Mallinckrodt said Tuesday that it reached a global agreement in principle to pay $1.6 billion to settle all opioid-related claims against the company, with shares jumping as much as 18% on the news. The deal has been reached with an executive committee representing thousands of plaintiffs in the opioid multi-district litigation and is supported by 47 US states and US Territory Attorneys General.
According to Mallinckrodt, the proposed settlement will be facilitated through a Chapter 11 filing by certain of its specialty generics-focused subsidiaries, which manufacture generic opioid products, among other medicines. The company noted that once the specialty generics segment emerges from bankruptcy protection, plaintiffs will receive $300 million, with further payments of $200 million made in each of the following two years. In addition, $150 million would be received every year on the third through eighth anniversaries of emergence.
The settlement comes a day after sources suggested that Mallinckrodt was in talks with creditors about a potential Chapter 11 filing for its US generics business in a bid to resolve claims over its alleged role in the country's opioid crisis, sending company shares down as much as 45% on the news. The drugmaker had previously acknowledged that it may be "necessary or advisable" for it to restructure its debts in a bankruptcy proceeding over the allegations.
CEO Mark Trudeau said that the settlements "are important steps toward resolving the uncertainties in our business related to the opioid litigation." Mallinckrodt noted that the specialty generics segment is expected to remain an indirect, wholly-owned subsidiary of the company, adding that upon emergence from the bankruptcy, it will continue to evaluate strategic options for the business.
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