US generics giant Mallinckrodt, which declared bankruptcy in 2020 after a stream of litigation regarding its role in the opioid epidemic and underpaying Medicaid rebates for its drug Acthar, has announced a new strategic plan and CEO as it emerges from its “restructuring process.”
Controversy on Controversy
The USA’s largest opioid manufacturer, Mallinckrodt has been heavily implicated in aggressively marketing its painkillers and fuelling a nationwide opioid addiction crisis, with a US Drug Enforcement Agency database showing that one of its subsidiary companies provided 28.9 billion oxycodone pills across the US from 2006 to 2012, more than 80 for each person in the country.
This led to a host of lawsuits from 50 states or territories representing thousands of plaintiffs being brought against the company and an agreement being struck for Mallinckrodt to pay USD 1.6 billion to trusts in instalments over several years and comply with an “operating injunction” on its opioid marketing.
Added to this were allegations that the company had price gouged and underpaid rebates for its drug Acthar, which spiralled in price from USD 748 a vial in 2001 to USD 40,000 by 2017, causing the US government’s Medicare Part D program for the elderly to spent over USD one billion on that drug alone. The criticism that Mallinckrodt received was compounded by the fact that the company had completed a tax inversion to Ireland back in 2013 to avoid US corporate taxes.
Mallinckrodt agreed to pay USD 260 million over seven years to the federal government over the Acthar allegations, which – when added to the USD 1.6 billion in opioid payouts – forced it into a reorganisation bankruptcy (whereby Mallinckrodt retained possession of its assets and drew up a reorganisation plan) back in 2020.
A New Beginning…
However, in a recent press release, the firm’s board chair, Paul Bisaro, heralded “a new beginning for Mallinckrodt,” adding that, “we emerge well-positioned for long-term success, with a substantially stronger capital structure and major litigation matters permanently resolved.” Mallinckrodt claims to be the first company to have permanently resolved opioid litigation on a global scale.
Today, with a USD 1.3 billion debt reduction and USD 250 million in cash, Bisaro added that “the top priority for our new Board is working alongside management to review the business and develop a go-forward strategy to drive sustainable value for our patients, customers, partners, team members, shareholders and other stakeholders. We are focused on thoughtfully establishing a plan that builds on our innovation-driven therapies pipeline, capitalizes on Mallinckrodt’s core strengths and positions the Company for long-term sustainable growth.”
…And a New Face at the Top
Part of this reorganisation has seen the end of Mark Trudeau’s near decade-long tenure as CEO and the appointment of Icelandic national Sigurdur (Siggi) Olafsson. Most recently serving as CEO of London-listed generics firm Hikma Pharmaceuticals and Israeli generics behemoth Teva, as well as Actavis, Olafsson also has experience on the innovator side of the industry with Pfizer’s Global R&D organisation.
Speaking in a press release, Olafsson stated, “It’s an honor to be appointed Mallinckrodt’s CEO. I look forward to helping guide the Company as it continues to support patients around the world. Mallinckrodt is emerging from its recent restructuring process with an attractive pipeline, enhanced financial flexibility and significant opportunities to drive stakeholder value. I look forward to working closely with the Board and my new colleagues in developing and executing Mallinckrodt’s revised strategic plan.”