A proposed settlement has been reached with generic drug manufacturer Mallinckrodt Pharmaceuticals, in which the company will pay $1.6 billion to settle thousands of lawsuits filed in the Cleveland MDL as well as by 47 state and U.S. territory attorneys general as part of their role in the rampant opioid crisis. The settlement will put Mallinckrodt’s generic units (Mallinckrodt LLC, SpecGx LLC and other affiliates) in Chapter 11 while leaving the specialty drug business out of restructuring.
The proposed settlement will be paid out to a trust over the course of 8 years: $300M will be paid after Mallinckrodt’s generic units come out of Chapter 11; $200M will be paid to plaintiffs for the next two years, and $150M to be paid each year after that. The trust would also receive options to purchase up to 20% of the company’s generic units shares after the units exit from bankruptcy. The funds in the trust will also be used to provide addiction treatment programs and related initiatives around the country.
Mallinckrodt was the largest generic opioid manufacturer in the U.S. during the opioid epidemic.