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Mallinckrodt proposes $30M settlement as Ohio opioid trial nears

Mallinckrodt PLC, along with its subsidiaries, reached a proposed settlement worth $30 million with two Ohio counties in connection with opioid lawsuits.

The drugmaker was ordered by a U.S. District Court judge in Ohio to stand trial — along with other pharmaceutical companies such as Johnson & Johnson, Endo International PLC, Purdue Pharma LP, Allergan PLC and Teva Pharmaceutical Industries Ltd. — in October to find out whether their marketing practices fueled the U.S. opioid addiction crisis.

If the settlement agreement is finalized, Mallinckrodt will pay $24 million in cash and $6 million in the form of medicine donations, which include addiction therapy products. In return, all named Mallinckrodt entities will be dismissed with prejudice from the lawsuit.

Mallinckrodt previously said it is considering options of restructuring and even bankruptcy to help with the possible legal liabilities over the opioid litigation against the company.

Moody's downgraded Mallinckrodt's corporate family rating to to Caa1 from B2 and its probability of default rating to Caa1-PD from B2-PD. The downgrade reflects the company's weak liquidity and exposure to opioid litigation, among other financial considerations. The outlook remains negative, the rating agency said in a Sept. 6 statement.

Allergan and Endo International have already made a $15 million settlement to avoid the October trial in Ohio.

In Oklahoma, J&J is appealing a ruling by a judge who ordered the company to pay $572 million in a suit brought by the state. Oklahoma accused the pharmaceutical giant of aggressively marketing its painkillers, contributing to the U.S. opioid epidemic.

Purdue Pharma is working with the U.S. Justice Department for a possible settlement regarding investigations on its opioid painkiller OxyContin, according to a report by The Wall Street Journal.