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Reckitt Benckiser reaches $1.4bn settlement with US regulators

The health and hygiene company put an end to the long-running investigation into the sales and marketing of an opioid addiction treatment from a former subsidiary
Reckitt Benckiser reaches $1.4bn settlement with US regulators

Reckitt Benckiser (RB.) has reached a $1.4bn (£1.1bn) settlement with the US Department of Justice (DoJ) and the Federal Trade Commission (FTC) to put an end to the long-running investigation into the sales and marketing of Suboxone Film by Indivior (INDV), its former prescription pharmaceuticals business that was demerged from the group in 2014. This represents the largest penalty related to the American opioid crisis, trumping the $600m paid by Purdue Pharma, the company that makes opioid drug OxyContin.

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Despite the settlement, Reckitt Benckiser maintains that it “acted lawfully at all times and expressly denies all allegations that it engaged in any wrongful conduct”. Management believes that the settlement is in the best interest of the company and its shareholders as it avoids the costs, uncertainty and distractions of an ongoing investigation, as well as potential incitement. Laxman Narasimhan is set to take over as chief executive in September and the health and hygiene company is in the midst of its 'RB 2.0' transformation plan.

The company plans to fund the settlement payment through existing debt facilities and cash generation. Reckitt Benckiser will increase its current provision of $400m to $1.5bn at its half-year results.

In April, Indivior was indicted by the DoJ for “engaging in an illicit nationwide scheme to increase prescriptions of Suboxone Film”, generating billions of dollars in revenue by “deceiving” healthcare providers into believing the drug was “safer, less divertible, and less abusable” than competing drugs. Indivior denies the allegations and said it intended to vigorously defend itself. On the same day, the Reckitt Benckiser settlement was announced, Indivior increased its revenue and income guidance for the first half of its 2019 financial year due to “market share outperformance” of Suboxone Film.