Two whistleblowers at a pharmaceutical company responsible for one of the largest drug price increases in US history said the company bribed doctors and their staffs to increase sales, according to newly unsealed documents in federal court.
The effort, the whistleblowers said in a lawsuit against the company, was part of an intentional “multi-tiered strategy” by Questcor Pharmaceuticals, now Mallinckrodt, to boost sales of H.P. Acthar Gel, cheating the government out of millions of dollars.
The price of the drug, best known for treating a rare infant seizure disorder, has increased almost 97,000%, from $40 a vial in 2000 to nearly $39,000 today.
The Justice Department has now intervened in the case after conducting its own extensive investigation — a sign that the government believes the allegations levied by the whistleblowers are credible. In a statement to CNN, Mallinckrodt did not deny the accusations but said the fault lies primarily with Questcor.
The bombshell allegations lay bare what the whistleblowers say was a culture designed to sell the drug at all costs, from lying to the Food and Drug Administration to offering bribes to doctors.
The price increase, combined with an aggressive sales push in rheumatoid arthritis, multiple sclerosis and other areas, has pushed the drug’s annual sales over $1 billion.
Many of those sales are driven by Medicare reimbursements. A CNN investigation last year found that Medicare spending on Acthar had risen dramatically — more than tenfold over six years — to some $2 billion.
In their lawsuit, the whistleblowers said the drugmaker’s conduct “has cheated the federal government out of millions of dollars that should not have been paid, thereby enriching [the company] and subjecting patients to unapproved, unsafe and potentially ineffective uses of H.P. Acthar Gel.”
“Questcor has attempted to conceal and cover-up its payment of kickbacks and its illegal promotion of H.P. Acthar Gel by making false statements to the FDA and directing employees to conceal evidence by failing to disclose … the full nature and extent of its advertising, promotional and marketing materials and plan.
“Mallinckrodt purchased Questcor in 2014 as part of a $5.6 billion deal. “The illegal practices that Questcor had been engaging in since 2007,” the suit said, “have knowingly been continued since the merger and acquisition of Questcor by Mallinckrodt.
“The whistleblowers’ allegations were unsealed after the Justice Department filed notice on March 6 to intervene in the lawsuit. The Justice Department has 90 days to file its own complaint, according to the March filing.If found liable, Mallinckrodt could be required to pay up to three times any amount the government is found to have been defrauded, as well as penalties ranging from $5,500 to $11,000 for each false claim, according to the whistleblower statute.
The Justice Department declined comment for this story.
In its statement to CNN, Mallinckrodt said that it was disappointed with the Justice Department’s decision to pursue the case and that it was cooperating with the agency. The drugmaker also sought to distance itself from Acthar’s previous owner, Questcor.
“The allegations pertain principally to legacy Questcor conduct,” Mallinckrodt said.
“Mallinckrodt has cooperated fully with the DOJ in its review of this historical conduct, voluntarily providing documents and information to the government. While we are disappointed the DOJ has elected to proceed with the lawsuit, we have been in advanced settlement talks with the government over the past several months.
“The company believes these sales and marketing claims are likely to be resolved in the near term through ongoing negotiations, and further believes a resolution that is reasonable and manageable for all parties is achievable. As the lawsuit principally concerns allegations of legacy conduct prior to Mallinckrodt’s acquisition of Acthar Gel, we do not envision any impact to how Mallinckrodt conducts business today.”
In its statement, the company referred to the whistleblowers as two former Questcor employees. Yet the suit makes clear that one of the employees stayed on after the 2014 merger and worked for Mallinckrodt, leaving the company in June 2017.
After CNN published this story, Mallinckrodt sent an additional statement: “Mallinckrodt strongly disagrees with the substance of the complaint and the sensational characterization of the allegations.
“Marc Orlow, an attorney representing the two whistleblowers, hailed the government’s decision.”Our clients are true heroes to stand up to a corrupt corporate culture that cost the taxpayers hundreds of millions of dollars,” he said.
Originally published on m.cnn.com