Company Responsible for 97,000% Drug Price Hike Bribed Doctors to Increase Sales

An amended court filing in a whistleblower lawsuit recently became unsealed when the Justice Department decided to prosecute the case.

Whistleblower lawsuits like this are often brought by current or former employees of a company alleged to have defrauded the federal government. In this case, pharmaceutical company Mallinckrodt may be liable for billions of dollars paid by the federal government to cover prescriptions of the drug Acthar – an infant seizure medication – for seniors on Medicare.

Acthar is one of just three drugs known to treat infantile spasms (IS), all of which carry serious risks and side effects, from blindness to infection and death. Made from the pituitary glands pigs, the mechanism of action is unknown to this day and has only 50-60% efficacy, according to an extensive CNN report published last year.

If allowed to continue, seizures in infants can cause permanent brain damage and intellectual or developmental disabilities in 70-90% of children with the disorder. Thousands are diagnosed each year.

“Historical Misconduct”

A Mallinckrodt rep said the allegations listed in the newly unsealed lawsuit relate mostly to “historical” and “legacy misconduct” committed by Questcor before the merger. It may be relevant to note here that the historical nature of misconduct on the part of Monsanto hasn’t protected Bayer from liability in any of the multimillion and even billion dollar lawsuits they’ve taken on this year.

Assuredly, there was plenty of misconduct within Questcor before the $5.6 billion deal with Mallinckrodt, to wit:

  • 2001 – Questcor buys Acthar and almost immediately increases price from $40 to $750 per vial
  • 2007 – overnight price hike on Aug. 27 from $1,600 to $23,000 per vial
  • 2013 – Questcorp buys US rights to competitor drug, Synacthen

Those repeated price hikes had devastating effects, although company reps claimed at a 2010 FDA hearing that high prices were necessary to keep the company viable and ensure the drug stayed in production for those who need it.

It’s true that most insurance companies will cover the drug and that the company participates in a program to provide it free of charge to uninsured families. However, pediatric neurologists and parents have reported delays in prior authorization specifically due to the drug’s price, and that the company’s own helpline can take up to three days to give approval.

Moreover, they’ve been known to push out cheaper alternatives that may be just as effective.

Antitrust

In 2013, Questcor bought the rights to a synthetic version of Acthar called Synacthen and then suppressed it, which the Federal Trade Commission says cheated families out of an “imminent alternative” to Acthar’s soaring prices.

Synacthen was already in use in Canada and Europe, and several US companies were bidding on the rights in order to develop the drug and offer it on the US market at a “significant discount.” According to the FTC, Mallinckrodt illegally purchased the rights in order to ensure their monopoly and facilitate an 85,000 percent price hike.

Mallinckrodt settled the lawsuit with the FTC in January 2017, paying $100 million but making no admission of wrongdoing for Questcor’s “legacy” misconduct. However, in the company’s own statement to CNN, it acknowledged that “Mallinckrodt did not pursue commercialization of Synacthen” because the approval process could take “many years” and that was a “barrier…virtually impossible to overcome.”

CNN’s investigation and public records also show Mallinckrodt continued to raise prices – to the tune of $7,000 – after the 2014 merger. All told, the price of the drug has risen 97,000 percent to a staggering $39,000 per vial since 2000 – an “extremely extraordinary” price hike that one expert on pharmaceutical pricing and policy told CNN was one of the largest in United States history.

Of the other two drugs most often prescribed for infantile spasms, one is not FDA-approved for that purpose (but then, neither was Acthar until 2010), but the other is approved, has about the same rate of efficacy, and is much, much cheaper at just $20.

Which begs the question: why use Acthar at all?

Bribing Scandal

The bribing allegations revealed in March have helped to fill in some of the missing pieces of the puzzle for doctors and policy experts following the matter.

Since it came on the market, Acthar has been approved for at least 19 conditions. Many neurologists say it is the best option for treating IS, but Questcor began pushing physicians to prescribe it for off-label conditions like multiple sclerosis (MS) and rheumatoid arthritis.

One doctor from the Oregon Health & Science University’s Multiple Sclerosis Center told CNN that very few MS physicians even take meetings with Athcar salespeople and he wondered why anyone did. If the complaint’s allegations are true, he says, that could provide the answer; not only were sales reps for Mallinckrodt bribing physicians, but their office staff and secretaries who act as gatekeepers.

According to the allegations, physicians’ office staff were bribed with coffee shop gift cards in amounts as high as $500 to arrange meetings.

Rather than straight bribes of cash for prescriptions, salespeople are alleged to have taken physicians out for lavish dinners, trips to Las Vegas, and even karaoke nights to help grease the wheels. Later, physicians who agreed to prescribe and promote the drug were rewarded with funding for clinical trials, which were then used to bolster the reputation of the drug.

The company also offered physicians guest speaker fees of $2,000 and more per prescription, according to the suit.

Until the federal government puts a cap on the price of life-saving medications, scandalous prescription drug prices will continue to put the most vulnerable communities at risk. After all, opioid manufacturer Insys just agreed to multimillion dollar settlement for bribing doctors, and then promptly declared bankruptcy a few days later, leaving analysts to wonder if any restitution will be made at all.

Whistleblowers Charles Strunck and Lisa Pratta originally filed the lawsuit in the Eastern District of Pennsylvania in 2012 but it remained under seal, as is customary to give the DOJ time to conduct its own investigation. Since 2012, the filing has been amended several times, and it is only the most recent amended filing that has become public.

The DOJ prosecutes less than 25% of whistleblower cases – and only moves forward if the department is confident of success.