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Indivior’s legal battles look terminal

The opioid addiction treatment specialist
July 31, 2019

Companies that are overexuberant about the marketing of products that aim to treat opioid addiction are walking a very risky path. But Indivior (INDV) – which is facing charges associated with the fraudulent marketing of its painkiller addiction treatment, Suboxone Film, in the US – is defending itself not just from litigation, but ongoing generic competition. Revenues and operating profits fell 12 per cent and 17 per cent, respectively, during the first half as Suboxone continued to lose market share. 

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In April, the Western District of Virginia claimed that Indivior sought to drive up sales of its Suboxone Film with a fraudulent marketing scheme. Authorities say the marketing campaign overstated the efficacy of the medicine compared with its cheaper tablet form. Both Indivior and its former parent Reckitt Benckiser (RB.) deny the charges, but in an attempt to draw a line under the saga Reckitt agreed to pay up to $1.4bn ($1.15bn) to US authorities. 

The Department of Justice is seeking $3bn from the Virginia case, which management says “could have a material impact on the group”. Net cash of $747m and a $50m revolving credit facility is not enough to cover the potential charges.

What’s more, this is not the only legal battle the group is fighting as regulators attempt to clamp down on all who seek to profit from the opioid crisis. Indivior says it is co-operating with at least 246 federal lawsuits surrounding “misleading marketing messages”. It is also fighting 14 patent battles for Suboxone Film, while simultaneously opposing antitrust claims in 41 states which say that the company deliberately delayed the entry of cheaper, generic competition to Suboxone.

It is little wonder that Indivior has spent almost $500m on legal bills since being spun out of Reckitt, $250m in the last two years alone. Management has set aside $438m for ongoing lawsuits. All this spending on litigation has come at a cost to research and development, which fell to just $25m in the first half of 2019, from $34m last year. Lack of innovation means the company has been unable to launch new medicines to offset a decline in Suboxone.