Facing “significant litigation and debt issues,” embattled Mallinckrodt is filing for bankruptcy protection. At the same time, the company unveiled new details of proposed settlements covering opioid marketing and H.P. Acthar Medicaid rebate allegations.
The company plans to use the Chapter 11 bankruptcy process to restructure, reduce its debt by $1.3 billion and enter settlements with various plaintiffs over opioids and Acthar Gel. The process is the “best opportunity to maximize the value of the enterprise and position the Ccmpany for the future in light of the current challenges it faces,” CEO Mark Trudeau said in a statement. He acknowledged the company faces “significant litigation and debt issues.”
Mallinckrodt is entering bankruptcy in part because its potential legal liabilities, worth “several billion dollars,” are “otherwise unmanagable,” the drugmaker said.
On opioids, the company agreed to pay $1.6 billion to trusts in installments over several years and comply with an “operating injunction” on its opioid marketing. Fifty states or territories and a committee representing thousands of plaintiffs are participating in the bankruptcy proceedings.
And on Acthar, the company agreed to pay $260 million over seven years to the federal government over allegations it underpaid rebates for years. The amount is significantly lower than the $650 million the government originally floated in its lawsuit against the drugmaker.
Monday’s news follows years of legal battles and controversy for the company. Most recently, the drugmaker was the focus of a Congressional probe on drug pricing. After reviewing internal documents, committee concluded the drugmaker used price hikes to meet revenue targets and sought to minimize competition on its lucrative Acthar.