Reckitt Benckiser to pay $1.4 billion to settle US probes into Suboxone Film marketing practices

Reckitt Benckiser announced Thursday that it agreed to pay up to $1.4 billion to settle federal investigations in the US related to the sales and marketing of the opioid addiction therapy Suboxone Film (buprenorphine/naloxone) by its former prescription pharmaceuticals business Indivior. The company noted that the deals with the Department of Justice and Federal Trade Commission resolve all claims relating to state Medicaid programmes for those states choosing to participate in the settlement.

According to Reckitt Benckiser, its board determined that the deal is in the best interests of the company and its shareholders as "it avoids the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment at a time of significant transformation." The company added that there "is no admission of any violation of law or any wrongdoing" under the settlement.

The Department of Justice detailed the charges against Indivior in April, with a federal grand jury indicting Indivior for allegedly engaging in an "illicit nationwide scheme" to increase prescriptions of Suboxone Film. The indictment claimed that the drugmaker obtained billions of dollars in revenue from Suboxone Film prescriptions by deceiving health care providers and health care benefit programmes into believing that Suboxone Film was safer, less divertible and less abusable than other opioid-addiction treatment drugs.

Commenting on the settlement, Deutsche Bank analysts said "this draws a line under an issue that would, at best, have resulted in additional cost, distraction and uncertainty and could, at worst, have led to much more costly and protracted legal proceedings." Morgan Stanley analysts called the settlement a "clear positive resolution" for Reckitt Benckiser, which as part of the settlement, has agreed to co-operate with investigations against Indivior.

The Department of Justice is seeking the forfeiture of at least $3 billion by Indivior, with the company noting in May that it has set aside $438 million related to the matter. Analysts at Jefferies said "the magnitude of the Reckitt Benckiser settlement is likely to be a focus, and in our view Indivior would be unlikely to afford this amount." The Jefferies analysts added "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."

Meanwhile, Indivior, which was spun-off from Reckitt Benckiser in 2014, raised its annual guidance on Thursday, citing "market share outperformance" of Suboxone Film when compared with historic analogues of branded pharmaceutical products facing generic competition, sending the company's shares up as much as 39%. The drugmaker now expects annual sales in the range of $670 million to $720 million, up from a previous prediction of $525 million to $575 million, with net income between $80 million and $130 million, lifted from a prior estimate of a loss of up to $40 million.

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