British company Reckitt Benckiser has agreed to pay $1.4 billion to resolve all U.S. government investigations and claims in what is the biggest drug industry settlement to date stemming from the nation's deadly opioid epidemic.
In a statement Thursday, Reckitt Benckiser denied wrongdoing but said the settlement deal "avoids the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment."
The company's former Indivior division, spun off in 2014, makes an opioid-addiction drug called Suboxone Film that dissolves under the tongue. In April, the Justice Department charged Indivior with felony fraud and conspiracy.
Federal prosecutors said that starting in 2010, Indivior falsely marketed its film as being safer and less prone to abuse than cheaper tablet forms, illegally earning billions of dollars in a "nationwide scheme" to bilk healthcare providers and insurers including Medicaid.
Indivior has denied the allegations. Prosecutors say the company should forfeit at least $3 billion in penalties if found guilty.
In announcing the Reckitt Benckiser settlement, the Justice Department noted that Suboxone is a medication designed to help people suffering from opioid dependency. "Drug manufacturers marketing products to help opioid addicts are expected to do so honestly and responsibly," said Assistant Attorney General Jody Hunt.
Most of the $1.4 billion will go to various federal agencies, but $200 million will be divided up among states that sign on to the settlement deal, with the money going to reimburse their Medicaid budgets.
While the payout is noteworthy for its size, this has been a year of reckoning across the pharmaceutical industry. Insys Therapeutics, Purdue Pharma and Teva Pharmaceutical Industries have agreed to pay state and federal agencies a combined total of more than half a billion dollars to settle opioid-related claims.
In May, seven current and former Insys executives pleaded guilty to or were convicted of federal racketeering conspiracy charges tied to the marketing of opioid medications. That company later declared bankruptcy. Purdue Phama has talked openly about filing for Chapter 11.
Meanwhile, Johnson & Johnson is in court in Oklahoma, with that state's attorney general demanding $17 billion in compensation. That trial is expected to wrap up early next week.
Another big trial begins in October involving lawsuits filed against Big Pharma by more than 1,200 local governments around the U.S. That consolidated case will be heard by a federal court in Ohio.
This is the kind of opioid-related legal chaos Reckitt Benckiser hopes to avoid, but it may not be completely in the clear. One of the industry's big fears is that companies will make big payouts but face lingering liability.
Reckitt Benckiser is still facing lawsuits from dozens of state attorneys general. Some officials may choose to take part in this federal settlement, but others may keep fighting in court, pushing for separate opioid settlements.
The Centers for Disease Control and Prevention reports more than 200,000 people died from prescription opioid overdoses in the U.S. from 1999 to 2017. Advocates hope much of the settlement money will eventually go to help communities and individuals struggling with high rates of addiction and overdose deaths.
AUDIE CORNISH, HOST:
The U.S. government will collect $1.4 billion in a settlement connected to the opioid epidemic. The record amount will be paid by the British company Reckitt Benckiser. North Country Public Radio's Brian Mann joins us now with details.
Hey there, Brian.
BRIAN MANN, BYLINE: Hi, Audie.
CORNISH: So needless to say, it's not a household name 'cause I'm pretty sure I messed it up.
CORNISH: Can you tell us (laughter) about the name of this firm and about the drug that it makes that's at the center of this deal?
MANN: Right. Reckitt Benckiser made Suboxone Film. It was actually made by a division of the company called Indivior, which the parent company spun off five years ago. This is an opioid medication that's actually used to treat people recovering from addiction. You take it by dissolving it under your tongue rather than in tablet form. And back in April, Audie, the Justice Department filed criminal charges, claiming this drug was marketed using false claims that it's safer, less prone to abuse than cheaper alternative drugs. The feds said the company earned billions of dollars bilking healthcare providers and insurers, including Medicaid.
CORNISH: The $1.4 billion - what is the U.S. government going to do with that money?
MANN: Yeah. Well, most of this will go into the federal government's coffers. But interestingly here, $200 million will be divided up between any states that sign onto the settlement - the money going to reimburse their Medicaid budgets.
CORNISH: But if the company doesn't make this drug anymore and now you've got the spin-off company that makes it, why did they agree to this huge payout?
MANN: Yeah, so Reckitt Benckiser issued a statement today denying any wrongdoing. But they basically said they want to get out from under all the uncertainties stemming from possible criminal indictments and civil lawsuits tied to the epidemic. A lot of big drug companies are in this same box right now. They made billions of dollars selling opioid medications, and now they face this wave of lawsuits and possible criminal charges and a ton of harsh publicity.
CORNISH: Speaking of that wave of lawsuits, how does this fit into the other kind of payments that we've seen from drug companies this year?
MANN: Yeah. This is really kind of a year of reckoning for Big Pharma. Insys Therapeutics, Purdue Pharma, Teva Pharmaceuticals - they've agreed to pay more than half a billion dollars between them to state and federal agencies. And these shockwaves just keep rolling through the drug industry. In May, seven Insys executives were found guilty on racketeering charges. That company later declared bankruptcy. Purdue Pharma, another big player - they've talked openly about filing for Chapter 11. And Johnson & Johnson, a really big name-brand company - they're in court right now in Oklahoma. That state's attorney general is demanding $17 billion in compensation. And this is really the kind of opioid-related legal chaos that Reckitt Benckiser is hoping to leave behind.
CORNISH: Now that Reckitt Benckiser has made this deal, are they cleared from future litigation?
MANN: Well, they're not. And this is one thing that the industry is afraid of - that they'll make these big payouts and still face lingering liability. The Centers for Disease Control and Prevention reports more than 200,000 Americans have died from prescription opioid overdoses. A lot of communities have been very hard-hit, so there are a lot of potential lawsuits out there. Reckitt Benckiser is still being sued right now by dozens of states. Their attorneys general have filed those suits. Some of those states may choose to take part in this federal settlement, but others could keep fighting in court. And that could mean a push for separate settlements.
CORNISH: That's North Country Public Radio's Brian Mann. He covers opioid litigation for NPR.
Thank you so much, Brian.
MANN: Thank you, Audie. Transcript provided by NPR, Copyright NPR.