Opioids

Drug manufacturer Mallinckrodt filed for Chapter 11 bankruptcy Monday, which now becomes a factor in the multistate settlement reached last February over abuse of opioids. 

Manninckrodt subsidiary Specialty Generics (SpecGx LLC) was the largest manufacturer of opioids in the nation between 2006 and 2012, according to the Drug Enforcement Administration. The company manufactured 37.7% of all opioid pills in the U.S. market during that time.

The bankruptcy announcement was not unexpected; when Mallinckrodt announced the settlement last February it contemplated putting SpecGx into Chapter 11.

Colorado Attorney General Phil Weiser announced Monday a updated settlement where Mallinckrodt will put $1.6 billion into a trust to be paid to the states to deal with the opioid epidemic.

“The opioid epidemic has destroyed thousands of lives and families in communities throughout Colorado," Weiser said. "Today’s settlement agreement with Mallinckrodt is part of our efforts to hold those who contributed to this epidemic accountable and to put in place necessary protections. While we still need to negotiate how much Colorado will receive from this national settlement with MNK, the funds will support urgently needed drug treatment and recovery pathways in our state."

How much Colorado will receive from that settlement has not yet been determined. All 50 states and U.S. territories are part of the agreement.

Under Monday's announcement, Mallinckrodt will pay:
  • $450 million upon emergence from bankruptcy;
  • $200 million annually on first and second anniversary of emergence from bankruptcy; and
  • $150 million annually on third through seventh anniversaries of emergence from bankruptcy.

The original settlement called for $300 million upon SpecGx's emergence from Chapter 11, with $200 million on the first and second anniversaries of emergence and $150 million on the third through eight anniversaries. 

According to Weiser's office, the new settlement improves the deal announced in February by moving $150 million from the last payment to the first.

Mallinckrodt has taken on "additional liability due to other legal issues and the impact of COVID-19," according to Weiser's office. The entire company went into bankruptcy Monday, not just SpecGx, and that required the settlement be renegotiated.

The company also has agreed that its opioid business "will be subject to stringent court-ordered requirements that, among other things, will prevent promotion of opioids and ensure systems are in place to prevent drug misuse."

According to a January database compiled by the Washington Post, there were 1.3 billion prescription pain pills supplied to Colorado between 2006 and 2014. Walgreens distributed the most, at 332.4 million, and 575.5 million were manufactured by SpecGx. 

The Omnicare pharmacy in Golden received the highest number of pills, at 18.4 million, enough for 3.2 pills for every man, woman and child in the state.

The National Institute on Drug Abuse reported that in 2018, Colorado providers wrote 45.1 opioid prescriptions for every 100 persons compared to the average U.S. rate of 51.4 prescriptions. 

Colorado is also part of another multistate settlement over opioids with five companies that is expected to result in $48 billion in payments to all 50 states.

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