Otsuka's Avanir unit plots 140 layoffs in wake of $116M Nuedexta settlement

California
California-based Avanir Pharmaceuticals is laying off 140 employees effective later this month. (Makaristos/Wikipedia)

Avanir Pharmaceuticals, fresh off a $116 million kickbacks settlement with the feds and tarnished by unflattering news reports, now plans to lay off 140 California employees, a public filing shows. 

The drugmaker disclosed the layoffs, which are effective Jan. 20, in a California WARN notice back in November. The layoffs are permanent, the notice says. 

Avanir, a unit of Japan-based Otsuka Pharmaceuticals, didn’t immediately respond to a request for comment about the cuts. Otsuka picked up the Nuedexta maker in 2014 for $3.5 billion. 

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The job cuts come after Avanir faced years of scrutiny for its marketing of Nuedexta, which is approved for pseudobulbar affect, the uncontrollable crying or laughing that can accompany certain neurological conditions. In 2017, CNN reported that the company had promoted the drug primarily to nursing homes, even though Nuedexta hasn't been tested extensively in elderly people. Sales had surged the year before, CNN reported. 

Avanir’s current round of layoffs isn’t the only time the company has cut jobs in recent years. Also in 2017, Avanir said it would lay off 73 staffers, the Orange County Business Journal reported. In September that year, Avanir employed 192 people in Orange County and 680 across the company, according to the report. 

The drugmaker's CEO, Wa'el Hashad, joined the same year. Last fall, Avanir agreed to settle with the Justice Department, and Hashad said at the time that he'd made compliance a priority at the company.

RELATED: Otsuka's Avanir agrees to pay $116M over Nuedexta kickbacks probe 

The drugmaker paid $95 million to the federal government to resolve allegations of misleading marketing and violations of the False Claims Act. At the same time, it agreed to pay a $7.8 million penalty and forfeit more than $5 million in a deferred prosecution agreement in Georgia. It also agreed to cooperate with an Ohio kickbacks lawsuit against a prescriber and former employees.

The settlement had been in the works for several months. In early 2019, Avanir said it reached an “agreement in principle” with authorities. At the time, Otsuka estimated it would cost $120 million to resolve the probe.   

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