Mallinckrodt Pharmaceuticals filed for bankruptcy protection on Monday, saddled with lawsuits alleging it helped fuel the United States opioid epidemic.
Adding to its woes, the company in March also lost a court battle to avoid paying higher rebates to state Medicaid programmes for its top-selling drug.
Mallinckrodt said on Monday that it had agreed to pay $1.6bn over several years to settle opioid-related litigation. About $450m would be paid as part of its settlement once the company emerged from Chapter 11 bankruptcy.
The company would then pay $200m in the first and second year after its emergence from the bankruptcy, and $150m subsequently through the seventh year.
Mallinckrodt had agreed to pay $260m over seven years to resolve disputes related to its multiple-sclerosis drug HP Acthar Gel and pay out rebates to state Medicaid programmes.
The company had said in February that it planned to have its generic drug business file for bankruptcy as part of a tentative $1.6bn opioid settlement to resolve claims by state attorneys general and US cities and counties.
Mallinckrodt also plans to dismiss its appeal to a March ruling related to Acthar gel, whose price per vial has risen from about $50 in 2001 to $38,892 in 2019.
During the bankruptcy protection, the company said it aims to resolve opioid-related claims and reduce its debt by about $1.3bn, while surviving on cash on hand and cash generated from operations.
The company listed both assets and liabilities in the range of $1bn to $10bn in a filing with the US Bankruptcy Court for the District Of Delaware.