The Department of Justice (DOJ) has decided to intervene in a whistleblower lawsuit against Questcor Pharmaceuticals, which is now owned by Mallinckrodt Pharmaceuticals. The newly unsealed allegations paint a picture of extreme corporate greed enabled by shameless doctors, who used their patient’s trust to line their pockets.
The complaint, filed by 2 former employees in 2012, now joined by the United States, describes how the companies and doctors enriched themselves through a fraudulent marketing scheme centered around H.P. Acthar Gel®, a controversial product.
Allegedly, both Questcor and Mallinckrodt bribed doctors who regularly prescribed Acthar. The companies also instructed their salesforce to bolster sales by encouraging uses and dosages of Acthar that were not approved by the Food and Drug Administration (FDA).
At the same time, they were aggressively marketing Acthar, the companies jacked up the price. Since 2000, the price of the 50-year-old drug increased an astonishing 97,000 percent.
Profits for Mallinckrodt soared. So did bonuses for doctors who elected to prescribe Acthar instead of Solu-Medrol®, a much cheaper generic that was readily available. Because Medicare accounted for a large segment of HP sales, the government was forced to foot the bill for millions of dollars of needlessly expensive prescriptions.
The decision of the DOJ to intervene in this case is not good news for Mallinckrodt — the government rarely steps in unless it believes the case can be won.
If held accountable, Mallinckrodt could be on the hook for 3-times the amount defrauded, estimated to be in the tens of millions, in addition to $5,500-$11,000 penalties for each false claim.
What Is H.P. Acthar Gel?
H.P. Acthar Gel (corticotropin) was first approved by the FDA in 1952. It never demonstrated effectiveness in controlled clinical trials that would meet current FDA standards — the drug was approved before the Kefauver-Harris Amendment — yet Acthar is approved for 19 indications, including treatments for multiple sclerosis, infantile spasms, and rheumatoid arthritis.
Critics of the drug point to a lack of medical evidence supporting the use of Acthar for many of these indications. For the first 50 years, though, the drug attracted little controversy, and it typically sold for about $40-$50 a vial.
That changed in 2001, when Questcor purchased the license to manufacture corticotropin, the generic name for Acthar. Within 6 years, they had raised the price to $23,269 per vial.
In 2014, Mallinckrodt acquired Questcor. By 2018, the acquisition cost of Acthar had risen $38,892. The numbers are astonishing. A vial of Acthar, which used to cost as much as tank of gas, now costs as much as a new sportscar – and then some.
Remember, this medication never demonstrated that it was effective, and much cheaper options were available. So why would doctors opt for the more expensive brand?
How to Sell an Overpriced Drug 101
A 2018 investigation published in the Journal of American Medicine found that 88 percent of physicians who regularly prescribed Acthar received monetary payment from the manufacturer, with 20% of physicians receiving more than $10,000.
“These findings suggest,” concluded the study, “financial conflicts of interest may be driving use of corticotropin in the Medicare program.”
The allegations in the unsealed whistleblower complaint give substance to those very suggestions. According to the lawsuit:
“Questcor paid illegal kickbacks, in the form of bribes, free vials of H.P. Acthar, speaking and advisory fees, business consulting services, and other things of value, to physicians and their staff in order to induce them to promote and prescribe H.P. Acthar Gel for on· and off-label uses, and to reward those who already had done so.”
The company cultivated profitable relationships with healthcare providers that clearly violated the Anti-Kickback Statute. Another component of the alleged scheme was “an elaborate plan”
that allowed Questcor to help physicians “overcome barriers to reimbursement imposed by Government Healthcare Programs.” Essentially, they helped doctors commit Medicare fraud.
The complaint also claimed that Questcor trained their sales force to use false, deceptive, and misleading methods to promote Acthar for uses other than those approved by the FDA. This invariably led to over-prescription, with patients using an expensive specialty pharmaceutical product in untested and potentially unsafe ways.
In public statements, Mallinckrodt has pointed the finger at Questcor, which it purchased in 2014. The lawsuits tell a different story — that Mallinckrodt knew about and continued the scheme after the merger.
What’s Next for High Drug Prices?
There is bipartisan momentum in Congress to see high drug prices come down. So far that has translated into a lot of harsh words for Pharma CEOs, but very little in the way of relief for consumers.
On Tuesday, the White House said President Trump will meet with Senate leaders about drug prices “in the near future.”
Common ground between Democrats and Republicans sometimes feels like its disappearing faster than the coast of Louisiana. Perhaps the reforming of the pharmaceutical industry is a space all sides can plant their flag.
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