Questcor's Acthar maneuvers land Mallinckrodt in hot water with FTC, state AGs

When Mallinckrodt ($MNK) bought Questcor Pharmaceuticals last year, it acquired more than H.P. Acthar Gel and the ongoing controversy about its pricing. It also inherited a rat's nest of state and federal investigations--and that snarl is growing.

The Federal Trade Commission has now demanded documents and information about Questcor's 2013 deal for the rights to Synacthen Depot, a Novartis ($NVS) drug that might have been a head-to-head competitor to Acthar. And as Mallinckrodt disclosed in a Thursday securities filing, that FTC subpoena was just one of several new investigations; "a small number of states" are looking into whether the deal violates state antitrust laws.

When Questcor ponied up $135 million for the rights to Synacthen, market-watchers raised their eyebrows. After all, the company had drawn fire for its pricing on Acthar, which brought in $761 million in 2013 after a series of big price hikes. And snapping up that potential rival--which was on the verge of launching at a far lower price, if another bidding drugmaker had succeeded in buying it--essentially elbowed aside the competition.

"Mallinckrodt is fully cooperating in each of these investigations," the company said in the filing, adding that it doesn't expect the probes to have a material effect on its finances.

Questcor bought Acthar years ago and immediately raised the price to more than $1,500 per vial, and by 2013, it was selling at $28,000 each. It was one of the world's most expensive drugs in 2013, according to FiercePharma research, at a cost of $205,681 per patient per year.

Along the way, Questcor came under the eye of the feds, which launched an investigation into its Acthar marketing, and short sellers, which had their own set of allegations. The company later reported thousands of side effects to the SEC, and a New York Times report linked the drug to 20 deaths and half a dozen disabilities. In a securities filing last year ahead of the Mallinckrodt deal closing, Questcor said 14% of Acthar scripts written in 2013 resulted in adverse event reports.

- read the SEC filing

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