State AG: Mallinckrodt agrees to $1.6B settlement

Generic drugmaker files for bankruptcy amid lawsuits stemming from OD deaths

Connecticut Attorney General William Tong announced Mondaythat the generic opioid manufacturer Mallinckrodt has agreed to a $1.6 billion settlement to resolve a host of lawsuits that arose in response to tens of thousands of deadly opioid overdoses nationwide fueled, in part, by prescription drugs.

Exactly how the money will be distributed remains under negotiation, Tong said, but the settlement and pressures from the COVID19 pandemic led the drug maker, one of the largest supplier of generic opioids, to file bankruptcy this week.

“Mallinckrodt is the nation’s highest volume manufacturer of generic opioids. For years, they balanced their business on the backs of a product they knew was dangerous and deadly. As Mallinckrodt now collapses and files for bankruptcy, this agreement ensures $1.6 billion will be placed in a trust and used to directly address the pain, suffering and trauma caused by the opioid epidemic. We continue to fight to ensure all players in the addiction industry are held fully accountable for the lives lost due to their greed and reckless pursuit of profits,” Tong said in a statement announcing the settlement.

In the settlement framework, Mallinckrodt has agreed to pay the moneyinto a trust, which will go toward response to the opioid epidemic and help address individual claims against the company for its role in the crisis, Tong’s office said.

The framework calls for the company to pay $450 million when it emerges from Chapter 11 bankruptcy, $250 million in the first and second year after emerging from bankruptcy and then $150 million a year for the third through seventh year after leaving bankruptcy, Tong’s office said. The company filed for bankruptcy in Delaware on Monday.

This agreement was reached in an effort to resolve hundreds of lawsuits that have emerged in recent years as families, along local and state governments, sought to hold drug makers accountable for the deadly toll of an epidemic that many say started with prescription pain medicine.

In announcing plans to enter bankruptcy, Mallinkrodt CEO and President Mark Trudeau said: “We have worked diligently over the last several months to evaluate all available options to achieve a comprehensive resolution to the significant litigation and debt issues overhanging our business. Having entered our restructuring support agreement and reached agreements in principle with a key group of opioid plaintiffs, other governmental parties and our guaranteed unsecured noteholders, we are beginning this process in a highly organized manner.”

A number of officials and local governments in Connecticut are among those whohavefiledlawsuits against Mallinckrodt and other prescription opioid manufacturers.

Like Mallinckrodt, Stamford-based Purdue Pharma, the maker of Oxycontin, declared bankruptcy last year, the company said, in part of a move toward an “agreement in principle” with a number of attorneys general and local governments worth $10 billion. Theagreement called for the Sackler family, whofounded and ran Purdue Pharma, to contribute at least $3 billion.

This agreement was opposed by a group of states, including Connecticut, and Tong was among those critical of the company’s bankruptcy filing.

Tong told The Courant at the time, “The idea that there’s $10 to $12 billion on the table isn’t true.” He said the company move toward bankruptcy was “to extinguish the claims of states, cities and families of overdose victims.”

On Monday, Tong’s office said the state’s suit against Purdue was on hold during the bankruptcy proceedings.

“We continue to fight through that proceeding to ensure that Purdue and the Sacklers are held fully accountable for their role in the opioid epidemic,” said Elizabeth Benton, Tong’s director of communications.