Short-seller Andrew Left puts Mallinckrodt and its Acthar pricing on the spot--again

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A check brandished by Andrew Left on CNBC Tuesday in a challenge to Mallinckrodt to run a new trial on H.P. Acthar Gel.

Mallinckrodt has faced its share of criticism about H.P. Acthar Gel, what with pricing controversies, federal investigations and basic questions about the drug’s efficacy. Now, short-seller Andrew Left, who called the company a “worse offender” than Valeant on pricing, has challenged the company to run a “proper trial” of the drug.

During a segment on CNBC Tuesday, Left held up a $1 million check, made out to the National Multiple Sclerosis Society. He promised to donate the hefty sum to the charity if Mallinckrodt put Acthar to the test.

Ahead of the appearance, Left tweeted about his $1 million challenge. Later in the day, he accused Mallinckrodt on Twitter of “scamming” the government. “I dare them to sue,” Left tweeted under the @CitronResearch handle.

And in an interview with Real Money after the CNBC appearance, Left said Mallinckrodt is "robbing from the health care system.”

It’s not the first time Acthar’s data has been challenged--or the first time critics have suggested that government health programs are wasting money on the drug. In 2014, the investigative news organization Pro Publica found that Medicare’s Acthar spending jumped twentyfold between 2008 and 2012, to $141.5 million

The Acthar saga is a long and twisted one, beginning with Questcor’s purchase of the drug in 2001. The company steadily increased the price of the hormone-based drug and racked up new indications for rare inflammatory disorders. Priced at $40 per vial in 2001, it went up to $23,000 in 2007, and by 2012, Medicare Part D was paying more than $41,000 on average.

Along the way, experts questioned whether Acthar has proven effective. Some called on Medicare to push Questcor for new trials to show that it actually works to treat diseases where it was often prescribed at the time, including rare kidney disorders and multiple sclerosis.

Mallinckrodt picked up Questcor in 2014, and last year, state and federal investigators moved in. The Federal Trade Commission last year 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. The company was already facing marketing allegations, and the FTC subpoena was just one of several new investigations. Mallinckrodt said at the time that "a small number of states" were looking into whether the Synacthen deal violates state antitrust laws.

Then, last fall, Mallinckrodt’s own pricing came under fire. Left picked up the flag in November, likening Mallinckrodt’s aggressive pricing on Acthar to Valeant and its now-discredited approach of growing sales by hiking sticker prices. "The market has been so focused on Valeant that they forgot about other platform companies who are levered and face the same headwinds in reimbursement," Left said in an emailed statement. "We already see these challenges at Mallinckrodt and while Valeant has been taking all the heat, the business model of Mallinckrodt is just as, if not more, in danger of unraveling."

CEO Mark Trudeau told CNBC at the time that he didn’t expect to see reimbursement challenges on Acthar's price. The company has invested heavily in studying Acthar for a variety of new indications, Trudeau said. Alternative treatments are even more costly, he contended.

Now, Mallinckrodt is disputing Left’s Tuesday statements. The company listed a variety of research efforts on Acthar, including “company-sponsored controlled clinical trials for lupus and for a key nephrotic syndrome condition called FSGS,” promising a “first patient announcement … very soon.”

“We also continue to evaluate opportunities to conduct Acthar phase four controlled clinical trials in other key disease areas,” the company said in a statement.

Mallinckrodt is generating “additional data sets” for Acthar, including pre-clinical and clinical data, patient registries and health economic assessments, as well as sponsoring investigator-initiated trials. "In the first half of fiscal 2016, we had approximately 40 data presentations and publications, with about half related to Acthar,” the company said.

- see the Real Money story
- get Mallinckrodt’s statement

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