Mallinckrodt Pharmaceuticals, the Irish–based manufacturer of generic drugs, agreed to pay $1.6 billion to resolve the mounting lawsuits that claim the manufacturer of fueling the opioid epidemic, which resulted in tens of thousands of deadly opioid overdoses across the U.S. The news was announced by Connecticut Attorney General William Tong on Monday.
The company, after losing on multiple fronts, filed for bankruptcy in Delaware on the same day. Filing bankruptcy allows companies to drop the debt and other liabilities and stay in business. According to the settlement agreement, the company agreed to pay the money to a trust, which will be used to address individual claims brought against the company for causing the opioid crisis.
Tong’s office said that the settlement requires the company to pay $450 million when it emerges from Chapter 11 bankruptcy, $250 million in the first and second year after emerging from bankruptcy, and then $150 million a year for the third through the seventh year after leaving bankruptcy.
Several officials and local governments in Connecticut have also filed lawsuits against Mallinckrodt and other opioid manufacturers. The agreement is an effort to resolve all the lawsuits that have emerged over the years.
Mallinckrodt CEO and President Mark Trudeau, while announcing the plan to enter bankruptcy, said that the company worked diligently to reach a resolution over the rising litigation and debt issues the company is facing. He further noted that the company is processing the agreement in a highly organized manner with a key group of opioid plaintiffs, other governmental parties, and the company's guaranteed unsecured noteholders.