Pharma files for bankruptcy because of various opiate crisis lawsuits

Mallinckrodt files for Chapter 11 bankruptcy

Mallinckrodt has filed for Chapter 11 bankruptcy for all of its U.S. subsidiaries and some international subsidiaries, the company said Oct. 12. 

The bankruptcy restructuring will reduce the company’s total debt by about $1.3 billion and resolve opioid-related claims and litigation involving its drug Acthar.

“After many months of deliberation, negotiation and consideration of alternatives, Mallinckrodt’s management and board of directors determined that implementing a Chapter 11 restructuring provides the best opportunity to maximize the value of the enterprise and position the company for the future in light of the current challenges it faces,” said Mark Trudeau, Mallinckrodt’s CEO. 

Opioid claims against the company are to be channeled into one or more trusts which would receive $1.6 billion in structured payments. The company also agreed to pay $260 million over seven years to settle claims it knowingly underpaid Medicaid for Acthar. 

In the bankruptcy filing, Mallinckrodt listed both assets and liabilities in the range of $1 billion to $10 billion. 

The company will continue to operate as normal as it restructures for bankruptcy. 

Mallinckrodt had said in February that it would put its U.S. generics business in bankruptcy as part of a proposed opioid settlement. In August, the company said it was considering bankruptcy for the parent company and most of its subsidiaries. 

In early March, the U.S. sued Mallinckrodt, alleging it knowingly underpaid Medicaid hundreds of millions of dollars in rebates for Acthar. The U.S. Justice Department said the company had calculated its rebate payments to Medicaid based on the drug’s price in 2013, but it has raised the drug’s price by 20 percent since then. The company was ordered to pay $650 million to CMS. 

As part of its bankruptcy filing, Mallinckrodt said it would reset Acthar’s Medicaid rebate calculation as of July 1, and that state Medicaid programs will receive 100 percent rebates on Acthar Medicaid sales. The company said it will dismiss its appeal of the Justice Department’s ruling in the case. 

Read Mallinckrodt’s full news release here.

3 Responses

  1. Well let’s hope no one breaks their back tripping over all of that money…

    • I hear ya…tho my first reaction to your ironic comment was, “let’s hope LOTS of people break their back!” This societally sponsored medical barbarity has really turned me into a rotten, bitter, vindictive person. Not to mention one who occasionally needs a second to pick up on irony…or is it sarcasm? Sleep deprivation has fractured my brain. God forbid they treat THAT either, right? I’m so happy they’ll be able to pat themselves on the back (b/c it wasn’t THEIR fault –no dangerous drugs were given to me!) when I turn into an increasingly stupid psychotic then drop dead from diabetes (no family history, never overweight, always had a good diet), heart attack, stroke…all those things that severe, chronic sleep deprivation causes. Maybe they’ll dislocate their shoulders in the patting…I can only hope.

      • Money is the prime motive, not love, and like is said in several different ways; “It’s not a question of enough, pal. It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another.”

        “Opioid Crisis” created a new and active arena for such transfers of money and, among others, the pain patients were losers. I am similarly approaching zero health. So sorry for all of us. I am not going to suffer too long I know that much…

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