St. Louis-based pharmaceutical company Mallinckrodt on Monday filed for bankruptcy after years of lawsuits alleging the drug company shared blame for the opioid epidemic.
State, local and tribal governments have sued Mallinckrodt and other opioid manufacturers, distributors and marketers for their role in the epidemic, saying the companies pushed the painkillers to patients despite knowing how addictive and dangerous they were.
Hundreds of thousands of people have died after overdosing on opioids in the United States.
The company announced it will place $1.6 billion into a trust to pay plaintiffs over eight years, starting when the company emerges from its restructuring.
“We are now on a clear path to eliminating legal uncertainties, maximizing enterprise value, strengthening our balance sheet and moving ahead with our strategic plans,” Mallinckrodt President and CEO Mark Trudeau said.
Earlier this year, the company had reached a preliminary agreement with several plaintiffs that determined the amount and pay schedule of the settlement.
The specter of never-ending opioid lawsuits has been scaring investors away from the company, said Andrew Pollis, a professor at Case Western Reserve University who specializes in opioid litigation.
“There’s a decent argument to be made that the best way to try to put finality on this is to pay a huge chunk voluntarily, lose your credit rating and reorganize,” Pollis said.
The lawsuits contend that companies throughout the medical supply chain should share the costs related to treating and preventing opioid addiction. There’s no way to tell how much blame Mallinckrodt shares in opioid-related deaths, he said.
Oxycontin maker Purdue Pharma and other companies have cut their losses and sought bankruptcy protection to escape the thousands of lawsuits, Pollis said.
“This is going to be the burden around the necks of every player in the industry for the next infinite number of years unless they individually choose to bring it to a head sooner,” he said.
Mallinckrodt maintains its operational headquarters north of Lambert International Airport. Its legal headquarters is in Dublin, Ireland, and its executive headquarters is in Surrey, United Kingdom.
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