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United States District Court for the Southern District of New York
February 28, 2022, Decided; February 28, 2022, Filed
OPINION AND ORDER
This federal securities class action centers on the marketing of a pharmaceutical drug that has been a useful tool in combating opioid addiction. Suboxone in Tablet form was first brought to market by a former subsidiary of defendant Reckitt Benckiser Group PLC ("Reckitt"). By 2009, its sales exceeded $700 million. With the drug's FDA-granted [*2] exclusivity period set to expire in 2009 and the prospect of generic competition on the horizon, Reckitt's former subsidiary, then known as Reckitt Benckiser Pharmaceuticals Inc. ("RBP") and now known as Indivior Inc. ("Indivior"), developed a new means for delivering the drug's active ingredients. The new delivery system is a dissolvable Suboxone Film that is placed under the tongue by the patient.
As alleged in the Third Amended Complaint ("the Complaint"), merely introducing Suboxone Film as an alternative to Suboxone in Tablet form would not insulate Reckitt from generic competition. So Reckitt allegedly embarked on a campaign to portray Suboxone Tablets as unsafe because of the possibility of their inadvertent consumption by children and abuse by addicts, and touted Suboxone Film as vastly superior in these respects. The Complaint alleges that Reckitt was highly successful in its plan, initially generating about $3 billion in revenue between 2010 and 2014 from sales of Suboxone Film.
Reckitt, according to the Complaint, "engineered a plan to coerce patients and physicians to switch from Tablets to Film under false pretenses" and told investors that Suboxone Film was safer than the [*3] Tablets when, in truth and in fact, it was more dangerous. (Compl't ¶¶ 11-12, 113.) When, on July 24, 2017, Reckitt announced a £318 million charge relating to Department of Justice ("DOJ") and Federal Trade Commission ("FTC") investigations, there was a stock price drop in the 3-5% range. (Compl't ¶ 275.) Follow-on announcements and developments allegedly caused even greater drops. (Compl't ¶¶ 278-79.)
Plaintiffs are public-employee pension plans who assert that they acquired either Reckitt's American Depository Shares ("ADSs") or its ordinary shares at artificially inflated prices and were injured when the market learned the truth about defendants' tactics to boost the sales of Suboxone Film. Plaintiffs assert that defendants violated section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5. They also assert that the individual defendants are liable as control persons under section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a). In addition, the City of Pontiac General Employees' Retirement System ("Pontiac"), which purchased shares of Reckitt on the London Stock Exchange (the "LSE"), brings three claims under the laws of England, where Reckitt and many of the individual defendants are located.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2022 U.S. Dist. LEXIS 35187 *; 2022 WL 596679
CITY OF STERLING HEIGHTS POLICE & FIRE RETIREMENT SYSTEM, CITY OF BIRMINGHAM RETIREMENT AND RELIEF SYSTEM and CITY OF PONTIAC GENERAL EMPLOYEES' RETIREMENT SYSTEM, Individually and on Behalf of All Others Similarly Situated, Plaintiff, -against- RECKITT BENCKISER GROUP PLC, RAKESH KAPOOR, ADRIAN HENNAH, SHAUN THAXTER and ADRIAN BELLAMY, Defendants.
Film, Suboxone, Tablets, investor, Defendants', sales, scienter, allegations, omission, patients, generic, motion to dismiss, shares, misleading, misrepresentation, exposure, misstatement, shareholder, marketing, pediatric, asserts, puffery, arbitration, Indictment, disclose, benefits, urge, purported, Exchange Act, demerger