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COVID-19 has been extremely trying for so many families and businesses, but it's not the only ongoing public health crisis.
The opioid epidemic, which has claimed 450,000 lives over the last two decades, has only gotten worse during coronavirus.
Yesterday, publicly traded Mallinckrodt Pharmaceuticals became the third major opioid manufacturer to file for bankruptcy protection over the last 18 months.
Mallinckrodt, which manufactures more opioids than any other company in the U.S., has been hit with more than 3,000 individual lawsuits accusing the company of deceptive marketing practices and illegally promoting the use of addictive pain killers.
Monday's bankruptcy announcement comes after the company reached an agreement with 50 states and a steering committee of local governments and Native American tribes. As part of the proposed settlement:
- Mallinckrodt will fund a $1.6 billion trust to pay claimants during the bankruptcy process.
- Victims will also receive warrants to buy a 20% stake in the company after it reemerges from bankruptcy.
- Equity shareholders, who have seen the company's share price fall from over $130 in 2015 to just 75 cents at the end of last week, are likely to get nothing.
Other Trouble: Mallinckrodt will also set aside $260 million to settle a government probe over the pricing of its multiple-sclerosis drug, Acthar Gel. The company was accused of "meteoric" price hikes which sent the per-vial price from $50 in 2001 to $38,892 in 2019.
What Else: Opioid manufacturers Purdue Pharma (controlled by the billionaire Sackler Family) and Insys Therapeutics, both filed for bankruptcy protection last year. Purdue is reportedly nearing a deal to pay $3 billion in restitution with the caveat that it is released from "all potential federal liability arising from or related to opioid-related activities."
The Takeaway: Last month, Mallinckrodt made cash payments totaling $5 million to top executives including CEO Mark Trudeau.