Pharmaceutical Giant Mallinckrodt ARD LLC Busted for Kickbacks and Medicare Scam
PHILADELPHIA, Pennsylvania – In a shocking case of corporate greed, pharmaceutical company Mallinckrodt ARD LLC (previously Questcor Pharmaceuticals, Inc., “Questcor,” and collectively “Mallinckrodt”), has agreed to pay $260 million as part of a global settlement to resolve separate allegations that Mallinckrodt violated the False Claims Act by knowingly using a foundation as a conduit to pay illegal copay subsidies in violation of the Anti-Kickback Statute, and underpaying Medicaid rebates due to the large price increases of its drug H.P. Acthar Gel (“Acthar”).
The government filed separate complaints detailing these allegations in 2019 and 2020, respectively. The settlement, which is based on Mallinckrodt’s financial condition, required final approval of the U.S. Bankruptcy Court for the District of Delaware, which approved the settlement on March 2, 2022.
The U.S. Attorney’s Office for the Eastern District of Pennsylvania filed a complaint alleging kickbacks involving Medicare Part D copays in August 2019. When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”). Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.
In its complaint, the government alleges that Mallinckrodt used a foundation as a conduit to pay illegal kickbacks in the form of copay subsidies for Acthar so it could market the drug as “free” to doctors and patients while increasing its price. Mallinckrodt allegedly paid these illegal subsidies through three funds that Mallinckrodt established through a foundation in order to induce Medicare-reimbursed purchases of Acthar at its ever-increasing price.
The District of Massachusetts filed a complaint alleging fraud against the Medicaid Rebate Program in early 2020. Pursuant to the Medicaid Drug Rebate Program, drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs. The government alleges that Mallinckrodt knowingly underpaid rebates due for Acthar from 2013 until 2020.
“When pharmaceutical companies manipulate Medicare Part D by covering patient copays, the whole structure of the Part D program is undermined,” said United States Attorney Jennifer Arbittier Williams. “Our Office is committed to maintain the financial integrity of taxpayer-funded programs like Medicare, and therefore we will continue to pursue fraud actions like this so that Medicare Part D and other federal healthcare programs remain viable for those who rely on the benefits.”
Mallinckrodt ARD LLC, a pharmaceutical company, has been charged with violating the False Claims Act by knowingly using a foundation as a conduit to pay illegal copay subsidies and underpaying Medicaid rebates due to the large price increases of its drug H.P. Acthar Gel.
Defendant: Mallinckrodt ARD LLC
Crime: Violation of the False Claims Act, Anti-Kickback Statute
City and State: Philadelphia, Pennsylvania
Date: March 2, 2022
Sentence: $260 million settlement
The settlement was approved by the U.S. Bankruptcy Court for the District of Delaware on March 2, 2022.
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Key Facts
- State: Pennsylvania
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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