Michigan to Receive Nearly $14.5 Million From Pharmaceutical Lawsuit

The State of Michigan will be receiving nearly $14.5 million over seven years following the settlement of a lawsuit that settled fraud allegations against Mallinckrodt ARD, LLC.

“We will not stand for pharmaceutical companies gaming the system to pad bottom lines,” said Attorney General Dana Nessel in a statement. “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.”

Mallinckrodt ARD, LLC is a U.S. subsidiary of the Irish pharmaceutical company of Mallinckrodt plc located in New Jersey that sells and markets pharmaceutical products throughout the country.

The settlement resolves allegations that from January 1, 2013 through June 30, 2020, the company knowingly underpaid Medicaid rebates for their drug H.P. Acthar Gel. The government alleges that Mallinckrodt’s conduct violated the Federal False Claims Act and the Michigan Medicaid False Claims Statute, resulting false claims being turned in to the Michigan Medicaid program.

It comes from a whistleblower lawsuit that was originally filed in the United States District Court for the District of Massachusetts where the government, 26 states, the District of Columbia and Puerto Rico intervened in the civil action in 2020.

Under the Medicaid Drug Rebate Program, according to the Department of the Attorney General, when a manufacturer increases the price of a drug faster than the rate of inflation, they must pay the Medicaid program a per-unit rebate of the difference between the current price of the drug and the price of the drug if it had gone up at the general rate of inflation since 1990 or when it first came to market.

Additionally, the government alleges that Mallinckrodt and their predecessor, Questcor, began paying rebates for Acthar in 2013 as if the product was a new drug and was just approved by the FDA instead of a drug that was first introduced in 1952, allegedly ignoring all pre-2013 price increases when calculating and paying Medicaid rebates for Acthar from 2013 to 2020. Specifically, the government alleges that Acthar’s price had already increased to over $28,000 per vial by 2013.

Through the settlement agreement, Mallinckrodt admitted that Acthar was not a new drug in 2013, but was approved by the FDA in 1990. They agreed to correct Acthar’s base date AMP and make sure the date will not change in the future, according to the Department of the Attorney General.

The total of the settlement is $233,707,865.18, plus interest, and funds will be paid to Michigan over seven years. The state will receive their first payment of their $14.5 million share, an estimated $180,000, by mid-July.