Mallinckrodt Pharmaceuticals has agreed to pay $1.6 billion to settle thousands of legal actions in a criminal case trying to decide who should be held accountable for the damages of the opioid disaster.
The generic drugmaker disclosed it had a tentative deal with a group of legal counsels representing local governments filing charges against different pharmaceutical firms over opioids - and that the agreement has the backing of the principal legal officer of 47 states.
Under the conditions of the agreement, Mallinckrodt will pay the claimants $1.6 billion spread over eight years. The payments would start after the drug company's specialty generics division emerges from its filing of Chapter 11 bankruptcy.
The move will exonerate all opioid-related claims versus the company. On top of this, Mallinckrodt - one of the biggest makers of generic opioids - would issue warrants for up to 19.99 percent of its share.
The announcement comes in the same week that OxyContin maker Purdue Pharma, which declared itself bankrupt last September, launched an extensive, nationwide information campaign to inform potential claimants.
Mallinckrodt, headquartered in Staines-Upon-Thames in England, was among the biggest-volume producers of opioid in the United States at the height of the country's prescription drug scandal, delivering 2.3 billion pills from 2006 to 2014, government records showed.
For 2010 alone, Mallinckrodt's SpecGX affiliate shipped 210 million doses of oxycodone to Florida, then the central hub of the black market substance trade. The company's strong 30-mg pills were especially very in demand among people with an addiction.
The generic pharmaceutical firm's agreement with its lenders would include providing a$800 million four-year loan term. Proceeds of the loan will be used to repay all of the company's 4.88 percent senior notes due April this year.
Notably, fourth-quarter profits of $805 million and adjusted earnings of $2.40 per share beat estimates, SVB Leerink's Fadia said. On a year-on-year basis, Mallinckrodt's sales were down 3.7 percent and earnings rose to 10.2 percent.
US District Judge Dan Polster, who oversees the Cleveland case, disclosed that he wants to see a worldwide settlement of all federal claims. Tuesday's announcement followed after over 20 attorneys general signed a letter junking an $18 billion deal proposed by three of the country's largest opioid firms.
Reaching the agreement for a global opioid resolution and the associated debt restructuring are crucial steps toward resolving "uncertainties in our business related to the opioid litigation," Mark Trudeau, president, and CEO of Mallinckrodt, said.
