DOJ Sues Mallinckrodt for Alleged Non-payment of $250 Million in Medicaid Rebates

The Department of Justice filed suit against Mallinckrodt in a Massachusetts federal court for allegedly evading more than $250 million worth of Medicaid rebates for its blockbuster drug H.P. Acthar Gel (repository corticotropin).

Mallinckrodt’s subsidiary Questcor is accused of violating the False Claims Act by knowingly underpaying Medicaid rebates it owed as a result of large price increases for the drug that has 19 indications ranging from multiple sclerosis to childhood seizures.

The complaint in the U.S. District Court for the District of Massachusetts alleges that Questcor avoided paying “inflationary rebates” on the drug prior to 2013 despite raising its price by more than $20,000 prior to that year.

The allegations were originally filed as a whistleblower complaint. The company previously paid $15.4 million to settle two whistleblower lawsuits alleging that Questcor bribed physicians to over-prescribe the gel.