by Scott McClallen
Michigan will receive $14.45 million from a federal pharmaceutical fraud settlement.
Michigan Attorney General Dana Nessel joined 49 other states, Washington, D.C., Puerto Rico, and the federal government to settle a lawsuit for $233.7 million, plus interest, to be paid over seven years by Mallinckrodt ARD, LLC.
“We will not stand for pharmaceutical companies gaming the system to pad bottom lines,” Nessel said. “I’m proud of the work done by our team that advocated for Michigan and successfully secured more than $14 million in state settlement dollars.”
Michigan expects to receive its first payment of about $180,000 in mid-July.
The settlement resolves allegations that from January 1, 2013, through June 30, 2020, Mallinckrodt knowingly underpaid Medicaid rebates for its drug H.P. Acthar Gel (Acthar).
The government alleges that Mallinckrodt and its predecessor Questcor began paying rebates for Acthar in 2013 as if Acthar was a newly approved drug by the U.S. Food and Drug Administration rather than a drug first introduced to market in 1952.
The Medicaid Drug Rebate Program has safety precautions for companies hiking drug prices.
When a drug manufacturer increases drug prices faster than the inflation rate, it must pay Medicaid a per-unit rebate difference between the current price and the price tied to inflation since 1990 or the first year the drug first came to market, whichever is later.
The government alleges that Mallinckrodt’s conduct violated the Federal False Claims Act and the Michigan Medicaid False Claims Statute.
The companies allegedly ignored all pre-2013 price increases when calculating and paying Medicaid rebates for Acthar from 2013 until 2020.
The government alleges that Acthar’s price had already risen to over $28,000 per vial by 2013. Under the settlement agreement, Mallinckrodt admitted that Acthar was not a new drug as of 2013 but was approved by the FDA and marketed before 1990. Mallinckrodt agreed to correct Acthar’s base date AMP and that it will not change the date in the future.
This settlement results from a whistleblower lawsuit initially filed in the U.S. District Court for the District of Massachusetts.
The U.S. Bankruptcy Court for the District of Delaware approved the settlement on March 2.
The Attorney General’s Health Care Fraud Division (HCFD) handled this case for Michigan. The HCFD is the federally certified Medicaid Fraud Control Unit for Michigan. It receives 75% of its funding from the U.S. Department of Health and Human Services under a grant award totaling $4.8 million for the fiscal year 2022. The remaining 25%, totaling $1.6 million, is funded by the State of Michigan.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Dana Nessel” by Dana Nessel.