Attorney General Ford Announces Settlement with Mallinckrodt ARD Pharmaceutical Company for Fraudulent Medicaid Claims

June 16, 2022

Carson City, 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 future.

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.