Attorneys General React To $1.6 Billion Mallinckrodt Settlement

Liz Carey

Houston, Texas (WorkersCompensation.com) – While a new settlement in numerous cases against the largest generic opioid manufacturer in the United States means states will get more money up front, they’ll still have to wait until the company comes out of bankruptcy.

In a new settlement, Mallinckrodt (MNK) will pay $1.6 billion into a trust that will pay for states’ costs as they fight the opioid epidemic.

Under the new agreement, MNK will pay $450 million into the trust upon emerging from bankruptcy. On the first and second anniversary of coming out of bankruptcy, the company will pay $200 million into the trust, and then pay $150 million each of the next five years.

Additionally, MNK agreed that its opioid business will be subject to stringent injunctive relief that will prevent marketing and ensure systems are in place to prevent drug misuse.

“This agreement is a significant step toward helping those victimized by one of the worst man-made epidemics in our state’s history,” said Texas Attorney General Ken Paxton. “My office has been aggressively working to hold opioid manufacturers accountable for their deceptive marketing of highly-addictive pain pills, which spurred an epidemic and left victims and families with unimaginable consequences. My office will continue to do everything it can to protect Texans and help our state heal from this crisis.”

The new agreement was necessary after MNK filed for bankruptcy on Monday, negating a previous agreement made in February. MNK said other legal issues, as well as the impact of COVID-19 were the cause of the bankruptcy filing. The new agreement would move $150 million from the last payment to the first.

In February, the company had warned that it planned to have its generic drug business file for bankruptcy as part of the settlement. And in August, it warned that the parent company and some other units may have to seek bankruptcy protection after a judge allowed the federal government to force it to pay higher rebates on its multiple-sclerosis drug, H. P. Acthar Gel to state Medicaid programs.

The agreement covers lawsuits brought against the company by 50 state attorneys general and other local subdivisions, and is part of a larger series of more than 3,000 lawsuits by states, local governments and municipalities against drug manufacturers and distributors over the opioid epidemic.

The lawsuits claim manufacturers engaged in deceptive marketing that promoted the use of opioids as pain medication, while down-playing the addictive nature of the drugs. Since 1999, the opioid epidemic has caused more than 450,000 overdose deaths in the U.S.

In multiple press releases on Monday, several states’ attorneys’ general applauded the new agreement that will go towards abating the opioid crisis.

“This is a significant development in our efforts to provide relief to Hoosiers who have been hurt by the unprecedented opioid crisis,” Indiana Attorney General Curtis Hill said in his press release. “Opioid misuse and addiction continues to afflict the people of Indiana, and we will continue to do everything in our power to mitigate the effects of this urgent and tragic public health emergency.”

It was not immediately clear how much money each state would receive, how the money would be distributed or how the trust will be administered.

“The enhancements to this already strong, global agreement will ensure more money flows to states more quickly to stop the death and destruction brought on by the national opioid crisis. … By holding Mallinckrodt accountable for its role in exacerbating the opioid crisis, we move closer to our goal of ending this epidemic and bringing relief to the Florida communities affected,” Florida’s Attorney General Ashley Moody said in her press release.

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