On July 11, the United States Department of Justice announced that the United Kingdom-based consumer goods company Reckitt Benckiser Group plc (RB Group) had entered into multiple agreements, involving total payments of $1.4 billion, “to resolve its potential criminal and civil liability related to a federal investigation of the marketing of the opioid addiction treatment drug Suboxone.” This resolution – which the Department described as “the largest recovery by the United States in a case concerning an opioid drug” – includes the following components:
- A non-prosecution agreement that requires RB Group (1) to forfeit $647 million of proceeds that it received from its former subsidiary Indivior and not to manufacture, market, or sell Schedule I, II, or III controlled substances in the United States for three years; and (2) to cooperate fully with all investigations and prosecutions by the Justice Department related, in any way, to Suboxone.
- A civil settlement agreement with the Justice Department in which RB Group agreed “to pay a total of $700 million to resolve claims that the marketing of Suboxone caused false claims to be submitted to government health care programs.” That $700 million settlement amount “includes $500 million to the federal government and up to $200 million to states that opt to participate in the agreement. This settlement “resolves the claims against RB Group in six lawsuits pending in federal court in the Western District of Virginia and the District of New Jersey under the qui tam, or whistleblower provisions of the False Claims Act.”
- A separate agreement with the Federal Trade Commission (FTC) in which RB Group “agreed to pay $50 million to resolve claims that it engaged in unfair methods of competition in violation of the Federal Trade Commission Act.” This agreement resolves FTC charges that RB Group illegally maintained a monopoly over Suboxone. As part of this resolution with the FTC, RB Group, though it no longer manufactures or markets drug products, agreed, as part of a consent decree, “that it would notify the FTC if it began marketing drug products in the United States.”
- A provision in the settlement agreement that requires RB Group to pay $3 million to the Program Income Fund of the Virginia Medicaid Fraud Control Unit (“MFCU”), to be paid on or before August 10, 2019, as directed by the MFCU.
Even though RB Group admitted no liability in the civil settlement, the Department stated that the settlement
addresses allegations by the United States that, from 2010 through 2014, RB Group directly or through its subsidiaries knowingly: (a) promoted the sale and use of Suboxone to physicians who were writing prescriptions without any counseling or psychosocial support and for uses that were unsafe, ineffective, and medically unnecessary and that were often diverted for uses that lacked a legitimate medical purpose; (b) promoted the sale or use of Suboxone Film to physicians and state Medicaid agencies using false and misleading claims that Suboxone Film was less susceptible to diversion and abuse than other buprenorphine products and that Suboxone Film was less susceptible to accidental pediatric exposure than tablets; and (c) submitted a petition to the Food and Drug Administration on Sept. 25, 2012, claiming that Suboxone Tablet had been discontinued “due to safety concerns” about the tablet formulation of the drug and took other steps to delay the entry of generic competition for Suboxone in order to improperly control pricing of Suboxone, including pricing to federal healthcare programs.
The Justice Department announcement also extensively summarized the pending indictment against Indivior, which RB Group had spun off in 2014. That indictment charges Indivior with conspiracy to commit wire fraud, mail fraud, and health care fraud, one count of health care fraud, four counts of mail fraud, and 22 counts of wire fraud, based on Indivior’s allegedly engaging in an illicit nationwide scheme to increase prescriptions of Suboxone Film.
Note: This resolution is notable for three reasons: (1) the total amount of forfeiture and payments in a single opioid-related case; (2) the general encouragement that it provides to the state attorneys general and other plaintiffs in their own civil opioid-related litigation against other pharma companies; and (3) the increased pressure that it places on Indivior to enter into a plea agreement with the Department.
The forfeiture allegations in the Indivior indictment already establish an expectation that, if Indivior is convicted on one or more counts, the Department will seek a financial penalty of at least $3 billion, among other assets. Moreover, the Justice Department has now strongly signaled to Indivior that it is prepared to seek financial penalties from Indivior greater than the $1.4 billion resolution with Reckitt. Paragraph 7 of the Settlement Agreement states that nothing in the Agreement “is an admission by the United States that the amounts paid by the Company are the maximum amounts that could be recovered from entities other than the Company,” and that “the United States is not precluded from arguing or presenting evidence that the total amount to be paid by others should be higher.”