Pharma Company Mallinckrodt Expects to Pay $15M to Settle DOJ Kickback Probe

Mallinckrodt, a pharmaceutical company, has announced a tentative deal with the United States Department of Justice (DOJ) to settle a bribery probe into its subsidiary Questor Pharmaceuticals.

The company expects to pay $15.4 million to the DOJ to settle the investigation. Mallinckrodt is responsible for one of the largest drug price increases in U.S. history.

The terms of the agreement have not been finalized as of yet, and the company will not admit wrongdoing on its part. Mallinckrodt said the agreement does not cover the allegations related to the charitable foundation Questcor. It will only cover the company’s sales and marketing activities.

The company has also allegedly “paid illegal kickbacks” as part of a scheme to boost profits and leave American taxpayers with the bill.

Those allegations are part of a separate probe. The DOJ is demanding a jury trial that would have put the company, responsible for a 97,000% drug price hike, front and center. The price of the company’s anti-inflammatory drug Acthar increased from $40 per vial in 2000 to nearly $39,000 today.

The DOJ is still seeking damages from Mallinckrodt’s alleged improper conduct at one of Questcor’s charitable foundations between 2010 and 2014. The government claims that Questcor was used as a “conduit” to pay illegal kickbacks in the form of copay subsidies in order to market its Acthar drug as “free” to patients and doctors.

By law, drug companies are prohibited from paying patient co-pays. The purpose of the rule is to prevent drug price increases, like what Mallinckrodt has been accused of.

The government has not stated whether it will pursue criminal charges against the company.

The DOJ claims that Mallinckrodt provided illegal copay subsidies for more than 2,600 Acthar prescriptions at a cost of $23,000 per vial, or $60 million total. As per the whistleblower act, the government can pursue up to three times the amount it had been defrauded, which equates to just under $180 million.