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States Join Client’s Lawsuit Against Mallinckrodt

July 17, 2020

In March, DOJ intervened in our lawsuit alleging that Mallinckrodt ARD defrauded the Medicaid Drug Rebate Program (MDRP). Our client, James Landolt, filed a qui tam complaint on behalf of the United States as well as numerous States, the District of Columbia, and Puerto Rico. His complaint alleges that Mallinckrodt violated federal and state False Claims Acts by failing to pay hundreds of millions of dollars in Medicaid rebates for its high-priced drug Acthar. 

States Join Our Mallinckrodt Lawsuit

In June, twenty-six states, the District of Columbia, and Puerto Rico informed the court that they too were intervening. On July 16th, those parties filed a consolidated complaint. The complaint alleges violations under state False Claims Acts as well as common law claims. The complaint contains similar allegations to those in the complaints that DOJ and our client filed previously. All three complaints accuse Mallinckrodt of knowingly failing to pay proper rebates for Acthar as required by the MDRP.

Because Acthar first came to the market in the 1950s, its rebate should have been based on its price in 1990. Beginning in 2013, however, Mallinckrodt began reporting data to the MDRP as if Acthar had come to market in 2013. Because Mallinckrodt had increased Acthar’s price dramatically after 1990, this change saved it tens of millions of dollars each quarter. Even after CMS instructed it to fix its reporting to the MDRP, Mallinckrodt continued to misreport its data and underpay the rebates it owed.

Mallinckrodt Moves to Dismiss Case

Last week, Mallinckrodt moved to dismiss our client’s complaint and DOJ’s complaint-in-intervention. The district court has directed plaintiffs to file their opposition to the motion by August 10th.

In addition, Mallinckrodt sued CMS last year in federal court in Washington DC. Mallinckrodt argued that it was entitled to change Acthar’s rebate data in 2013. It challenged CMS’s actions requiring it to restate Acthar’s data going forward and claimed that it should not have to pay additional rebates dating back to 2013. Senior United States District Judge Thomas F. Hogan rejected Mallinckrodt’s arguments and ruled in favor of CMS. Judge Hogan later denied Mallinckrodt’s motion for reconsideration and declined to stay entry of judgment pending appeal. Mallinckrodt has appealed the district court’s ruling to the Court of Appeals for the D.C. Circuit. Oral argument in that case is scheduled for September 24, 2020.

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