A drug company that bought up the rights to a $40 infant epilepsy medicine and its competing product was able to increase the price to $34,000 per vial because it created a monopoly, federal regulators have alleged.
In 2014, Mallinckrodt Pharmaceuticals acquired drug company Questcor and with it the rights to Acthar Gel, a hormone injection used to help babies under the age of one with rare infantile spasms.
But according to a lawsuit filed by the Federal Trade Commission (FTC), they also acquired Questcor’s rights to Synacthen Depot, a different drug with the same application.
They then shelved that drug while hiking the price of the 60-year-old Acthar Gel to 85,000 per cent more than it had cost just a decade previously. That led to suit, which they settled on Wednesday, The Washington Post reported.
Acthar Gel was first approved by the FDA in 1978 for use on babies with infantile spasms – a rare epileptic condition that can affect up to 2,500 kids a year in the US.
Children with cerebral palsy, Down syndrome, tuberous sclerosis and similar health issues are more likely to suffer symptoms, which emerge before the child’s first birthday.
In 2001, Questcor bought up the rights to Acthar, which was then being sold for $40 per vial, for $100,000 plus royalties. They then began hiking the price.
In 2013 it bought the US rights to Synacthen Depot, which is produced by Swiss company Novartis and can also be used to treat infantile spasms, for $135 million.
According to the lawsuit, it did so because even though Synacthen wasn’t yet approved by the FDA, it posed a ‘nascent competitive threat’ to Acthar.
‘Questcor took advantage of its monopoly to repeatedly raise the price of Acthar,’ Edith Ramirez, chairwoman of the Federal Trade Commission, said in a statement.
‘We charge that, to maintain its monopoly pricing, it acquired the rights to its greatest competitive threat, a synthetic version of Acthar, to forestall future competition.’
By 2014, Questcor was charging $28,000 a vial for Acthar. It was then that Mallinckrodt bought up Questcor, and all of their rights.
According to the lawsuit it continued the monopoly, hiking the price further.
The drug’s price was pushed all the way up to $34,000, bringing in $1 billion in 2015 alone, the lawsuit alleged.
Mallinckrodt settled the lawsuit on Wednesday for $100,000 – just 0.01 per cent of the money it was said to have made in 2015 – and an agreement to pursue FDA approval of Synacthen for treating infantile spasms and nephrotic syndrome.
Some of the money would also go to pay for the legal fees of five states that pursued their own suits along with the Federal Trade Commission.
However, the agreement did not ‘constitute… any admission of liability or wrongdoing,’ the company said in a statement.
It also said that trials of Synacthen would be extremely expensive, and difficult to perform as it would require patients to stop using Acthar.
‘We continue to strongly disagree with allegations outlined in the FTC’s complaint, believing that key claims are unsupported and even contradicted by scientific data and market facts, and appear to be inconsistent with the views of the FDA,’ the company said.
It also said that it would pursue trials for the use of Synacthen in patients suffering from Duchenne Muscular Dystrophy, a disease causing muscular degeneration.
Mallinckrodt Pharmaceuticals’ case came to the public’s attention thanks to another accused price-gouger, Martin Shkreli, of Turing Pharmaceuticals.
Shkreli had mentioned Mallinckrodt’s case while under questioning last year for increasing the price of toxoplasmosis medication Daraprim – which he bought from another company – by more than 5,000 per cent.
SOURCE: JAMES WILKINSON