Reckitt hammered by $1.4bn opioid settlement bill

Cornelia Mascio
Luglio 14, 2019

Reckitt Benckiser has agreed to pay a $1.4 billion fine to settle a United States investigation into the sales and marketing of opioid addiction treatment Suboxone film (buprenorphine and naloxone) by its former prescriptions business.

The maker of Nurofen and Durex said it had reached a deal with the US Department of Justice and Federal Trade Commission to resolve the long-running inquiry into sales and marketing of Suboxone Film, an opioid-based drug.

An indictment back in April claimed Indivior had marketed its star drug as safer and less abusable than other treatments, deceiving healthcare providers and allowing the company to rake in billions of dollars in extra sales.

Drugmaker Indivior Plc on Thursday raised its profit and revenue guidance for the full year as its blockbuster opioid drug Suboxone lost market share at a lower pace than expected, bolstering its first-half performance.

The company said it had acted lawfully at all times and denied any wrongdoing, but had determined that the agreement was in the best interest of shareholders.

It said the agreement avoided the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment at a time of significant change for the company, which is undergoing a restructuring plan and handing over to a new chief executive.

The dissolvable film form of the drug was marketed as having a lower risk of being abused, but prosecutors say Indivior knew it could potentially be more risky.

While welcoming the settlement, AJ Bell investment director Russ Mould said the cost could limit incoming CEO Laxman Narasimhan's ability to undertake much-needed investment in Reckitt's brands.

In an effort to regain investor confidence after setbacks - including a safety scandal in South Korea, a failed product launch and a cyberattack - Reckitt's outgoing boss, Rakesh Kapoor, launched a plan to split the group into two business units - one for health and another for hygiene and home products.

Reckitt Benckiser shares rose 2.6% to 65.95 pounds at 0839 GMT on July 11.

Investors had feared the U.S. probes could hinder the transformation.

The settlement is the largest financial penalty issued that's tied to the opioid crisis, according to the report. Analysts at JPMorgan wrote in a note that the settlement "clarifies the legal environment for RB and should allow the new management to focus on the RB 2.0 transformation". In effect, the settlement would require the British consumer goods group to raise an amount of $1.5 billion to cover costs of investigation, however, previously the company had told that it had been seeking a settlement at $400 million. This morning it said it will increase the provision to $1.5 billion in order to cover the settlement and any remaining litigation exposures.

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