June 16, 2022
NV — Today, Attorney General Aaron Ford announced a $233.7 million settlement
with Mallinckrodt ARD, LLC (formerly known as Questcor
Pharmaceuticals, Inc.), a U.S. subsidiary of the Irish pharmaceutical company
Mallinckrodt plc (collectively Mallinckrodt).
The settlement, joined by
all 50 states, Washington, D.C., Puerto Rico and the federal government, will
be paid over a period of seven years. In total, Nevada will receive $1,703,095
from the settlement.
“My office will not stop
going after those who would seek to defraud our state and our healthcare and
Medicaid system,” said AG Ford. “I would like to thank the office’s
Medicaid Fraud Control Unit for the vital work they do – this is just the
latest win they have delivered for the state of Nevada.”
The settlement resolves
allegations that from Jan. 1, 2013, through June 30, 2020, Mallinckrodt
knowingly underpaid Medicaid rebates due for its drug H.P. Acthar Gel (Acthar).
The government alleges that Mallinckrodt’s conduct violated the Federal False
Claims Act and the Nevada False Claims Act and resulted in the submission of
false claims to the Nevada Medicaid program.
Under the Medicaid Drug
Rebate Program, when a manufacturer increases the price of a drug faster than
the rate of inflation, it must pay the Medicaid program a per-unit rebate of
the difference between the drug’s current price and the price of the drug if it
had gone up at the general rate of inflation since either 1990 or the year the
drug first came to market, whichever is later.
However, the government
alleges that Mallinckrodt — and its
predecessor Questcor — began paying
rebates for Acthar in 2013 as if Acthar was a new drug rather than a drug that
was first introduced in 1952. The government alleges this practice meant the
companies ignored all pre-2013 price increases when calculating and paying
Medicaid rebates for Acthar from 2013 until 2020. In particular, the government
alleges that Acthar’s price had already risen to over $28,000 per vial by 2013;
therefore, ignoring all pre-2013 price increases for Medicaid rebate purposes
significantly lowered Medicaid rebate payments for Acthar. Under the settlement
agreement, Mallinckrodt admitted that Acthar was not a new drug as of 2013 but
rather was approved by the FDA and marketed prior to 1990. Mallinckrodt agreed
to correct Acthar’s base date AMP and that it will not change the date in the
A team from the National
Association of Medicaid Fraud Control Units participated in the litigation and
conducted settlement negotiations on behalf of the states. The team included
representatives from the Offices of the Attorneys General for the states of
California, Florida, Massachusetts, Michigan, Nevada, New York, Texas and
Wisconsin. Senior Deputy Attorney General Amy Steelman represented Nevada as
part of the national team that obtained this settlement. Management Analyst Carrie Sprenkle was the
Team Leader for the analysts on the national team.
The Nevada Medicaid Fraud Control Unit receives 75% of
its funding from the U.S. Department of Health and Human Services under a grant
award. The remaining 25% is funded by the State of Nevada.