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Analysis

Mallinckrodt to Pay $15M to Settle False Claims Liability

By John Commins  
   September 06, 2019

The United Kingdom-based drug maker wooed doctors with lavish dinners and entertainment.

Mallinckrodt ARD LLC will pay the federal government $15 million to resolve whistleblower allegations that the United Kingdom-based company wined and dined physicians to induce them to write prescriptions for the company's pricey H.P. Acthar Gel, the Department of Justice said.

The alleged False Claims Act and Anti-Kickback Statute violations occurred from 2009 to 2013, when the company was known as Questcor Pharmaceuticals Inc., DOJ said.  

"The Department of Justice will hold companies accountable for the payment of illegal kickbacks in any form," Assistant U.S. Attorney General Jody Hunt said in a media release.

"Improper inducements have no place in our federal healthcare system, which depends on physicians making decisions based on the healthcare needs of their patients and not on or influenced by personal financial considerations," Hunt said.

Mark Casey, general counsel for Mallinckrodt, said the drug maker was "pleased to have conclusively resolved and put this Questcor matter behind us."

"Where we can resolve legacy legal matters in a reasonable and manageable way, we will continue to do so," Casey said.

Acthar is used to treat multiple sclerosis, and rare and potentially fatal infant spasms.

The allegations in the settlement stem from two whistleblower lawsuits cases, and those plaintiffs will share $2.9 million of the payment. 

In June, DOJ intervened in another whistleblower lawsuit in Philadelphia alleging that between 2010 and 2014  Mallinckrodt (then Questcor) used a foundation as a conduit to pay kickbacks in the form of copays to patients using Acthar. 

DOJ said the alleged scheme allowed Mallinckrodt to market the drug as "free" to doctors and patients while hiking its price astronomically, noting that from 2001 through 2014, Mallinckrodt raised the price of Acthar from $50 to over $32,200 per 5 milliliter vial.    

The kickbacks to patients were funneled through three funds that Mallinckrodt's foundation set up to pay only Acthar Medicare copays. The subsidies were used to stymie doctor and patient concerns about the drug's high cost and to market the drug as "free." 

“Improper inducements have no place in our federal healthcare system.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: Mark Van Scyoc / Shutterstock.com


KEY TAKEAWAYS

The alleged False Claims Act and Anti-Kickback Statute violations occurred from 2009 to 2013, when the company was known as Questcor Pharmaceuticals Inc.

In June, DOJ intervened in another whistleblower lawsuit in Philadelphia alleging that between 2010 and 2014  Mallinckrodt used a foundation as a conduit to pay kickbacks in the form of copays to patients using Acthar. 

DOJ said the alleged scheme allowed Mallinckrodt to market the drug as 'free' to doctors and patients while hiking its price astronomically.

From 2001 through 2014, Mallinckrodt raised the price of Acthar from $50 to over $32,200 per 5 milliliter vial.   


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