(CNN)A large opioid manufacturer has reached a settlement agreement in principle worth $1.6 billion with attorneys general for 47 states and US territories, according to a company press release.
Opioid manufacturer reaches proposed $1.6 billion settlement
Mallinckrodt announced Tuesday that the proposed deal will resolve all opioid-related claims against the company and its subsidiaries if it moves forward. Plaintiffs would receive payments over an eight-year period to cover the costs of opioid-addiction treatments and other needs.
"This court-supervised process is expected to lead to the creation of a trust which, among other things, would establish an abatement fund to offset the expense of helping to combat opioid addiction and providing support to communities impacted by opioid abuse," the company said in its statement.
"Nothing can undo the devastating loss and grief inflicted by the opioid epidemic upon victims and their families, but this settlement with Mallinckrodt is an important step in the process of healing our communities," said California Attorney General Becerra in a statement.
He called Malllinckrodt "the largest generic opioid manufacturer in the United States."
The company's main subsidiaries, including Specialty Generics, will file for Chapter 11 bankruptcy and the proposed settlement will become effective upon Specialty Generics emergence from bankruptcy.
An estimated 10.3 million Americans aged 12 and older misused opioids in 2018, including 9.9 million prescription pain reliever abusers and 808,000 heroin users, according to the National Survey on Drug Use and Health.
The Centers for Disease Control and Prevention reported more than 70,0000 people died from drug overdoses in 2017, with a prescription or illicit opioid involved in 68% of those deaths.
Mallinckrodt said the company and its subsidiaries will continue operating normally throughout the court-approval process. The company said it expects a "channeling injunction" that would exempt it from litigation involving Specialty Generics' manufacturing and sale of opioids that occurred prior to or during the time this plan works its way through the court system.
"Reaching this agreement in principle for a global opioid resolution and the associated debt refinancing activities announced today are important steps toward resolving the uncertainties in our business related to the opioid litigation," said Mark Trudeau, Mallinckrodt's President and CEO.
The company also released its fourth quarter earnings today. In the last quarter of 2019, the company reported net sales of just over $800 million and for 2019 and net sales of $3.163 billion, "with strong performance across hospital products and the Specialty Generics segment."
This isn't the first opioid pharmaceutical company that has agreed to a settlement.
Last year, Purdue Pharma, the maker of OxyContin, and Teva Pharmaceuticals agreed to pay over $350 million in lawsuits brought on by the Oklahoma attorney general over allegations the companies contributed to the state's opioid epidemic.