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Pharmaceutical lawsuit pays out nearly $14.5 million to Michigan

Posted at 5:23 PM, Jun 22, 2022

LANSING, Mich. — An American-Irish drug manufacturer must pay more than $230 million as part of a settlement after it allegedly underpaid Medicaid rebates.

Mallinckrodt ARD, LLC, formerly known as Questcor Pharmaceuticals, Inc., is a United States branch of the Irish pharmaceutical company Mallinckrodt plc, which sells and markets pharmaceutical products nationwide.

Michigan Attorney General Dana Nessel joined 49 other states, Washington, D.C., Puerto Rico and the federal government to settle allegations of fraud against the company.

The allegations stem from January 1, 2013 through June 30, 2020.

Mallinckrodt is accused of knowingly underpaying Medicaid rebates that were due for its drug H.P. Acthar Gel (Acthar).

When a manufacturer boosts the price of a drug faster than the rate of inflation, it has to pay the Medicaid program a “per-unit rebate,” according to the Medicaid Drug Rebate Program.

The per-unit rebate is the difference between the drug’s current price and the price of the drug if its price increased at the general rate of inflation since 1990 or the year the drug first hit the market, whichever is later.

The government claims Mallinckrodt started paying rebates for Acthar in 2013 as if it were a new drug, recently approved by the Food and Drug Administration (FDA).

However, Acthar first hit the market in 1952.

That means the company allegedly ignored all pre-2013 price increases when calculating and paying Medicaid rebates for Acthar from 2013 to 2020.

As part of the settlement, Mallinckrodt admitted that Acthar was not a new drug in 2013 and that the FDA approved it and it hit the market before 1990.

This settlement stems from a whistleblower lawsuit.

The total value of the settlement is $233,707,865.18.

Michigan will receive $14,450,193.22, with the first payment, an estimated $180,000, expected mid-July.

“We will not stand for pharmaceutical companies gaming the system to pad bottom lines. I’m proud of the work done by our team that advocated for Michigan and successfully secured more than $14 million in state settlement dollars,” said Nessel.