Mallinckrodt Pharmaceuticals Agrees to $15 Million Settlement to Resolve Kickback Allegations

Mallinckrodt Pharmaceuticals will pay $15.4 million to resolve allegations that it illegally marketed one of its most profitable drugs. Mallinckrodt became involved in the lawsuit after it acquired the drug’s original maker, Questcor, for $5.6 billion, in 2014.

Mallinckrodt Pharmaceuticals Agrees to $15 Million Settlement to Resolve Kickback Allegations

Last May, we reported on the two (now consolidated) whistleblower lawsuits that were resolved by the recent settlement. The False Claims Act case was initiated by Charles Strunck, a former Questcor sales specialist, and Lisa Pratta, a former Questcor neurology specialist. Both Strunck and Pratta were involved in the marketing of Acthar, a drug used in multiple sclerosis treatments.  

H.P. Acthar Gel, which is also used to treat lupus, arthritis, and seizures in infants, experienced a spectacular price increase in 2007, going from $1,600 to $23,000. In under 20 years, the drug’s price went from $40 to $39,000 per vial. Its annual sales currently surpass $1 billion.

According to the whistleblowers’ allegations, the defendant used “wine and dine” tactics to boost sales of Acthar, systematically bribing physicians to prescribe the drug, in violation of anti-kickback regulations. Bonuses offered to doctors in exchange for prescription and promotion of Acthar could go as high as $80,000 per month. 

Prosecutors also found that the company lied to the FDA about Acthar’s effectiveness, and promoted it for unapproved off-label uses. Additionally, the whistleblowers claimed the company instructed staff to conceal evidence of its illegal marketing practices.

The Department of Justice decided to join the whistleblower lawsuits after it found evidence that 12 Questcor sales representatives illegally offered luxurious entertainment and lavish dining to physicians as part of their marketing of Acthar.   

Between 2009 and 2013, a large number of prescriptions were written in connection with the alleged violations. Since Medicare, Medicaid, and other government programs were billed for thousands of vials of Acthar, the defendant’s practice involved multiple False Claims Act violations. 

U.S. Attorney William M. McSwain said in a statement that the Department of Justice will continue to protect patients who prescribe drugs “so they can enrich themselves” and from pharmaceutical companies that engage in illegal marketing. "Kickback schemes are a form of illegal pay-to-play business practices that have no place in our healthcare system; they interfere with physician-patient relationships and drive up the cost of health care."

Consolidated last July, the two whistleblower suits filed by Strunck and Pratta had a very favorable outcome for the tipsters. As a reward for their efforts, they will receive $2.9 million.

As the settlement agreement was announced, a spokesperson for the OIG of the Department of Health and Human Services referred to the payment of kickbacks to boost profits as a practice that "cheats taxpayers and the patients who rely on government healthcare programs for essential care." P 

A spokesperson for the defendant said in a statement that the company is “pleased” to have put the lawsuit behind them. The settlement does not include an admission of guilt. 

Are you an employee or ex-employee of a pharma or Medicaid company cheating the government? We’re working on several stories that could use your input. Give us a call or connect by email – we can keep your identity confidential.

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