Rockford, Illinois is suing Mallinckrodt Pharmaceuticals over the price of one of its blockbuster drugs, called Acthar.
Rockford is accusing Mallinckrodt of taking advantage of its monopoly of the market and charging an exorbitant price for the drug — which currently is listed at around $US35,000 per vial.
The drug cost $US40 a vial as recently as 2001 and the price was raised by its previous owner (which Mallinckrodt acquired) as well as Mallinckrodt itself.
In 2015 the town paid almost $US500,000 for just 9 prescriptions of the drug to treat 2 children, according to the complaint. The gross, per-vial cost of the medication was $US54,339.76
“By engaging in the antitrust conduct and other unlawful conduct described herein, the Defendants have been knowingly enriched by the amount charged for Acthar over and above what they could have charged in a competitive market, and what was charged previously before the unlawful conduct was undertaken,” says the complaint.
“By establishing and maintain a monopoly, exercising monopoly power, and engaging in other unlawful acts and practices, the Defendants were able to extract exorbitant revenue from consumers that had nowhere else to turn for treatment.”
The city is accusing Mallinckrodt of violating anti-trust laws and the Illinois Consumer Fraud and Deceptive Practices Act.
“Mallinckrodt is aware of the lawsuit filed in the U.S. District Court for the Northern District of Illinois. The company has received and is evaluating the complaint, and will consider its response after completing its assessment,” a spokesperson from the company told Business Insider.
Details of the lawsuit were first reported by Rockford based television station WIFR.
One of the worst offenders
The station broadcast comments from the mayor of Rockford, in which he called Mallinckrodt as “one of the worst offenders,” citing the company’s “unconscionable price increases.”
Mallinckrodt acquired Acthar in 2014 when it bought another pharmaceutical firm, Questcor. In January Mallinckrodt paid $US100 million to settle claims with the FTC and five states that Questcor had purchased a competitor to the drug in order to stifle competition. The company did not admit wrongdoing.
Rockford’s complaint, however, attributes Mallinckrodt’s monopoly, in part, to what happened with the other drug, called Synacthen.
“Such conduct reasonably contributed to Mallinckrodt’s maintenance of monopoly power. The purpose and effect of such conduct has been to suppress rather than promote competition on the merits,” it says.
Acthar isn’t just controversial for its price tag. Even though the drug is primarily used to treat infantile spasms, it has become one of the top 20 most costly drugs for Medicare Part D, a government prescription program for the elderly. The drug cost the program about half a billion dollars in 2015.
Acthar can be used to treat 19 ailments in total, including multiple sclerosis, though many insurers restrict its use for anything other than infantile spasms.
Doctors have also questioned the drug’s efficacy overall, in part because it has never undergone clinical trials. Acthar also is prescribed by less than 1% of doctors in the US. The Rockford complaint also questions whether the drug as efficacious as its marketing suggests.
Read the entire complaint below:
Business Insider Emails & Alerts
Site highlights each day to your inbox.