Antitrust claims are the focus, as Mallinckrodt is striving to get out of bankruptcy


Bottles of prescription pain relievers, Hydrocodine Bitartrate and Acetaminopohen, 5 mg / 325 mg pills, manufactured by Mallinckrodt, stand on a shelf in a local pharmacy in Provo, Utah. REUTERS / George Frey

(Reuters) – Mallinckrodt Plc filed for bankruptcy last year to settle thousands of lawsuits accusing it of fueling the opioid epidemic.

The drug company recently launched a multi-day hearing to seek approval of its proposed reorganization plan and underlying opioid settlement, which creditors and government agencies have broadly agreed to.

But now, in what a Mallinckrodt attorney called an “unconventional” approach to a Chapter 11 plan validation process, the company will begin another hearing on Monday on claims made by two insurers that they were overstating their clients Acthar-Gel had to reimburse prices for Mallinckrodts.

One of the company’s top moneymakers, the product is used to treat infantile convulsions and multiple sclerosis.

Insurers Humana Inc and Attestor allege that Mallinckrodt not only engaged in anti-competitive practices by inflating Acthar’s prices prior to bankruptcy in violation of antitrust laws, but that it continued to charge those high fees throughout the process. Insurers argue that by continuing to pay amounts they believed to be illegal, they should be eligible for priority status in Mallinckrodt’s creditor payment structure.

A Mallinckrodt spokesman did not immediately respond to a request for comment. The company has stated in court files that the insurers’ claims are unfounded.

Lawyers said they need to resolve this matter before US bankruptcy judge John Dorsey, who oversees the Chapter 11 case, can rule on the plan. It aims to cut $ 1.3 billion from Mallinckrodt’s total debt and set up a trust fund for plaintiffs who have made opioid-related claims against the company valued at approximately $ 1.7 billion.

Acthar-related claims, which Mallinckrodt estimates at around $ 1.4 billion, represent a total recovery of $ 7.5 million. The insurers say the actual amount of damage is “billions” higher than Mallinckrodt’s estimate.

According to Mallinckrodt, the insurers’ claims for damages do not qualify as “actual administrative costs”, which are typically paid off first in the event of a corporate bankruptcy.

Other individuals and legal entities who have brought antitrust lawsuits related to Acthar have also objected to the proposed scheme. They argue that it offers unreasonable rewards to management and unduly favors opioid applicants over their claims.

Mallinckrodt has settled Acthar antitrust lawsuits brought by federal and state governments.

The case is In re Mallinckrodt Plc, US Bankruptcy Court, District of Delaware, No. 20-12522.

For Mallinckrodt: George Davis, Robert Malionek, Chris Harris, George Klidonas, Andrew Sorkin, Anupama Yerramalli, Jeff Bjork, Elizabeth Marks of Latham & Watkins; and Mark Collins, Robert Stearn Jr., Michael Merchant, Amanda Steele, Robert Maddox von Richards, Layton & Finger

For insurers: Matthew Feldman and Paul Shalhoub of Willkie Farr & Gallagher; Donna Culver and Robert Dehney of Morris, Nichols, Arsht & Tunnell; and Scott Solberg and Benjamin Waldin from Eimer Stahl

Continue reading:

Mallinckrodt’s bankruptcy judge approves the start of the voting process

Mallinckrodt opioid applicants call for more disclosure of reorganization plans

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