Mallinckrodt to Settle With DOJ for $15m as Another Complaint is Filed
Drugmaker Mallinckrodt said Wednesday that it will likely pay $15.4 million to settle charges made by the Department of Justice (DOJ) related to sales and marketing activities of a company acquired by Mallinckrodt.But the DOJ also filed another complaint Wednesday under the False Claims Act, claiming that Mallinckrodt used a foundation to pay illegal kickbacks in the form of copay subsidies for its expensive drug known as H.P. Acthar gel, which is used to treat multiple sclerosis, lupus, rheumatoid arthritis and other conditions.
Originally approved by the US Food and Drug Administration (FDA) in 1952, net sales for Acthar totaled more than $1 billion in 2018 and are expected to exceed $1 billion in 2019, the company said.
In that other complaint, DOJ alleges that Mallinckrodt raised Acthar’s price from approximately $50 per vial in 2001 to over $32,000 per vial by the end of 2014. But Mallinckrodt notes that it did not acquire Questcor Pharmaceuticals, the previous owner of Acthar, until August 2014.
DOJ also says that Mallinckrodt’s scheme allowed it to market Acthar as “free” to patients but millions of dollars’ worth of false Medicare claims were filed.
US Attorney William McSwain added: “Drug companies are not allowed to pay patients’ co-pays. That rule is designed to prevent the very thing Mallinckrodt allegedly did here – outrageously jack up Acthar’s price and leave the government with the entire bill.”
Mallinckrodt defended itself in a statement: “Contrary to the DOJ's characterizations in the complaint, the allegations relate to legacy Questcor conduct as all the donations to the Chronic Disease Fund (CDF) referenced in the complaint occurred prior to the acquisition of Questcor or were for grandfathered patients who had been approved by CDF for co-pay assistance prior to the acquisition.”
In January 2017, Mallinckrodt also agreed to pay $100 million to settle Federal Trade Commission (FTC) charges that the company violated antitrust laws when Questcor acquired the rights to a competing drug that threatened its monopoly in the US for adrenocorticotropic hormone drugs.
Part of the reason those FTC charges were filed was because of complaints from other companies, including Retrophin, a company formerly headed by Martin Shkreli. Retrophin ended up settling its dispute with Questcor for $15.5 million.
In January, the company also received a letter from the US House Committee on Oversight and Reform, requesting information relating to the pricing strategy for Acthar.
And former Sen. Claire McCaskill (D-MO) also previously questioned Mallinckrodt after hospital systems saw millions in increased payments for the company’s injectable version of acetaminophen, known as Ofirmev.