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Mallinckrodt illegally inflated price of drug from $50 to $32,000, DoJ lawsuit says

Published on 07/06/19 at 10:28am

The Department of Justice (DoJ) has filed new charges against Mallinckrodt alleging the Irish-listed firm illegally hiked the price of a vial of the anti-inflammatory drug Acthar from $50 to $32,000.   

Mallinckrodt paid illegal kickbacks to encourage Medicare patients to buy their drugs, the lawsuit says.

The government alleges that Mallinckrodt used a foundation as a conduit to pay illegal kickbacks in the form of co-pay subsidies so that it could market the drug as ‘free’.

In the meantime Mallinckrodt raised the price of Acthar to astronomical levels, increasing the price of the drug from $50 per vial when they acquired it in 2001, to $32,000 per vial at the end of 2014.

While Mallinckrodt paid patient’s co-pay payments through the conduit foundation, the firm charged massively inflated prices, knowing that the high list price would not discourage doctors and patients from prescribing or taking the drug.

According to a statement from the DoJ: “Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.”   

U.S. Attorney McSwain, commented: “Drug companies are not allowed to pay patients’ co-pays.  That rule is designed to prevent the very thing Mallinckrodt allegedly did here – outrageously jack up Acthar’s price and leave the government with the entire bill.”

“We will not allow drug companies to use so-called charitable patient assistance funds to do what they otherwise are not allowed to do.  That’s an illegal kickback and undermines the viability of Medicare Part D, which our nation instituted to help seniors cover prescription drug costs.”

Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division added: “Illegal inducements increase the costs paid by the American taxpayer and distort the market forces that otherwise could control those costs. This lawsuit and prior enforcement actions make clear that the Department will hold accountable drug companies that pay illegal kickbacks to facilitate increased drug prices.”

The charges were brought about under whistleblower provisions written into the False Claims Act which allow whistleblowers to sue on behalf of the government and receive a share of any recovery of funds.

“We sincerely thank the relators in this case. Together with their lawyers, these three citizens provided essential assistance to the government throughout its investigation. Without their willingness to shed light on allegations of fraud, preserving government program funds would be far more challenging,” McSwain added.

Louis Goss

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