Reckitt Benckiser to pay $1.4bn over opioid treatment sales

Reckitt Benckiser to pay $1.4bn over opioid treatment sales

Reckitt Benckiser has agreed to pay a $1.4 billion fine to settle a USA investigation into the sales and marketing of opioid addiction treatment Suboxone film (buprenorphine and naloxone) by its former prescriptions business.

"While RB acted lawfully at all times and expressly denies all allegations that it has 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", it said in a statement to the FT.

Last month, RB picked PepsiCo executive Laxman Narasimhan as its next CEO, becoming the latest industry heavyweight to turn to a company outsider to tackle faltering growth and new media-savvy rivals.

But the indictment said that Indivior sought to boost sales by exaggerating the safety of Suboxone Film and connecting patients with doctors who were known to over-prescribe it and other opioids, taking advantage of the country's huge opioid addiction crisis.

Shares in Reckitt, whose products range from Mucinex cold medicine and Lysol cleaners, closed up 2.5%.

The settlement is the largest recovery for opioid drug mis-marketing in U.S. history, according to the Department of Justice, and is made up of $647m to the federal government, $700m to states and $50m to the Federal Trade Commission.

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Indivior has been charged in the United States with illegally increasing prescriptions for opioid addiction treatment Suboxone by deceiving doctors and healthcare benefit programmes into believing its film version was safer and less susceptible to abuse than similar drugs.

Investors had feared the US probes could hinder the transformation. Analysts at JP Morgan wrote in a note that settlement "clarifies the legal environment for RB and should allow the new management to focus on the RB 2.0 transformation". Although the business was spun out of Reckitt Benckiser in 2014, the alleged wrongdoing largely occurred in a period when Indivior was a wholly owned subsidiary of the consumer health giant behind household name brands including Durex, Dettol, Air Wick, Cillit Bang and Strepsils.

The settlement is the largest financial penalty issued that's tied to the opioid crisis, according to the report.

Reckitt said it would increase its provision related to the investigations to $1.5bn to cover both the cost of the settlement and "any remaining litigation exposures".

Analysts at Jefferies said: "While we expect this indicates a potential high-water mark for Indivior, the cases are independent and Indivior is preparing to go to trial with the Department of Justice and any potential update is not expected near-term".

The move by Reckitt came as Indivior lifted its outlook for 2019 sales and profit after a stronger-than-forecast first half.

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