- Office of Attorney General Maura Healey
Media Contact for Mallinckrodt To Pay $233 Million in National Settlement of Allegations That It Defrauded Medicaid Drug Rebate Program
Thomas Dalton, Deputy Press Secretary
BOSTON — Attorney General Maura Healey announced today that her office has joined with 49 other states, the District of Columbia, Puerto Rico, and the federal government in a $233 million national settlement with Mallinckrodt ARD, LLC, a leading generic opioid manufacturer, of allegations that it defrauded the Medicaid Drug Rebate Program.
Mallinckrodt ARD, LLC – formerly known as Questcor Pharmaceuticals, Inc. – is a U.S. subsidiary of the Irish pharmaceutical company Mallinckrodt plc, which sold and marketed pharmaceutical products throughout the nation. The settlement resolves allegations that from January 1, 2013, through June 30, 2020, Mallinckrodt knowingly underpaid Medicaid rebates due for its drug H.P. Acthar Gel (Acthar), in violation of the Federal False Claims Act and the Massachusetts False Claims Act. Massachusetts will receive nearly $2.7 million from this settlement as a result of Mallinckrodt’s submission of allegedly false claims to the state’s Medicaid program (MassHealth).
“Millions of Massachusetts residents rely on MassHealth to get critically important medical care, especially when managing serious conditions like multiple sclerosis, rheumatoid arthritis and lupus, all of which can be treated by the prescription drug Acthar,” said AG Healey. “This settlement recovered millions of dollars owed to our state by Mallinckrodt and sends a clear message that no company can get away with shortchanging MassHealth, a vital program for the most vulnerable in the Commonwealth.”
Under the Medicaid Drug Rebate Program, when a manufacturer increases the price of a drug faster than the rate of inflation, it must pay the program a per-unit rebate of the difference between the drug’s current price and the price of the drug if its price had gone up at the general rate of inflation since 1990 or the year the drug first came to market, whichever is later. However, Mallinckrodt and its predecessor Questcor allegedly began paying rebates for Acthar, a drug used to treat conditions such as multiple sclerosis and infantile spasms, in 2013 as if Acthar were a “new drug” just approved by the U.S. Food and Drug Administration (FDA), rather than a drug that was first introduced to market in 1952. This practice meant the companies allegedly ignored all pre-2013 price increases when calculating and paying Medicaid rebates for Acthar from 2013 until 2020. In particular, it is alleged that Acthar’s price had already risen to over $28,000 per vial by 2013; therefore, ignoring all pre-2013 price increases for Medicaid rebate purposes significantly lowered Medicaid rebate payments for Acthar. According to the settlement agreement, Mallinckrodt admitted that Acthar was not a new drug as of 2013 but rather was approved by the FDA and marketed prior to 1990.
This settlement results from a whistleblower lawsuit originally filed in the United States District Court for the District of Massachusetts. The federal government, the District of Columbia, Puerto Rico, and Massachusetts and 25 other states intervened in the civil action in 2020. The settlement announced today is part of a reorganization plan that was approved in March 2022 by the U.S. Bankruptcy Court.
Under the terms of the settlement, nearly $2.7 million will go to MassHealth as restitution for the drug rebates that were underpaid by Mallinckrodt.
A team from the National Association of Medicaid Fraud Control Units participated in the litigation and conducted settlement negotiations on behalf of the states. The team included AG’s offices in California, Florida, Massachusetts, Michigan, Nevada, New York, Texas, and Wisconsin. Managing Attorney Ian Marinoff of AG Healey’s Medicaid Fraud Division represented Massachusetts and was a member of the litigation and settlement team.
The AG’s Medicaid Fraud Division receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award. The remaining 25 percent is funded by the Commonwealth of Massachusetts.