(Reuters) – Mallinckrodt filed for bankruptcy protection on Monday, saddled with lawsuits alleging it helped fuel the U.S. opioid epidemic.
Adding to its woes, the company in March also lost a court battle to avoid paying higher rebates to state Medicaid programs for its top-selling drug.
Mallinckrodt said on Monday it had agreed to pay $1.6 billion over several years to settle opioid-related litigation. About $450 million would be paid as part of its settlement once the company emerged from chapter 11 bankruptcy.
The company would then pay $200 million in the first and second year after its emergence from the bankruptcy, and $150 million subsequently through the seventh year.
Mallinckrodt had agreed to pay $260 million over seven years to resolve disputes related to its multiple-sclerosis drug H.P. Acthar gel and pay out rebates to state Medicaid programs.
The company had said in February it planned to have its generic drug business file for bankruptcy as part of a tentative $1.6 billion opioid settlement to resolve claims by state attorneys general and U.S. cities and counties.
Mallinckrodt also plans to dismiss its appeal to a March ruling related to Acthar gel, whose price per-vial has risen from about $50 in 2001 to $38,892 in 2019.
During the bankruptcy protection, the company said it aims to resolve opioid-related claims and reduce its debt by about $1.3 billion, while surviving on cash on hand and cash generated from operations.
The company listed both assets and liabilities in the range of $1 billion to $10 billion in a filing with the U.S. Bankruptcy Court for the District Of Delaware.
(Reporting by Nate Raymond in Boston, Rama Venkat and Manas Mishra in Bengaluru; Editing by Arun Koyyur and Shounak Dasgupta)