What Is The Current State Of Opioid Settlements?

The latest news from Mallinckrodt Pharmaceuticals indicates that the company filed for bankruptcy protection in early October. The company made the move after being saddled with lawsuits alleging it was one of the key players in the US opioid epidemic. The company lost its battle against the government to avoid paying higher rebates to state Medicaid programs for its generic opioid drug.

The company listed its liabilities and assets that range between $1 billion and $10 billion in filing bankruptcy with the US Bankruptcy Court for the District of Delaware. The drug maker, based in Stains-Upon-Thames, England, is facing more than 3000 lawsuits that were filed against it for using deceptive marketing to promote the use of painkillers that were known to be addictive.

Mallinckrodt, the highest volume producer of opioids in the US, agreed in February, 2020 to pay $1.6 billion in settlement for the thousands of lawsuits brought against it by local governments and several states over its role in the opioid crisis.

Representatives from the company said that it is planning to implement restructuring that will provide for the settlement of opioid claims. During the bankruptcy protection, the drug maker aims to resolve opioid-related claims against it and bring their debt down by as much as $1.3 billion. The company hopes to survive the period using cash on hand and income generated from its other operations.

The money to be paid in the settlement will be paid into a cash trust over a period of eight years. This money will be used to underwrite costs related to the treatment of opioid addiction as well as other related efforts throughout the country. After the restructuring plan is approved by the court, $300 million will be paid by Mallinckrodt as an initial payment. Mallinckrodt is one of the first opioid drug maker that has reached a settlement with municipal governments as well as most states.

Why is Mallinckrodt Pharmaceuticals being sued?

Mallinckrodt Pharmaceuticals is being sued for its role in the opioid epidemic.

The Centers for Disease Control and Prevention (CDC) stated that about 218,000 people died between 1999 and 2017 in the US from overdoses that were related to prescription opioid painkillers. Deaths related to opioid prescription painkillers were five times higher in 2017 than in 1999.

Mallinckrodt is the highest volume manufacturer of generic opioids in the United States. SpecGX, Mallinckrodt’s subsidiary, shipped over 210 million doses of oxycodone to Florida in 2010 alone. At the time, Florida was the epicenter of the black market of the opioid trade. The 30-milligram opioid pills from the drug marker were highly sought out by people with opioid addictions.

Mallinckrodt continue to ship and distribute the opioid drugs despite knowing the addiction risks. The drug maker is said to have continued fulfilling suspicious orders without checking to ensure that the drugs would not be diverted to the black market.

Mallinckrodt Pharmaceuticals and other opioid drug manufacturers like Purdue are being sued for having overstated the benefits of using the opioid painkillers. These manufacturers aggressively marketed the drugs to physicians and other healthcare providers, promoting the benefits of using opioid drugs while downplaying the addiction risks.

According to the State of New York attorney general, the number of prescriptions for opioid drugs quadrupled between 2000 and 2011 without any scientific evidence that the use of these drugs was medically necessary. The improper marketing and distribution of the opioids let to the deaths of hundreds of thousands across the US.

States and municipalities have filed lawsuits against Mallinckrodt and other opioid manufacturers with the aim of recovering the costs associated with the epidemic. Lawsuits by individuals and their families have also being filed with the aim of recovering damages caused by addiction to opioids as well as the loss of loved ones who succumbed to overdoses.

Generic drug manufacturers fueled the epidemic

Major players in big pharma including Purdue Pharmaceuticals and Johnson and Johnson have been at the center of opioid lawsuits. However, lesser-known manufacturers of generic opioids are now thought to have played a more crucial role in fueling the widespread opioid addiction. Mallinckrodt and other generic opioid manufacturers are thought to have manufactured pills that are more addictive than the brand-name medications.

The potent generic drugs from Mallinckrodt and other generic drug makers were widely sought after because they were more addictive and much cheaper than brand name drugs. Generic drug makers are believed to have controlled about 88% of the opioid market in the US. They managed to avoid the scrutiny of the US Drug Enforcement Agency (DEA) for years because they were not as well-known as the big pharma companies.

Lawsuits against Mallinckrodt indicate that the drug maker didn’t place enough emphasis on the addiction risks associated with the opioids it manufactured while knowing the full risks. The company also didn’t monitor suspicious orders that resulted in 47% of the company’s high-potency opioids being sold in Florida alone.