Faced with “significant litigation and debt issues”, the besieged Mallinckrodt is deposit for bankruptcy protection. At the same time, the company unveiled new details on proposed regulations covering the marketing of opioids and the HP Acthar Medicaid remission claims.
The company plans to use the Chapter 11 bankruptcy process to restructure, reduce its $ 1.3 billion debt and strike deals with various opioid and Acthar Gel plaintiffs. The process is the “best opportunity to maximize the value of the business and position the business for the future in light of the current challenges it faces,” CEO Mark Trudeau said in a statement. He acknowledged that the company was facing “significant litigation and debt issues.”
Mallinckrodt goes bankrupt in part because its potential “multi-billion dollar” legal liabilities are “otherwise unmanageable,” the drugmaker said.
Regarding opioids, the company has agreed to pay $ 1.6 billion to trusts in installments over several years and to comply with an “operating order” on its marketing of opioids. 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 the federal government $ 260 million over seven years for allegations it underpaid rebates for years. The amount is significantly lower than the $ 650 million the government initially threw in its lawsuit against the drugmaker.
Monday’s news follows years of legal battles and controversy for the company. More recently, the drugmaker was the subject of a Congressional drug price inquiry. After reviewing internal documents, the committee concluded the drugmaker has used price hikes to meet its revenue targets and sought to minimize competition on its lucrative Acthar.