DOJ Joins Whistleblower Suit Against Mallinckrodt Over Fraudulent Billings Involving Pediatric Drug that Cost Medicare Billions

The Department of Justice has just joined two pharmaceutical company insiders in a lawsuit against Questcor Pharmaceuticals, which allegedly defrauded taxpayers out of hundreds of millions of dollars through a “multi-tiered” scheme to inflate the price of a pediatric drug.

The alleged scheme, which has been described as one of “the largest drug price increases” in our nation’s history, included bribing doctors and other healthcare professionals to boost sales.   

The defendant, Questcor Pharmaceuticals, is now Mallinckrodt. The drug in question is H.P. Acthar Gel. From 2000 to 2019, the price of the drug, which is used to treat a rare disorder in infants, went from $40 to $39,000 per unit, which represents nearly a 100,000 percent increase. 

The whistleblowers are Charles Strunck, once a multiple sclerosis sales specialist for Questcor, and Lisa Pratta, an Acthar neurology specialist for the company.  

The DOJ’s investigation found evidence that supports the whistleblowers’ allegations. Since Mallinckrodt acquired Questcor in 2014, it claims Questcor is the entity responsible for the fraud. Lisa Pratta may be able to prove otherwise, since she stayed on after the acquisition. In fact, in a statement to CNN, representatives for Mallinckrodt did not deny that the misconduct existed. 

The alleged misconduct involved lying to the FDA and bribing physicians to prescribe Acthar not only for the rare infant seizures it was designed to treat but also for multiple sclerosis and arthritis. These strategies were responsible for annual sales of the drug rising to $1 billion.

A large portion of H.P. Acthar’s lucrative sales was reimbursed by Medicare. Journalists found that in the course of six years, Medicare spent $2 billion on the drug.

According to the complaint, the drugmaker "cheated the federal government out of millions of dollars that should not have been paid, thereby enriching [the company] and subjecting patients to unapproved, unsafe and potentially ineffective uses of H.P. Acthar Gel." 

The lawsuit also states that, “Questcor has attempted to conceal and cover-up its payment of kickbacks and its illegal promotion of H.P. Acthar Gel by making false statements to the FDA and directing employees to conceal evidence by failing to disclose . . . the full nature and extent of its advertising, promotional and marketing materials and plan."

To the claims that Mallinckrodt was not involved in the fraud, the industry insiders responded that after its multi-billion-dollar deal to acquire Questcor, Mallinckrodt, knowingly continued with the fraudulent practices.

The defendant could be forced to pay hundreds of millions of dollars if found guilty of violating the False Claims Act. In its statement to CNN, Mallinckrodt stated that it is cooperating with the DOJ and called the alleged fraud, “legacy Questcor conduct." 

A spokesperson for whistleblowers Strunck and Pratta said in a statement that the tipsters are "true heroes to stand up to a corrupt corporate culture that cost the taxpayers hundreds of millions of dollars."  

According to the complaint, “Had [Medicare] known that reimbursements were being made for H.P. Acthar Gel caused by Questcor's unlawful promotion, it would not have made such reimbursements.” If the case succeeds, the former Questcor employees could receive a multi-million-dollar whistleblower award. 

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