Tuesday, 16 July 2019
Latest news
Main » Reckitt to pay $1.4 billion to end long-running Indivior probes

Reckitt to pay $1.4 billion to end long-running Indivior probes

14 July 2019

Reckitt Benckiser (RB) has agreed to pay an eye-watering $1.4bn to the United States government to resolve criminal and civil litigation over the marketing of its opioid addiction treatment Suboxone.

Denying all of the accusations, Reckitt Benckiser said in a statement on Thursday (July 11th), "While RB has acted lawfully at all times and expressly denies all allegations that it engaged in any wrongful conduct, after careful consideration, the board of RB determined that the agreement is in the best interests of the company and its shareholders".

He added: "Given how aggressive USA regulators can be, there must be some relief that a line has been drawn under the issue and incoming Reckitt chief executive, Pepsi man Laxman Narasimhan, can start with a clean slate".

Shares in Reckitt, whose products range from Mucinex cold medicine to Lysol cleaners and Durex condoms, closed up 2.5 percent for the day.

In an effort to regain investor confidence after setbacks - including a safety scandal in South Korea, a failed product launch and a cyberattack - Reckitt's outgoing boss, Rakesh Kapoor, launched a plan to split the group into two business units - one for health and another for hygiene and home products.

RB said it will pay up to 1.4 billion US dollars (£1.1 billion) as part of an agreement with the US Department of Justice and the Federal Trade Commission to resolve the issue.

Investors had feared the USA probes could hinder the transformation.

Another company has reached a settlement with the government over its role in the opioid crisis.

Federal prosecutors charged that Indivior allegedly marketed a version of Suboxone (Suboxone Film) to medical professionals as less addictive and safer than other drugs containing its active ingredient, the opioid buprenorphine, according to the DOJ statement.

"The magnitude of the RB settlement is likely to be a focus, and in our view Indivior would be unlikely to afford this amount".

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.

"The danger is that Narasimhan will be operating with one hand tied behind his back", Mould told the Reuters news agency.

Separately, Indivior's shares shot up 37.7% to 61p after it raised full year profit and sales guidance thanks to a better than expected first half showing from Suboxone. Drug overdose deaths rose from 8,048 in 1999 to 47,600 in 2017. It said the deal would be funded through existing borrowing facilities and cash generation.

The FTSE 100 giant had previously set aside US$400mln to cover the cost of the investigations, but it will now up this provision to an eye-watering US$1.5bn.

Reckitt to pay $1.4 billion to end long-running Indivior probes