Shares in FTSE 100 consumer goods giant Reckitt Benckiser (RB.) have fallen by 6% to £60.11 as the market speculates it could be caught up in a US probe involving Indivior (INDV) which has been accused of misselling and mislabelling an opioid treatment.
Indivior’s share price slumped 73.3% to 28.5p after being accused of 28 felony counts, including conspiracy to commit mail, wire and healthcare fraud by the Department of Justice (DoJ).
The allegations are based on actions that occurred ‘almost exclusively’ prior to Indivior demerging from Reckitt in 2014, according to a statement from Indivior.
Reckitt has not issued a response to the DoJ’s accusations. However, at the end of 2018 it had put aside $400m in case of any liabilities relating to various investigations into Indivior including one by the DoJ.
In its 2018 annual report Reckitt said the final cost to resolve these issues ‘may be substantially higher than this provision’.
Analysts speculate a fine of at least $3bn from the DoJ is possible if Indivior is found guilty.
READ MORE ABOUT INDIVIOR HERE
The DoJ claims that Indivior obtained billions of dollars in sales from its Suboxone Film product by deceiving healthcare providers and benefit programmes into believing it was safer and less likely to be abused than other drugs.
Other accusations by the DoJ can be found in the official statement here.
Accusations against Indivior include a lack of scientific evidence to support safety claims for Suboxone, specifically a lower risk of child exposure, and encouraging more patients to use the drug at higher doses.
HOW HAS INDIVIOR RESPONDED?
Indivior says the allegations are unsupported and argues key accusations have been contradicted by the US Food and Drug Administration (FDA) and the Centers for Disease Control.
In response to the allegations, Indivior says it used a campaign to teach doctors about recommended dosing for Suboxone and adopted unit-dose packaging to cut the risk of exposure to children.
The latter move was encouraged by the FDA and the Centers for Disease Control, according to Indivior.
The opioid addiction specialist also revealed it made several attempts to reach a settlement and co-operated with the DoJ’s investigation, which started in December 2013.
While the company plans to defend itself against the DoJ’s allegations, it has warned an adverse verdict may have a ‘material adverse effect on the company and its financial position and outlook’.
The fraud accusations could not have come at a worse time for the company, which has struggled to keep rival Dr Reddy’s Laboratories from launching a genetic version of Suboxone.
Shares in Indivior are currently languishing at an all-time low after crashing 92.3% over the past year.
