Reckitt Benckiser to pay $1.4bn fine over opioid treatment sales

Andrew Cummings
July 14, 2019

Reckitt Benckiser Group has agreed to pay $1.4 billion to settle a USA investigation into the company's sales and marketing of Suboxone Film, a product managed by its spinout company, Indivior.

Reckitt agreed to pay as much as US$1.4 billion to resolve the U.S. Department of Justice and the Federal Trade Commission probes, the maker of Durex condoms and Lysol cleaning products said in a statement on Thursday.

The deal came after Indivior in April was indicted and accused of deceiving doctors and healthcare benefit programs into believing Suboxone Film, itself a form of opioid, was safer and less susceptible to abuse than similar drugs.

The federal investigation centred on a former Reckitt pharmaceutical subsidiary - spun off in 2014 and renamed Indivior - and marketing practices it deployed for Suboxone between 2006 and 2015.

Though UK-based RB maintains it did nothing wrong, the board opted to make peace with feds in the best interests of the company and shareholders.

The settlement avoids "the costs, uncertainty and distraction associated with continued investigations", Reckitt said, even though the company denies any wrongdoing.

The indictment said Indivior also used an internet and telephone programme that had been touted as a resource for opioid-addicted patients to connect them to doctors it knew were prescribing Suboxone and other opioids at high rates and under questionable circumstances.

Reckitt is in the process of separating its business into two divisions, one focusing on health, and the other on hygiene and household products. Laxman Narasimhan is to take over as chief executive in September, replacing Rakesh Kapoor. But investors feared the United States investigations could hinder the company's transformation.

The resolution is the largest recovery by the U.S. in a case concerning an opioid drug and includes the forfeiture of proceeds totalling $647 million, civil settlements with the federal government and the states totalling $700 million, and an FTC settlement.

Analysts at Jefferies said: "While we expect this indicates a potential high-water mark for Indivior, the cases are independent and Indivior is preparing to go to trial with the Department of Justice and any potential update is not expected near-term". Thursday's settlement was only with RB Group, and not Indivior.

The company said it would increase its provision related to the investigations to $1.5 billion to cover both the cost of the settlement and "any remaining litigation exposures". 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.

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