Mallinckrodt could owe a whopping $650M in Acthar Medicaid rebates

Mallinckrodt
Mallinckrodt's setback in its Medicaid rebate fight won't affect its proposed opioid deal, the company said. (Mallinckrodt)

Mallinckrodt has already had a busy year with a $1.6 billion opioid deal in the works and the planned bankruptcy of its specialty generics unit. Now, the drugmaker has taken another hit in its fight to escape a massive Medicaid bill for its controversial H.P. Acthar Gel. 

Mallinckrodt may be forced to pay $650 million in back rebates after a Washington, D.C., judge on Monday backed the federal government's claims the drugmaker underpaid on Acthar for years. 

On top of the overdue rebates, Mallinckrodt said the decision could strip away between $90 million and $100 million in net sales of Acthar each year. 

Mallinckrodt intended to appeal the ruling and move for a stay on the order in the meantime, the company said.

RELATED: N.Y. postpones opioid bellwether trial as novel coronavirus concerns spread

Mallinckrodt's long-running fight to escape its massive rebate bill comes as the drugmaker works to piece together a $1.6 billion global opioid deal that has broad signoff from state prosecutors.

Late last month, Mallinckrodt reached an "agreement in principle" with a plaintiff's executive committee representing thousands of opioid lawsuits the drugmaker faces in a Cleveland multidistrict litigation as well as 47 state and territory attorneys general, the company said. The state of New York last week joined that agreement, making it the 48th to sign off.

To cover its end of the deal, Mallinckrodt said the bankruptcy would reform its generics unit into a public trust, allow for a "channeling injunction" against further opioid lawsuits and grease the skids for a sale of the company's opioid portfolio.

Monday, Mallinckrodt said the Medicaid lawsuit was one of many "legal contingencies" the drugmaker had considered in the proposed settlement, and the deal was still on the table after the ruling.

RELATED: Feds target Mallinckrodt after joining Medicaid rebate suit worth 'hundreds of millions'

Signing that deal was complicated by Mallinckrodt facing the uncertainty of a major Medicaid bill that now seems more likely given the district judge's ruling.

Earlier this month, the feds joined a False Claims Act whistleblower suit filed in Boston accusing Mallinckrodt of underpaying Medicaid rebates for Acthar by "hundreds of millions of dollars," the U.S. Attorney's Office for the District of Massachusetts said in a release.

The government accused Mallinckrodt, which purchased Acthar maker Questcor Pharma in 2014, of refusing to pay "inflationary rebates" on Acthar despite raising the price of the drug 85,000% between 2001 and 2017. Under the Medicaid Drug Rebate Program, drugmakers are required to pay back the difference between a drug's price increase each year and the rate of inflation, the attorney's office said.

Mallinckrodt pushed back against those claims in a May lawsuit field against the U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services, accusing the government of retroactively changing Acthar's average manufacturer price. 

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