Prior to this, the government filed a suit in 2019, claiming that the company used a foundation as a way of making illegal copay subsidies through three funds that it had a foundation set up for to induce Medicare-reimbursement purchases of Acthar. Mallinckrodt used the subsidies to counteract doctor and patient concerns about the high costs of the drug. Under the Federal Anti-Kickback Statute, pharmaceutical companies are prohibited from offering or paying any direct or indirect remuneration to get Medicare patients to purchase their drugs. This extends to payments of patients’ copay obligations.

In its settlement, Mallinkrodt admitted the drug was not a new drug as of 2013 and agreed to correct Acthar’s base date AMP and to not change the date in the future. The company will pay approximately $234.7 million to resolve the Medicaid rebate allegations. Of this, it will pay approximately $123.6 million to the U.S. and approximately $110.1 million to participating Medicaid states. It will also pay approximately $26.3 million for the kickbacks accusations.

Both cases were filed under the whistleblower provision of the False Claims Act, which allows private parties to sue for fraud on behalf of the U.S. and share in any recovery. The whistleblowers in the kickbacks case will receive approximately $4.9 million and the one in the rebates case will receive approximately $24.7 million.

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