Mallinckrodt Settles Price-Fixing Suit for $100M

WASHINGTON (CN) — The successor of Questcor Pharmaceuticals will pay $100 million to settle charges that it monopolized the market for a lifesaving drug that treats infant seizures.

The drug in question, Acthar Gel, “is the only therapeutic adrenocorticotropic hormone product sold in the United States,” according to the complaint, filed simultaneously with the settlement on Jan. 18 in U.S. District Court for the District of Columbia.

Five states and the Federal Trade Commission note that adrenocorticotropic hormone, or ACTH, is the standard of care for infantile spasms. The 60-year-old drug is also used to treat a kidney disorder called nephrotic syndrome.

When Questcor acquired Acthar in 2001, the price per vial was $40. “Questcor has since raised Acthar’s price to over $34,000 per vial — an 85,000% increase,” the complaint states.

The FTC notes that Acthar was the only drug product to Questcor’s name before it became Mallinckrodt ARD in 2014. Buying the drug cost from Aventis Pharmaceuticals cost Questcor just $100,000, plus modest royalties. The FTC notes that the drug’s U.S. sales alone topped more than a $1 billion in 2015. Parent company Mallinckrodt is based in Ireland.

“It is outrageous that Questcor blocked competitors from entering the market for ACTH in order to continue charging unconscionably high prices to consumers with life-threatening diseases,” Maryland Attorney General Frosh said in a statement. “This settlement will introduce competition into the market to keep prices more reasonable.”

Questcor cornered the market on ACTH, according to the complaint, in 2013 by licensing the rights to a Novartis drug, Synacthen Depot, which is a synthetic ACTH drug approved for use in countries outside the United States.

Regulators say that Synacthen represented a “nascent competitive threat” to Acthar — even though it was not yet approved as a treatment in the United States. Questcor outbid several other companies in the deal worth at least $135 million.

As part of its settlement with Mallinckrodt ARD, the FTC will receive $90 million. Maryland, New York, Alaska, Texas and Washington will each receive $2 million.

Mallinckrodt did not admit any liability or wrongdoing as part of the settlement but it did agree to license Synacthen to a competitor approved by the FTC.

“We continue to strongly disagree with allegations outlined in the FTC's complaint, believing that key claims are unsupported and even contradicted by scientific data and market facts, and appear to be inconsistent with the views of the FDA,” Mallinckrodt said in a statement.

Although pharmaceutical price hikes have made recent headlines and garnered political scrutiny, the Acthar hike alone wasn't the primary focus of the federal and state investigations. Regulators say the case highlights steps that Questcor took to protect its revenues by squelching competition.

“Questcor took advantage of its monopoly to repeatedly raise the price of Acthar,” FTC chairwoman Edith Ramirez said in a statement. “We charge that, to maintain its monopoly pricing, it acquired the rights to its greatest competitive threat, a synthetic version of Acthar, to forestall future competition.”

Mallinckrodt notes in its statement, however, that the resources necessary to develop Synacthen in the United States would be considerable and that trials could be difficult to conduct because patients would have to forego a known treatment, Acthar.

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