Whistleblower Lawsuit Alleges Illegal Scheme to Push HP Acthar by Mallinckrodt's Questcor

May 2, 2019

A whistleblower lawsuit against Questcor Pharmaceuticals, which is now a part of Mallinckrodt, alleges bribes and other fraudulent strategies to boost sales of HP Acthar Gel. The drug, first developed in 1952, is approved for 19 different indications, including multiple sclerosis and arthritis.

This story has been updated with information from Mallinckrodt.

A whistleblower lawsuit against Questcor Pharmaceuticals, which is now a part of Mallinckrodt, alleges bribes and other fraudulent strategies to boost sales of HP Acthar Gel. The drug, first developed in 1952, is approved for 19 different indications, including multiple sclerosis and arthritis.

The suit, filed in the US District Court of the Eastern District of Pennsylvania, alleges that the schemes deprived the government through reimbursements paid by Medicare, Medicaid, and other taxpayer-financed programs.

The case was first filed in 2012 and was partially unsealed this week when the Department of Justice announced its intention to intervene in the case.

News of the whistleblower suit comes 5 months after the Office of the Inspector General (OIG) of HHS informed Mallinckrodt that providing Acthar free of charge for a rare pediatric condition known as infantile spasm (IS), also known as West syndrome, would violate federal kickback law. Acthar, or adrenocorticotropic hormone, was approved by the FDA in 1952. But like some forms of insulin, epinephrine, and naloxone, it is known for seeing huge price increases.

Mallinckrodt, which purchased Questcor in 2014 and paid a $100 million fine to the Federal Trade Commission in 2017 related to Acthar, proactively reached out to HHS for its opinion in that instance.

The effort, the whistleblowers said in a lawsuit against the company, was part of an intentional effort. “Questcor's conduct has had a material effect on the Government Health Care Programs decision to pay for H.P. Acthar Gel,” the suit reads. “Had these programs known that reimbursements were being made for H.P. Acthar Gel caused by Questcor's unlawful promotion, it would not have made such reimbursements.” The practices continued after Mallinckrodt bought Questor, the suit says.

The alleged crimes date back to 2007, when Questcor sought to increase sales by promoting the drug for “unapproved doses and indications” in order to compete against a drug that was considered first-line therapy for MS, as well as promoting usage to providers by giving them “things of value.”

For violating the federal False Claims Act, Mallinckrodt could be subject 3 times the amount of damages the government sustains and civil penalties of between $5500 and $11,000 per claim.

It is rare for the government to intervene, said Ross Begelman, a partner in the firm of Begelman & Orlow, which is handling the case, Strunck, et al v. Questcor Pharmaceuticals, Inc.

Charles Strunck worked for Questcor as a multiple sclerosis sales specialist from September 2010 to August 2011. The other plaintiff named in the case is Lisa Pratta, who was an Acthar neurology specialist with Questcor and then Mallinckrodt from September 2010 to June 2017.

“The government has until June 4 to file its complaint of intervention,” said Begelman in an interview with The American Journal of Managed Care.

The vast majority of these types of cases settle out of court, he said.

In a statement, Mallinckrodt said it was in "advanced settlement talks" and that it believed "a resolution that is reasonable and manageable for all parties is achievable." It said it "strongly disagrees with the substance of the complaints and the sensational characterization of the allegations."

In 2017, Mallinckrodt agreed to pay $100 million to the Federal Trade Commission for another issue regarding Questcor and Acthar. The FTC said that while benefitting from an existing monopoly for Acthar, Questcor illegally acquired the rights to develop a competing drug, Synacthen Depot. The acquisition preserved Questcor’s Acthar monopoly and kept competitors out of the market.

Questcor bought the rights to the drug for $100,000 in 2001. Because the drug was approved in 1952, it was not required by the FDA to show efficacy for over a dozen new uses it began marketing the drug for—while at the same time, it was raising the price.

In 2001, the cost of 1 vial of the drug was approximately $40. In 2007, Questcor raised the list price nearly 1300%, from $1650 to over $23,000 per vial.

Net sales for the Acthar reached $1.195 billion in 2017, the OIG said. In 2006 net sales were $12.1 million.