Mallinckrodt to pay $15 million to resolve US bribery allegations over Acthar Gel as DOJ files new kickback charges

Mallinckrodt disclosed on Wednesday that it reached an agreement in principle with the US Department of Justice (DOJ) under which the company expects to pay $15.4 million to resolve allegations involving "legacy sales and marketing activities" at its Questcor Pharmaceuticals unit. Specifically, two whistle-blower lawsuits claimed that Questcor bribed healthcare professionals and illegally marketed Acthar Gel (corticotropin) to boost sales.

Mallinckrodt will not be forced to admit to wrongdoing under the terms of the settlement, adding the agreement is "fair and reasonable" and "should put to rest these government claims." The drugmaker acquired Questcor in 2014 for $5.6 billion.

Also on Wednesday, the DOJ announced that it has filed a new complaint against Mallinckrodt alleging that Questcor used a charitable foundation to funnel kickbacks in connection with Acthar Gel from 2010 through 2014. According to the DOJ, Questcor used the foundation to provide kickbacks in the form of co-pay subsidies for Acthar Gel, to the exclusion of other treatments. "The company paid these subsidies to induce Medicare-reimbursed purchases of Acthar Gel at its ever-increasing price, and used the subsidies to counteract doctor and patient concerns about the drug's high cost and to market the drug as 'free,'" the DOJ stated. The complaint contends that the price of Acthar Gel was increased from about $50 per 5-mL vial in 2001, when Questcor acquired rights for the drug, to more than $32 200 by the end of 2014.

Jennifer Crandall, spokeswoman for the US Attorney's Office of the Eastern District of Pennsylvania, noted that "the allegations made by the government in the complaint filed today [regarding the charitable foundation conduct] do not relate to any other settlement."

Meanwhile, Mallinckrodt general counsel Mark Casey stated that the drugmaker "looks forward to finalising our settlement agreement with the government relating to legacy Questcor sales and marketing activities." He added "as we have said repeatedly, where we can resolve legacy legal matters in a reasonable and manageable way, we will do so. Unfortunately, that has not been possible to date regarding the allegations relating to Questcor's charitable foundation activities, despite what we believe was lawful and appropriate activity."

The news comes after Mallinckrodt filed a lawsuit last month seeking to block the US Department of Health and Human Services and the Centers for Medicare and Medicaid Services from changing Medicaid rebate calculations that could reduce annual sales of Acthar Gel by about 10 percent. The company was also recently named in a New York lawsuit accusing several drugmakers of deceptively marketing opioids.

To read more Top Story articles, click here.