Reckitt to pay $1.4bn to end opioid addiction treatment investigations

Chesterfield whistle-blower feels vindicated after drug-company agrees to pay $1.4 billion for alleged false advertising

Chesterfield whistle-blower feels vindicated after drug-company agrees to pay $1.4 billion for alleged false advertising

British consumer health giant Reckitt Benckiser announced Thursday it will pay up to $1.4 billion (1.2 billion euros) to settle a dispute with U.S. authorities over the sale and marketing of an opioid addiction treatment.

"After careful consideration, the board ... determined that the agreement is in the best interests of the company and its shareholders".

The settlement "avoids the costs, uncertainty and distraction associated with continued investigations, litigation and the potential of an indictment at a time of significant transformation under RB 2.0 and during CEO transition", said RB's statement.

Laxman Narasimhan, who was chief commercial officer at PepsiCo, will succeed Rakesh Kapoor at the helm of the pharmaceuticals, personal care and "home hygiene" (Air Wick, Lysol, Calgon, Woolite, Vanish) company on September 1.

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 cyber attack, Reckitt's outgoing boss Rakesh Kapoor launched a plan to split the group into two business units - one for health and one for hygiene and home products.

Investors had feared the USA probes could hinder the transformation.

However, the settlement marks the largest payout so far by any drug company involved in what US President Donald Trump has called the country's epidemic of opioid addiction. The company, owned by Reckitt until 2014, also referred patients to doctors it knew to be prescribing opioids in a careless manner, the indictment said.

The settlement is the largest recovery for opioid drug mis-marketing in USA 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.

Federal prosecutors claimed that Reckitt "illegally obtained billions of dollars in revenue" by tricking healthcare providers into believing that Suboxone is safer and less susceptible to abuse than similar drugs although its active ingredient is an opioid. Thursday's settlement was only with RB Group, and not Indivior.

"The danger is that Narasimhan will be operating with one hand tied behind his back", Mould told the Reuters news agency. Paying the fine, the highest single penalty so far imposed on a company involved in the U.S. opioids crisis, also protects the company's participation in United States government programmes, Reckitt said.

The settlement means the British consumer goods giant will have to raise the amount of money it has set aside to cover the cost of the investigations to $1.5 billion, from an earlier provision of $400 million, the company said on Thursday.

Thomas Cook seeks £750m recapitalisation
"Old Town Road" singer, Lil Nas X, headlining TwitchCon