Balderas joins $230 million settlement against drug company over Medicaid fraud allegations

New Mexico Attorney General Hector Balderas

From the Office of the Attorney General:

ALBUQUERQUE – Attorney General Hector Balderas announces that New Mexico has joined 49 other states, Washington, DC, Puerto Rico and the federal government in settling fraud allegations against Mallinckrodt ARD, LLC (formerly Questcor Pharmaceuticals, Inc. ), an American subsidiary of the Irish pharmaceutical company Mallinckrodt plc (Mallinckrodt), which sells and markets pharmaceutical products throughout the country.

The total value of the settlement is $233,707,865.18, plus interest, to be paid over seven years. Of this amount, New Mexico will receive $493,974.38 in compensation.

The settlement resolves allegations that, from January 1, 2013 through June 30, 2020, Mallinckrodt knowingly underpaid Medicaid rebates owed for its HP drug Acthar Gel (Acthar). The government alleges that Mallinckrodt’s conduct violated the Federal False Claims Act, the New Mexico Medicaid False Claims Act and the New Mexico Fraud Against Taxpayers Act, resulting in the submission of false claims to the New Mexico Medicaid program.

“Vulnerable New Mexicans are already grappling with unbearable prescription costs, and my office will enforce the rule of law against bad actors who cause harm to the state and its Medicaid members,” the prosecutor said. General Balderas.

Under the Medicaid Drug Rebate program, when a manufacturer increases the price of a medicine faster than the rate of inflation, it must pay the Medicaid program a unit rebate equal to the difference between the current price of the medicine and the price of the drug if its price had increased at the general rate of inflation since 1990 or the year the drug entered the market, whichever is later.

The government alleges that Mallinckrodt and its predecessor Questcor began paying rebates for Acthar in 2013 as if Acthar was a “new drug” that had just been approved by the U.S. Food and Drug Administration (FDA), rather than a drug that was first introduced to the market in 1952. .

Apparently, this practice meant that companies ignored all pre-2013 price increases when calculating and paying Medicaid rebates for Acthar from 2013 to 2020. In particular, the government alleges that the price of Acthar had already increased to over $28,000 per bottle in 2013; therefore, ignoring all pre-2013 price increases for Medicaid rebate purposes significantly reduced Medicaid rebate payments for Acthar.

Under the settlement agreement, Mallinckrodt admitted that Acthar was not a new drug as of 2013, but rather had been approved by the FDA and marketed before 1990. Mallinckrodt agreed to correct the base date AMP of Acthar and that he will not change the date in the future.

The New Mexico Attorney General’s Medicaid Fraud Control Unit (MFCU) receives 75% of its funding from the U.S. Department of Health and Human Services as part of a grant totaling $3,774 $509 for federal fiscal year (FY) 2021-22, of which $2,830,884 is federally funded. . The remaining 25% of the approved grant, totaling $943,625 for the 2021-22 fiscal year, is funded by the State of New Mexico.