Reckitt Benckiser pays $1.4 billion in opioid settlement

Reckitt Benckiser to pay $1.4bn fine over opioid treatment sales

Reckitt Benckiser to pay $1.4bn fine over opioid treatment sales

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

Though UK-based RB maintains it did nothing wrong, the board opted to make peace with feds in the best interests of the company and shareholders.

"It avoids the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment at a time of significant transformation under RB 2.0 and during CEO transition", Reckitt said in its announcement.

PHOTO:Rakesh Kapoor, chief executive officer of Reckitt Benckiser Group Plc, pauses during a Bloomberg Television interview in London, Feb. 19, 2018. Shares in Reckitt Benckiser (RB), whose products range from Mucinex cold medicine and Lysol cleaners, rose as much as 3.3% in early trading yesterday.

Before the generic versions became available, Reckitt and its former subsidiary developed a dissolvable oral film version of Suboxone and worked to shift prescriptions to this patent-protected film, according to the FCT complaint.

According to the company's Thursday's (July 11th) statement, the Reckitt Benckiser had reached an accord with the US Department of Justice alongside US Federal Trade Commission (FTC) in order to resolve the probe that had spin-off the company's entire pharmaceutical business back in 2014.

Investors had feared the United States probes could hinder the transformation.

Federal prosecutors claimed that Reckitt "illegally obtained billions of dollars in revenue" by tricking healthcare providers into believing that Suboxone is safer and less susceptible to abuse than similar drugs although its active ingredient is an opioid.

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 USA in the last few years. Separately yesterday, Indivior said it had no new information to provide on its legal proceedings with the US Department of Justice, which are separate from RB.

"The magnitude of the RB settlement is likely to be a focus, and in our view Indivior would be unlikely to afford this amount".

"Because the fine will be met through existing borrowing facilities and cash flow, Narasimhan will inherit a company in slightly straitened circumstances, particularly as the balance sheet had already been stretched by the 2017 acquisition of Mead Johnson for an eye-watering US$17bn". RB said it would increase its provision related to the investigations to $1.5bn to cover both the cost of the settlement and 'any remaining litigation exposures.