Mallinckrodt Paying $35 Million to Settle Opioid Allegations

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The Justice Department says that Mallinckrodt will pay $35 million to resolve allegations that it failed to report suspicious orders of pharmaceutical drugs and for recordkeeping violations. A department news release says this is the first settlement of its magnitude with a manufacturer of pharmaceuticals resolving nationwide claims that the company failed to meet its obligations to detect and notify the Drug Enforcement Administration (DEA) of suspicious orders of controlled substances such as oxycodone. The settlement also addresses violations in the company’s manufacturing batch records at its plant in Hobart, NY, the release says. 

The government alleged that Mallinckrodt failed to design and implement an effective system to detect and report suspicious orders for controlled substances, such as orders that are unusual in their frequency, size, or other patterns. The U.S. alleged that from 2008 to 2011, the company supplied distributors, and the distributors then supplied various U.S. pharmacies and pain clinics, an increasingly excessive quantity of oxycodone pills without notifying DEA of the suspicious orders.

During the investigation, the government says, it learned that drug manufacturers offer discounts, known as chargebacks, based on sales to certain downstream customers. Distributors provide information on the downstream customer purchases to obtain the discount. The Mallinckrodt settlement requires the manufacturer to use chargeback and similar data to monitor and report to DEA suspicious sales of its oxycodone at the next level in the supply chain, typically sales from distributors to independent and small chain pharmacy and pain clinic customers.

The government says the company’s recordkeeping violations created discrepancies between the actual number of tablets manufactured in a batch and the number of tablets Mallinckrodt reported on its records.

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