Mallinckrodt struck by $650m rebate bill court decision

By Vassia Barba contact

- Last updated on GMT

(Image: Getty/alfexe)
(Image: Getty/alfexe)

Related tags: Mallinckrodt, Opioid epidemic, Opioid

Amid the company’s loss on opioid settlements, Mallinckrodt receives another hit regarding a Medicaid drug rebate for its Acthar Gel price.

In an announcement, Mallinckrodt said it received a court decision in its suit against the US Department of Health and Human Services, and the US Centers for Medicare & Medicaid Services (CMS).

The suit regarded the company's calculation of Medicaid drug rebates for its Acthar Gel (repository corticotropin injection) product.

The US District Court for the District of Columbia decided in favor of the CMS, approving its decision to reverse its determination of the base date average manufacturer price used to calculate the product’s rebates.

In an announcement earlier this month, the US Department of Justice said that Mallinckrodt has violated the False Claims Act “by knowingly underpaying Medicaid rebates due as a result of large increases in the price of its drug.”

Following the court decision, Mallinckrodt said it will have to pay approximately $650m (€592m) for the underpayments since 2013.

On top of that, the company estimated that a prospective change to the Medicaid rebate calculation could reduce Acthar Gel net sales by $90m to $100m.

Mark Casey, the company’s EVP and chief legal officer, said the court ruling is ‘disappointing’, and that “a bedrock principle of administrative law is that the government is required to give fair notice and a clear, legal basis for a change in position.”

The executive commented that the decision's legal reasoning is ‘significantly flawed’ and said that Mallinckrodt “will move for a stay and reconsideration,” ​and potentially an appeal.

As one of the manufacturers fielding lawsuits related to the opioid epidemic in the US, Mallinckrodt announced earlier this month that it would be filing for bankruptcy​ for its specialty generics subsidiary, which would see the company pay plaintiffs $1.6bn.

This action would help Mallinckrodt out of all cases against it, following previous settlement agreements reached last year​ with Ohio.

The company stated that the CMS rebate matter was ‘identified as a part’ of the $1.6bn for a global opioid settlement.

Related topics: Markets & Regulations, Regulations

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