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Mallinckrodt To Face Antitrust Suits As It Files For Chapter 11

 |  November 7, 2021

Mallinckrodt filed for bankruptcy last year to resolve thousands of lawsuits accusing it of fueling the opioid epidemic, but now faces new antitrust claims. 

According to Reuters Humana and Attestor, allege that not only did Mallinckrodt engage in anti-competitive practices by inflating Acthar’s prices before the bankruptcy in violation of antitrust laws, but that it has continued charging those high rates during the case. The insurers argue that since they have had to continue paying amounts they believe are illegal, they should be entitled to senior priority status in Mallinckrodt’s creditor payment structure.

Related: Humana’s Antitrust Claims Over Acthar Can Advance

Lawyers said they need to resolve this matter before US Bankruptcy Judge John Dorsey, who is overseeing the Chapter 11 case, can rule on the plan. It aims to cut $1.3 billion from Mallinckrodt’s overall debt and set up a trust for plaintiffs that have brought opioid-related claims against the company worth around $1.7 billion.

Acthar-related claims, which Mallinckrodt estimates to be around $1.4 billion, are in line for a total recovery of $7.5 million. The insurers say the actual amount of the claims is “billions” higher than Mallinckrodt’s estimate.

Mallinckrodt says the insurers’ claims for damages do not qualify as “actual administrative expenses” that are typically paid off first in a corporate bankruptcy.

Other individuals and entities that have brought Acthar-related antitrust claims have also objected to the proposed plan. They argue it provides inappropriate rewards for management and improperly favors opioid claimants over their claims.

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