Mallinckrodt to pay $100 mln to settle U.S. probe on drug pricing

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By Diane Bartz | WASHINGTON

WASHINGTON Mallinckrodt Plc has agreed
to pay $100 million to settle allegations that a subsidiary
broke U.S. antitrust law by sharply increasing the price of a
multiple sclerosis drug while ensuring that no rival medicine
appeared on the market, the Federal Trade Commission said on
Wednesday.

Mallinckrodt’s share price dropped sharply to just under $43
from above $49 on a report Wednesday, which proved incorrect,
that the FTC would sue Mallinckrodt. It spiked above $50 after
news of a settlement and closed at $46.53, down 5.8 percent.

In 2001, Questcor bought the rights to Acthar, a type of
hormone-based drug used to treat infantile spasms as well as
multiple sclerosis. Over time, the company raised the price from
$40 per vial to more than $34,000, the FTC said. Questcor was
acquired by Mallinckrodt in 2014.

Acthar, which is off patent, represented 34 percent of
Mallinckrodt’s $3.4 billion in net sales for fiscal 2016, the
company said in a government filing.

Per patient, Medicare spent more on Acthar than for any
other drug in 2015, putting out $504 million for just 3,104
patients, according to the Medicare Drug Spending Dashboard.

Several U.S. drug makers have been criticized for sharp
increases in drugs, notably Turing Pharmaceuticals’ Daraprim and
Mylan’s EpiPen. The U.S. Centers for Medicare and
Medicaid Services reported 11 drugs saw price increases of more
than 100 percent in 2015.

“This is an egregious case of a monopolist doing a deal to
eliminate potential competition and keep its power over pricing.
It is abhorrent that lifesaving drugs cost New Yorkers tens of
thousands of dollars,” said Attorney General Eric Schneiderman
in a statement.

Mallinckrodt, an Irish company headquartered in the United
Kingdom, said the settlement would not affect its net sales and
slammed the FTC’s probe.

“We continue to strongly disagree with allegations outlined
in the FTC’s complaint, believing that key claims are
unsupported and even contradicted by scientific data and market
facts,” a company representative said in a statement.

Questcor also bought the rights to Synacthen in 2013 in
order to prevent the development of a rival drug, the FTC said
in its complaint. Under the settlement, Mallinckrodt will also
license Synacthen rights.

“This is too little, too late. The proper thing would have
been to block the (Synacthen) deal in the first place,” said
David Balto, a veteran of the FTC now in private practice.

The drug’s pricing has also come under criticism from
lawmakers concerned about abusive increases in drug prices.
Senator Amy Klobuchar, a Minnesota Democrat, criticized the
sharp price increase as early as 2008.

Klobuchar called the settlement announced on Wednesday “a
strong message that companies will not be able to keep the
profits they earn by violating antitrust laws.”

In addition to the FTC and New York, the settlement also
included Alaska, Maryland, Texas and Washington.



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