Reckitt Benckiser Agrees To Pay $1.4 Billion to Settle Long-Running Opioid Investigation
British company, Reckitt Benckiser, agreed to pay $1.4 billion to resolve all U.S. government investigations and claims in what is the biggest drug industry settlement to date stemming from the nation's deadly opioid epidemic, ending U.S. Department of Justice and the Federal Trade Commission inquiries into the sales and marketing of Suboxone Film, an opioid-based drug.
Thursday, Reckitt Benckiser denied wrongdoing, but said the settlement deal "avoids the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment." A $1.4 Billion Dollar Distraction – but, of course, no admission of criminal conduct nor the commission of outright fraud. “Under the terms of the agreements, RB will pay a total of up to $1.4 billion to fully resolve all federal investigations into RB in connection with the subject matter of the Indivior indictment and claims relating to state Medicaid programs for those states choosing to participate in the settlement,” the company said in a statement. “The resolution will also protect the group’s participation in all U.S. government programs.” Therein lies the problem; none of these companies should be allowed to continue participation in “all of U.S. government programs.” Where is the incentive to discontinue such conduct?
“While RB has acted lawfully at all times, and expressly denies all allegations that it engaged in any wrongful conduct, after careful consideration the board of Reckitt determined that the agreement is in the best interests of the company and its shareholders,” the company said. What total BS. Acted lawfully, but agreed to pay $1.4 billion?
In April, the Justice Department charged Indivior with felony fraud and conspiracy. The federal grand jury in Virginia indicted Indivior on charges that the company had orchestrated a “nationwide scheme” that raked in billions by falsely promoting its under-the-tongue Suboxone Film as a more child-proof and less addictive version of the opioid addiction drug’s tablet form. The indictment hit the manufacturer with 28 felony counts involving mail, wire and health care fraud, and demanded at least $3 billion in cash — three times the company’s global revenue in 2018.
Federal prosecutors said that starting in 2010, Indivior falsely marketed its film as being safer and less prone to abuse than cheaper tablet forms, illegally earning billions of dollars in a "nationwide scheme" to bilk healthcare providers and insurers, including Medicaid. The spin-off, Indivior, said in a brief statement that it has noted RB's settlement, but said its case with the DOJ remains separate. Indivior declined to provide further details. It’s not out of the woods by any stretch.
Suboxone is a medication designed to help people suffering from opioid dependency. “We are confronting the deadliest drug crisis in our nation’s history. Opioid withdrawal is difficult, painful and sometimes dangerous; people struggling to overcome addiction face challenges that can often seem insurmountable,” said Assistant Attorney General Jody Hunt. "Drug manufacturers marketing products to help opioid addicts are expected to do so honestly and responsibly.”
“Today’s settlement represents a small step in the right direction towards holding opioid manufacturers responsible for their role in creating a public health crisis that continues to plague our country,” Scott Simmer of Baron & Budd, counsel for one of the whistleblowers, said in a statement. “During the opioid epidemic that has ravaged our country, it was critical that health care professionals and their patients have access to truthful information about drugs like Suboxone that could help save lives.”
Most of the $1.4 billion will go to various federal agencies, but $200 million will be divided up among states that sign on to the settlement deal, with the money going to reimburse their Medicaid budgets [$700 million to end claims that its marketing of Suboxone resulted in the submission of false claims to government health care programs, which includes $500 million to the federal government and up to $200 million to states that choose to opt in to the agreement, according to the DOJ; Reckitt also agreed to a non-prosecution agreement, under which it will forfeit $647 million of proceeds from Indivior; in the company’s deal with the FTC, Reckitt agreed to pay $50 million to settle the agency’s claims that if violated antitrust laws in an effort to thwart generic competition for Suboxone].
Thursday's payout is the largest so far by any drug company related to the country's epidemic of opioid addiction. The previous record was $600 million, paid in 2007 by Purdue Pharma LP, which makes OxyContin, after it admitted to downplaying the addiction risks. This has been a year of reckoning across the pharmaceutical industry. Insys Therapeutics, Purdue Pharma, and Teva Pharmaceutical Industries have agreed to pay state and federal agencies a combined total of more than half a billion dollars to settle opioid-related claims.
In May, seven current and former Insys executives pleaded guilty to or were convicted of federal racketeering and conspiracy charges tied to the marketing of opioid medications.
The founder and four former executives of Insys Therapeutics Inc. were convicted by a federal jury in Boston in connection with bribing medical practitioners to prescribe Subsys, a highly-addictive sublingual fentanyl spray intended for cancer patients experiencing breakthrough pain, and for defrauding Medicare and private insurance carriers.
Insys founder and former Executive Chairman John N. Kapoor, 76, of Phoenix, Ariz.; Richard M. Simon, 48, of Seal Beach, Calif., the former National Director of Sales; Sunrise Lee, 38, of Bryant City, Mich., a former Regional Sales Director; Joseph A. Rowan, 45, of Panama City, Fla., a former Regional Sales Director; and Michael J. Gurry, 55, of Scottsdale, Ariz., the former Vice President of Managed Markets, were convicted by the federal jury of RICO conspiracy. Sentencing has not yet occurred.
Prior to the start of the trial, two other high-level Insys executives pleaded guilty and testified during the trial: Michael Babich, of Scottsdale Ariz., the former CEO and President of the company, and Alec Burlakoff, of Charlotte, N.C., the former Vice President of Sales.
From May 2012 to December 2015, the Insys defendants conspired to bribe practitioners, many of whom operated pain clinics, in order to induce them to prescribe Insys’ fentanyl-based pain medication, Subsys, to patients often when medically unnecessary. Subsys is a powerful, rapid-onset opioid intended to treat cancer patients suffering intense breakthrough pain.
Sending these Insys executives to jail, the first time it will really have been done in the pharmaceutical arena at anywhere near this level, will hopefully start to send a message to these licensed drug dealers. In the past, a few small players have been sent jail, but never the executives pocketing hundreds of millions of dollars. It’s about time.
Insys later declared bankruptcy. Purdue Pharma has threatened filing for Chapter 11. And, Johnson & Johnson is in currently in trial in Oklahoma, with that State's Attorney General demanding $17 billion in compensation for the State of Oklahoma alone. The trial is expected to conclude in the next few weeks. These companies have no right to conduct business given the arrogance with which they have perpetrated such fraud for so many years.
The nationwide multidistrict opioid trial begins in October in the federal court in Ohio involving lawsuits filed against Big Pharma and numerous opioid manufacturers by more than 1,200 local governments around the U.S.
Reckitt Benckiser is still facing lawsuits from dozens of State Attorney Generals. Too bad.