United States Intervenes in False Claims Act Lawsuit against Drug Maker Mallinckrodt Alleging Company Knowingly Avoided Paying Medicaid Rebates Owed Due to Significant Price Increases
The Department of Justice has joined a False Claims Act complaint against Mallinckrodt ARD (formerly Questcor Pharmaceuticals) alleging it knowingly underpaid Medicaid rebates due as a result of large increases in the price of its drug H.P. Acthar Gel, by misrepresenting when the drug was introduced and first marketed.
Drug manufacturers must pay state Medicaid programs quarterly rebates, which include an inflationary component based on the drug’s price since 1990 or when it was first marketed, whichever date is later. The government alleges that although the drug was first marketed long before 1990, Mallinckrodt began calculating and paying rebates as if it were a new drug first marketed in 2013, based on the FDA’s approval of a new indication for its use in 2010. Mallinckrodt had increased the drug’s price by more than $20,000 per unit before 2013, which would mean this this accounting of its price change would avoid inflationary rebates of hundreds of millions of dollars. The company allegedly ignored multiple notifications that this approach was invalid.
