Final hours! Save up to 55% OFF InvestingProCLAIM SALE

New York charges Mallinckrodt with insurance fraud over opioid claims

Published 04/21/2020, 12:19 PM
Updated 04/21/2020, 02:00 PM
© Reuters. A pharmacist holds prescription painkiller Oxycodone Hydrochloride, 30mg pills, made by Mallinckrodt
MNKKQ
-

By Jonathan Stempel

NEW YORK (Reuters) - New York state brought civil charges on Tuesday accusing Mallinckrodt Plc (N:MNK) of insurance fraud for misrepresenting the safety and efficacy of its opioid drugs, leading to medically unnecessary prescriptions.

Governor Andrew Cuomo said the charges brought by New York's Department of Financial Services are the first against a major opioid manufacturer in the regulator's probe into entities that contributed to the nationwide opioid crisis.

New York accused Mallinckrodt of overstating the benefits of long-term opioid treatment, downplaying the risks of addiction and abuse, and knowing its conduct would result in the payment of fraudulent insurance claims on unnecessary prescriptions.

Mallinckrodt is the largest maker of generic opioids in the United States. According to New York, it supplied more than 1 billion pills to about 5 million policyholders in the state from 2009 to 2019.

The company was charged with violating two New York insurance laws, with civil penalties of up to $5,000 per violation.

Mallinckrodt had no immediate comment.

Tuesday's charges follow Mallinckrodt's Feb. 25 agreement to pay $1.6 billion to settle thousands of lawsuits by state and local governments over its role in the U.S. opioid epidemic.

As part of that agreement, Mallinckrodt agreed to put a U.S. generic drug business into Chapter 11 bankruptcy.

Mallinckrodt is headquartered in Staines-Upon-Thames in Britain, and has U.S. offices in Missouri and New Jersey.

Opioids have contributed to more than 400,000 deaths since 1997, according to the U.S. Centers for Disease Control and Prevention.

Cuomo has estimated that opioids caused about $2 billion of insurance rate increases to be passed on to New Yorkers.

New York's financial services department formally notified about 23 opioid manufacturers and distributors last year that they might face civil enforcement charges for contributing to rising insurance premiums.

It ordered Mallinckrodt to attend an Aug. 24 hearing at the regulator's offices in Albany, New York.

The U.S. government on March 3 separately charged Mallinckrodt with defrauding Medicaid out of hundreds of millions of dollars on its top-selling Acthar Gel, which treats spasms in infants as well as multiple sclerosis.

© Reuters. A pharmacist holds prescription painkiller Oxycodone Hydrochloride, 30mg pills, made by Mallinckrodt

In afternoon trading, Mallinckrodt shares were down 49 cents, or 14.1%, at $2.98.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.