Mallinckrodt ARD LLC Embroiled in Kickback Scandal
The United States has filed a complaint under the False Claims Act against Mallinckrodt ARD LLC, formerly known as Mallinckrodt ARD Inc. and previously Questcor Pharmaceuticals Inc., in the U.S. District Court for the Eastern District of Pennsylvania, the government announced today.
The government alleges that Mallinckrodt and Questcor (collectively Mallinckrodt) engaged in conduct that violated the False Claims Act by using a foundation as a conduit to pay kickbacks in connection with its drug H.P. Acthar Gel (Acthar) from 2010 through 2014.
According to the government, 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.
The Federal Anti-Kickback Statute prohibits a pharmaceutical company from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value—to induce Medicare patients to purchase the company’s drugs. This prohibition extends to the payment of patients’ copay obligations.
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 had a foundation set up to pay Acthar Medicare copays to the exclusion of other drugs.
"Illegal inducements increase the costs paid by the American taxpayer and distort the market forces that otherwise could control those costs," said Assistant Attorney General Jody Hunt of the Civil Division. "This lawsuit and prior enforcement actions make clear that the Department will hold accountable drug companies that pay illegal kickbacks to facilitate increased drug prices."
"Medicare Part D is an important program that our nation instituted to help seniors cover prescription drug costs, and Congress enacted safeguards to ensure Part D’s fiscal viability for those citizens," said United States Attorney William M. McSwain. "In my office’s continued commitment to fighting health care fraud, we will not allow drug companies to use so-called charitable patient assistance funds to do what they otherwise cannot do — pay patients’ co-pays to circumvent these safeguards and increase their profits."
Defendant: Mallinckrodt ARD LLC
Criminal Charges: Violated the False Claims Act by using a foundation as a conduit to pay kickbacks
City and State: Eastern District of Pennsylvania
Exact Date: Not specified
Sentence or Outcome: Not specified
Dollar Amounts: None specified in the complaint
Key Facts
- State: Pennsylvania
- Category: Drug Trafficking|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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