Mallinckrodt to settle oxycodone diversion case for $35M with Justice Department

Department of Justice
Federal authorities allege that Mallinckrodt 30 mg oxycodone pills were so prevalent among drug abusers in Florida and other states that the became known as "M's" on the street.

Many public officials would like to hold makers of the highly addictive drug oxycodone responsible for at least some of the local devastation that has stemmed from an epidemic of opioid addiction and overdoses over the last decade. But a federal investigation, extensively documented by the Washington Post, shows how difficult that can be.

The newspaper reported that Mallinckrodt, one of the largest makers of oxycodone in the U.S., is the subject of a DEA investigation into massive diversions of the highly addictive drug in Florida. But instead of facing billions of dollars in fines, the drugmaker is in talks with Justice Department to settle for $35 million, without acknowledging any responsibility, the paper said, citing confidential government documents and emails.  

The U.S. Attorney’s Office in Detroit confirmed the settlement talks to the Washington Post, which called the probe the largest prescription-drug case the agency ever pursued by the Drug Enforcement Agency.

“As this case is still in settlement negotiations, we cannot comment on the specifics of the matter,” acting U.S. Attorney Daniel Lemisch told the newspaper. But, he said, “Our office works diligently to use all the legal tools available to us to hold corporations responsible for their actions.”

Mallinckrodt, which has faced other legal issues, told the newspaper that it is a “recognized leader in developing and sharing best practices related to the prevention of opioid diversion and misuse.”

A spokesperson said, “We are proud of the programs and initiatives we’ve developed to ensure appropriate use of pain medication and, most importantly, to deter such medications from ending up in the wrong hands.”

RELATED: Mallinckrodt’s Acthar drama continues with $100M FTC settlement

While the drugmaker did take steps to cut off some wholesalers, The Post said that the DEA and federal prosecutors contend that the U.K.-based drugmaker didn’t appropriately report suspicious orders and to prevent diversion of its pills, which were so prevalent among drug abusers that they were called “M's” on the street. It said the company, between 2008 and 2012, shipped 500 million its oxycodone pills to Florida, accounting for 66% of the total supply in the state.

The Post said Mallinckrodt, which was based in St. Louis, Missouri, before moving its domicile to the U.K., was prepared to acknowledge its responsibility to report suspiciously large orders placed by its wholesaler, but the drugmaker contended it was not responsible for tracking those on to pharmacies and doctors.

The revelations come even as state and local authorities throughout the country have been filing lawsuits claiming drugmakers were partly responsible for the epidemic by misleading the public about abuse risks associated with the drugs.

Among other actions in California and elsewhere, Purdue, Allergan and Johnson & Johnson have been sued by the city of Chicago, which accused the drugmakers of contributing to a dramatic rise in opioid and heroin addiction there. Chicago is seeking to recover some of the costs of dealing with the epidemic.

RELATED: California goes after Purdue, Endo, J&J, Actavis and Teva over opioids

Most recently, a federal investigation into Phoenix-based Insys Therapeutics has led to federal charges that former executives allegedly “bribed” doctors with lavish parties and other perks to prescribe its Subsys for off-label treatments. The opioid-based spray is approved by the FDA only for treating cancer pain from conditions other than cancer, yet it was used for patients with back pain and other maladies.

RELATED: Insys's 'reckless' Subsys marketing led to patient's death, lawsuit alleges