Humana calls Mallinckrodt's Acthar a 'billion-dollar golden goose' in $700M fraud lawsuit

Mallinckrodt
Humana said Mallinckrodt defrauded the insurer of $700 million in Acthar payments. (Mallinckrodt)

Mallinckrodt is getting burned on all sides as federal prosecutors scope out the drugmaker’s controversial H.P. Acthar Gel marketing and price hikes. Now, one of the largest U.S. insurers is looking to pile on.

Humana overpaid for Acthar by $700 million because of Mallinckrodt’s widespread campaign to stifle competition and pay doctors and patients to choose the pricey med, the insurer said in a new federal lawsuit in California.

Humana accused Mallinckrodt of a “complex, multipart scheme involving monopoly, bribery, racketeering, fraud, and other deceptive and unfair practices” to fuel the drug’s skyrocketing price increases and induce physicians to boost prescriptions. Mallinckrodt acquired Acthar in 2014 as part of a $5.6 billion purchase of Questcor, which has landed the U.K. drugmaker in a raft of legal problems since its buyout.

Humana did not provide a statement on the lawsuit, citing a "longstanding policy not to comment on pending litigation."

Mallinckrodt said it intended to "vigorously defend" itself in court. 

"Mallinckrodt strongly believes that Humana’s complaint is completely without merit as it is based on misstatements of fact and erroneous applications of the law," spokesman Daniel Yunger said in a statement. "Humana’s past and present utilization management policies require that a patient and prescriber provide Humana with adequate clinical rationale and treatment history before Humana makes an informed and discretionary decision to reimburse Acthar."

RELATED: Mallinckrodt hit with new kickback charges same day as $15.4M settlement with feds

Mallinckrodt has maintained that most of Acthar’s price hikes—which amounted to an 85,000% increase from 2001 to 2017—occurred before the Questcor purchase. However, the drugmaker has continued routine price hikes since it acquired Acthar, which a Mallinckrodt spokesman previously described as “modest price adjustments in the mid-single digit percentage range.”

Humana said price increases for “billion-dollar golden goose” Achtar were purposefully instituted to counteract the drug’s flagging sales and limited market.

Those price hikes were only the tip of the iceberg for Mallinckrodt, which recently inked a $15.4 million settlement with the Justice Department on kickback charges stemming from two whistleblower lawsuits. In early June, the drugmaker closed the book on those charges but immediately faced a new set of accusations from the feds that it funneled money through front funds to illegally subsidize Medicare copays and jack up the drug’s list price.

RELATED: Mallinckrodt postpones split-up plan as opioid lawsuits cloud spinoff's future

The drugmaker has also been under fire for its generic opioids marketing, one of a slew of opioid makers facing nationwide litigation.

Last week, Mallinckrodt announced it would delay a spinoff of its specialty generics business as potential settlements in numerous opioid lawsuits against the company have created uncertainty about the to-be-independent unit's future cash flow.  

Mallinckrodt's spinoff plan, announced in December, would create a new company under the Mallinckrodt name consisting of its specialty generics products including oxycodone, active pharmaceutical ingredients and the constipation drug Amitiza.

What's left over—the company's specialty brands, including H.P. Acthar Gel—would operate under a new, as-yet-undetermined name and without the burden of potentially hefty opioid liabilities.

Editor's Note: This story has been updated to include a statement from Mallinckrodt. 

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