $200 million made in each of the following two years. Thereafter, $150 million would be paid in years three to eight.
Mallinckrodt’s total revenues were $3.16 billion last year, with speciality generics accounting for $739 million of that total.
Last year, the UK company said it had put a prior plan to spin out its generics unit on hold while it gauged the impact of the US opioid litigation.
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