Mallinckrodt Pharmaceuticals, based in Staines-upon-Thames, England, with its U.S. headquarters in St. Louis, Missouri, produces specialty pharmaceutical products, including generic drugs and imaging agents. Key generic specialty products include Hydrocodone API and tablets and Oxycodone API and tablets
As of 1988, Mallinckrodt was the only company in the US that is allowed to receive cocaine, which it has used to make cocaine hydrochloride, a prescription drug used in hospitals as a local anesthetic by eye and ear, nose and throat doctors.
To combat an escalating opioid epidemic, the Drug Enforcement Administration trained its sights in 2011 on Mallinckrodt Pharmaceuticals. It was the first time the DEA had targeted a manufacturer of opioids for alleged violations of laws designed to prevent diversion of legal narcotics to the black market. And it would become the largest prescription-drug case the agency has pursued.
Ultimately, the DEA and federal prosecutors would contend that the company ignored its responsibility to report suspicious orders as 500 million of its pills ended up in Florida between 2008 and 2012 – 66 percent of all oxycodone sold in the state. Government investigators alleged in internal documents that the company’s lack of due diligence could have resulted in nearly 44,000 federal violations and exposed it to $2.3 billion in fines, according to confidential government records and emails obtained by The Washington Post.
But six years later, after four investigations that spanned five states, the Washington Post reports that the government has taken no legal action against Mallinckrodt. Instead, the company has reached a tentative settlement with federal prosecutors, according to sources familiar with the discussions. Under the proposal, which remains confidential, Mallinckrodt would agree to pay a $35 million fine and admit no wrongdoing.
“Mallinckrodt’s response was that ‘everyone knew what was going on in Florida but they had no duty to report it,” according to an internal summary of the case prepared by federal prosecutors and obtained by The Post.
The case shows how difficult it is for the government to hold a drug manufacturer responsible for the damage done by its product. DEA investigators appalled by rising overdose deaths said they worked for years to build the biggest case of their careers only to watch it falter on uncertain legal territory and in the face of stiff resistance from the company.
The drug company said that the agreement in principle is subject to additional review and approval by the U.S. Justice Department and U.S. Drug Enforcement Administration and will not have a material effect on Mallinckrodt’s financial condition. In a statement, a Mallinckrodt spokesman said the company has worked hard to fight drug diversion.
The U.S. attorney’s office in Detroit, which is handling the case, issued a statement. “Our office works diligently to use all the legal tools available to us to hold corporations responsible for their actions,” acting U.S. attorney Daniel Lemisch said. “This is particularly true in a highly regulated industry such as the manufacture of opioids. As this case is still in settlement negotiations, we cannot comment on the specifics of the matter.”