The British pharmaceutical company Indivior had more than £560m wiped from its market value on Wednesday after the US justice department charged it with fraudulent marketing of its treatment for people addicted to opioids.
The indictment demanded the forfeiture of $3bn in cash, as well as all of Invidior’s main business divisions, bank accounts, trademarks and patents – effectively meaning the company would cease to exist if found guilty.
A grand jury in the federal court in Abingdon, in the US state of Virginia, said Indivior marketed Suboxone Film, an opioid-based drug, as a safe and controllable treatment for opioid and heroin addiction.
However, the indictment on Tuesday said that Indivior – until 2014 part of Reckitt Benckiser – sought to boost sales by telling healthcare providers and programmes that Suboxone Film, which contains the opioid buprenorphine, was better and safer than similar drugs, when in fact it was not.
The company also set up a telephone line for patients to call to be connected to a doctor for opioid addiction and dependence treatment; the indictment says Indivior connected patients to doctors it knew were prescribing Suboxone and/or other opioids in a careless and clinically unwarranted manner.
The US department of justice accused Indivior of a fraud targeting people addicted to opioids. The increase in addiction to opioids has become a central issue in politics in the US and the UK in recent years, prompting intense scrutiny on pharmaceutical firms. The US president, Donald Trump, declared the opioids crisis a public health emergency in 2017.
Jody Hunt, an assistant attorney general at the DoJ, said: “Opioid addiction is a national epidemic. The indictment alleges that, rather than marketing its opioid-addiction drug responsibly, Indivior promoted it with a disregard for the truth about its safety and despite known risks of diversion and abuse.”
Indivior, which made more than $800m in revenues from the sale of the drug in 2014 alone, was charged with 28 counts of healthcare fraud, mail fraud and wire fraud related to the marketing of Suboxone Film.
The grand jury alleged: “Indivior’s fraudulent scheme lasted for years and hindered patients’, healthcare … providers’ and health care benefit programmes’ accurate assessments regarding opioid-addiction treatment in order to increase the company’s profits.”
Indivior has denied the allegations.
However,the scandal also threatened to drag in the former parent company, Reckitt, which is listed on the FTSE 100 and has its headquarters in Slough, Berkshire. In 2018, Reckitt set aside £313m to cover any legal costs. In its annual report the firm acknowledged that final costs could be significantly higher and that it had engaged in talks with the US Department of Justice.
In a statement to the stock market, Indivior said the alleged wrongdoing had “occurred almost exclusively prior to Indivior becoming an independent company”.
Shares in Reckitt Benckiser fell by 6% on Wednesday to £60.09.
In a statement, Reckitt said: “This indictment is not against RB Group Plc or any other group company and we currently have no additional or new information in respect of this matter, apart from what has been publicly issued by the [US] department of justice and Indivior Plc.”
Shares in Indivior crashed 74% to 28p on Wednesday morning.
The company’s market value has already plummeted in the past year as it has tried to prevent a generic rival to Suboxone Film from entering the market. Shares traded at a record high above 500p as recently as June last year but slumped after US courts allowed the sale of the cheaper, generic rival manufactured by India’s Dr Reddy’s Laboratories.
Indivior, which also has operations in Slough, as well as Richmond, in the US state of Virginia, called the indictment “wholly unsupported by either the facts or the law”.
However, Indivior said it had “made numerous attempts to reach a settlement that went far beyond what it believes the facts of the case support”.
The company said the justice department “has apparently decided it would rather pursue self-serving headlines on a matter of national significance than achieve an appropriate resolution”.
“We will contest this case vigorously and we look forward to the full facts coming out in court.”