New York accuses Mallinckrodt of violating two state insurance laws in latest opioid case.
As the coronavirus pandemic continues to sweep across the nation, New York hasn’t forgotten about the implications of the opioid epidemic. It brought civil charges against manufacturer Mallinckrodt Plc alleging “insurance fraud for misrepresenting the safety and efficacy of its opioid drugs and leading to medically unnecessary prescriptions,” according to court documents. Governor Andrew Cuomo said, “The charges brought by New York’s Department of Financial Services are the first against a major opioid manufacturer in the regulator’s probe into entities that contributed to the nationwide opioid crisis.”
The state accused Mallinckrodt of using deceptive marketing tactics to purposefully exaggerate the benefits of its opioid pain relievers while downplaying the negative consequences of long-term use, especially addiction. It did so “knowing its conduct would result in the payment of fraudulent insurance claims on unnecessary prescriptions,” the lawsuit states. The company supplied “more than 1 billion pills to 5 million policyholders in the state from 2009 to 2019.”
Mallinckrodt previously announced that the firm, along with its specialty generics-focused subsidiaries, Mallinckrodt LLC, SpecGx LLC and other affiliates, had reached an agreement on the terms of a global settlement that would resolve all opioid-related claims against it. The agreement is supported by 47 state and U.S. Territory Attorneys General.
As the time, Mark Trudeau, President and Chief Executive Officer of Mallinckrodt, said, “Reaching this agreement in principle for a global opioid resolution and the associated debt refinancing activities announced today are important steps toward resolving the uncertainties in our business related to the opioid litigation. Importantly, when finalized, we believe the proposed settlement and capital restructuring activities will provide us with a clear path forward to achieving our long-term strategy, preserving value for our financial stakeholders and providing us with the flexibility to operate effectively.”
Trudeau continued, “In spite of the uncertainties impacting the business, we have continued to deliver strong earnings and cash flow as evidenced by our fourth quarter and 2019 results issued today. These results reflect the strength of both Specialty Brands and Specialty Generics and underscore our vision for the future of these businesses. Our pipeline continues to build momentum, with the expected filings of terlipressin and StratGraft® in the coming months, as well as the completion of key clinical study results and data readouts across the portfolio. Looking ahead, we remain focused on our vision to develop and bring to market innovative therapies for under-served patients with severe and critical conditions.”
New York’s case, filed after the intended blanket settlement, also follows a lawsuit filed by the Department of Justice earlier this year accusing Mallinckrodt of underpaying hundreds of millions of dollars in Medicaid rebates associated with its Acthar Gel treatment. The company responded at the time, “The company has previously addressed why the government’s position is wrong both on the law and the facts.” In the latest case, it was charged with violating two New York insurance laws that carry civil penalties of up to $5,000 per violation.