The California Attorney General announced a global settlement framework between state attorneys general, local subdivisions, and Mallinckrodt, its subsidiaries, and certain other affiliates. Mallinckrodt is currently the largest generic opioid manufacturer in the United States.
The company said that it had an agreement with a key committee of lawyers representing thousands of local governments suing various drug industry players over opioids – and that the deal has the support of the attorneys general of 47 states and territories.
In the agreement, Malinckrodt agrees to pay $1.6 billion in cash to a trust that will cover the costs of opioid addiction treatment and related efforts, with the potential for increased payment to the trust. The company also agrees that its future generic opioid business will be subject to stringent injunctive terms that, among other things, will prohibit marketing of its opioid products and ensure systems are in place to prevent the drugs from falling into the wrong hands.
Documents gathered as the company prepared for trial showed that a Mallinckrodt sales manager told a distributor in 2009 of the pills: “Just like Doritos; keep eating, we’ll make more.” A company spokesman later called the statement “outrageously callous.”
The company argued in court filings that unlike makers of brand-name drugs, it did not promote opioids to doctors or understate the addiction risks. But plaintiffs in the cases said Mallinckrodt continued to ship suspicious orders without making sure the drugs weren’t going to be diverted to the black market.
Under its agreement, Mallinckrodt is filing for bankruptcy. The plan calls for it to make payments for eight years after the company emerges from the protections. That route is similar to one OxyContin maker Purdue Pharma is taking to settle opioid claims against it.
“Reaching this agreement in principle for a global opioid resolution and the associated debt refinancing activities announced today are important steps toward resolving the uncertainties in our business,” Mark Trudeau, president and CEO of the company, said in a statement.
Joe Rice, a lawyer on the executive committee of plaintiffs suing in federal court over opioids, said in an interview Tuesday that some details of the Mallinckrodt agreement still remain to be ironed out.
Mallinckrodt’s announcement comes weeks before a trial on the toll of opioids is scheduled to start in Central Islip, New York. The looming trial has been a factor in a ramped-up push for other drugmakers and distributors to settle, as well.
There have been increasingly public tensions between attorneys general and the private lawyers for local governments over the biggest of the proposed settlements, which would involve at least the three biggest U.S. drug distribution companies.
States have also been divided on whether to accept the deal, under which the distributors would pay a total of $18 billion over 18 years.