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Humana lawsuit targets Mallinckrodt's 'billion-dollar golden goose'

Latest twist in long story of Acthar

Mallinckrodt

US health insurer Humana has filed a lawsuit against Mallinckrodt Pharmaceuticals seeking to recoup some of the “ill-gotten gains” the defendant allegedly made from Acthar.

The case alleges that Humana overpaid by $700m for on Acthar because of illegal practices that enabled Mallinckrodt and Questcor, the former owner of the drug, to increase the price from $40 to $39,000 (although this increase was over a period of 17 years).

“These eye-popping price increases are not an accident, a market anomaly or a necessary by product of legislation. They are the intended result of purposeful and illegal conduct,” the lawsuit alleges. “This conduct consists of a complex, multipart scheme involving monopoly, bribery, racketeering, fraud and other deceptive and unfair practices.”

Humana’s case makes three broad allegations. Firstly, the insurer alleges Mallinckrodt acquired the rights to a synthetic version of Acthar from Novartis but “never seriously attempted” to bring it to market, thereby eliminating a competitor that could have brought the price of the drug down.

Secondly, Humana alleges Mallinckrodt artificially inflated demand “by using a charitable foundation for the illegal purpose of paying patient co-pays”.

The nonprofit allegedly used money from Mallinckrodt to provide patient assistance funds solely for Acthar.

“In other words, it was a bribe to patients and a vehicle through which Mallinckrodt could persuade physicians that the astronomical price of the drug should not be a barrier to prescribing it,” the lawsuit alleges.

Finally, Humana alleges Mallinckrodt maintained the artificially inflated demand “through a pervasive bribery scheme to doctors”.The lawsuit identifies at least 20 doctors who allegedly received “thinly disguised bribes” totalling upward of $250,000 over a three-year period.

The allegations are the latest twist in the long story of Acthar, a drug which was developed by Armour, a meat company, in the 1940s as a byproduct of pork processing.

Acthar came to market in the US in 1952 with a broad label reflecting the approval practices of the time and evidence that the drug triggers anti-inflammatory responses.

Over the decades, other drugs superseded Acthar in many, but not all, indications, culminating in Aventis Pharmaceuticals selling the asset to Questcor for $100,000 in 2001.

At that time, the drug cost $40, according to the lawsuit. Questcor allegedly increased the price to $750 immediately after buying the asset but the big jump was still to come.

In 2007, the price went from $1,650 to $23,269 according to the lawsuit. The price continued to tick up over the following years, both before and after Mallinckrodt paid $5.6bn to acquire Questcor in 2014.

Article by
Nick Taylor

13th August 2019

From: Sales

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