Mallinckrodt’s Acthar Gel is no stranger to controversy. Pricing critics, payers and the feds have all targeted the controversial hormone injection. But now, Medicaid is hitting Acthar where it hurts most—in the pocketbook—and the company is more than happy to go to court.
The Irish drugmaker sued the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services on Tuesday, accusing the government of retroactively changing the drug’s average manufacturer price and putting it on the hook for $600 million in back rebates.
Mallinckrodt said the move, if left unchallenged, would undermine the company’s development work on a new-and-improved Acthar formulation. That project is a $500 million-plus proposition, the company said, at it includes clinical trials in hard-to-treat indications like rheumatoid arthritis.
Plus, Medicaid patients would only have limited access to the drug, the company said. The company said Acthar cleared $1 billion in sales in 2018. “Despite
The company said it doesn't need to change its sales forecast or set aside a reserve to cover the loss. Still, after the filing, Mallinckrodt shares dropped 10% in pre-market trading Tuesday to $13.02. Since March 1, the company’s stock has lost nearly half its value, down from a high of $24.91.
Mallinckrodt’s newest legal fight over Acthar is the latest in a series of lawsuits, including the Justice Department's recent decision to join two whistleblower claims accusing Questcor, the Acthar maker Mallinckrodt acquired in 2014, of illegally marketing the gel.
In what federal prosecutors called a “high-tiered strategy” to push Acthar sales, the suit added weight to former employees’ claims that the company fostered a culture of misdirection about the drug, including deceiving payers about its benefits and retaliating against workers who threatened to blow the company’s cover.
A separate whistleblower claim not included in the federal suit said the company used “dirty data” to mislead payers and that sham internal investigations about the company’s behavior resulted in few if any changes.
But the federal government isn’t the only player piling on Mallinckrodt. In 2017, a payer lawsuit accused Questcor of actively stifling Acthar competition in a move to pump the drug’s list price 85,000% from $40 to more than $36,000 at the time the lawsuit was filed. Mallinckrodt has argued the vast majority of the drug’s price hikes occurred before Questcor was acquired and that it offers behind-the-scenes discounts and rebates. But Mallinckrodt has also pushed through routine price hikes in the years since it bought the product.
“Since acquiring Acthar Gel, Mallinckrodt has only made modest price adjustments in the mid-single digit percentage range,” a company spokesman previously told FiercePharma. “Additionally, Mallinckrodt provides discounts to this list price to payers, which the prior owner generally did not offer.”