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U.S. sues Mallinckrodt, accuses drugmaker of defrauding Medicaid

FILE PHOTO: Bottles of prescription painkillers Hydrocodine Bitartrate and Acetaminopohen, 5mg/325mg pills, made by Mallinckrodt sit on a shelf at a local pharmacy, in Provo, Utah, U.S., April 25, 2017. REUTERS/George Frey

(Reuters) – The United States sued a unit of the drugmaker Mallinckrodt Plc on Tuesday, accusing it of defrauding Medicaid out of hundreds of millions of dollars as a result of “extraordinary” price increases for its drug Acthar Gel.

The government joined a civil lawsuit by a whistleblower who said Mallinckrodt ARD LLC’s conduct concerning Acthar, which is used to treat a rare infant seizure disorder as well as multiple sclerosis, violated the federal False Claims Act.

Mallinckrodt and an outside spokesman did not immediately respond to requests for comment.

The government said that under the Medicaid Drug Rebate Program, drugmakers must pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of their drugs.

Mallinckrodt was accused of violating a rule designed to shield Medicaid when drug prices rise faster than inflation, where rebates are calculated based on a drug’s price in 1990 or the date the drug was first marketed, whichever is later.

The government said that while Acthar was first marketed in the 1950s, Mallinckrodt and its predecessor Questcor calculated rebates as though marketing began in 2013, by which time the price per vial had risen by more than $20,000, despite being warned not to do this.

By avoiding the payment of inflationary rebates on pre-2013 price increases, Mallinckrodt has cost American taxpayers hundreds of millions of dollars, the government said.

Reporting by Jonathan Stempel in New York; Editing by David Gregorio

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