In 2001, a vial of a medical gel called Acthar cost $40. Today, that same vial would set you back nearly $40,000. If you pay taxes in Marietta, you’ve helped pay some of that cost, and the city is looking to bring prices back down with a lawsuit against pharmaceutical company Mallinckrodt, whose principal executive office is in the UK.
The city has a self-funded health care plan paid for by tax revenue. According to the lawsuit, the city employs over 700 benefits-eligible people, and it also provides health insurance benefits to over 300 retired individuals.
A family member of one of these people has a serious medical condition that requires treatment with Acthar, and the city has paid out over $2 million for this one patient.
The drug’s active ingredient is extracted from pig pituitary glands. It was invented in 1948 as a byproduct of the pork processing industry. When it’s refrigerated and made into a gel, it can be a lifesaver for people with serious conditions.
It can be used to treat 19 different ailments, including infantile spasms, multiple sclerosis, Lupus, kidney disorders and rheumatoid arthritis.
In 2001, a company called Questcor, which would later be acquired by Mallinckrodt, bought worldwide rights to sell and manufacture Acthar for $100,000 plus royalties.
In the years since, Questcor and Mallinckrodt have raised the price of the drug several times, up to over $39,000 — 97,500% of its 2001 cost.
In its complaint, filed Feb. 6 in the United States District Court in Atlanta, the city calls the price increase “eye-popping,” “exorbitant” and “unconscionable.”
It further alleges the drug company of scheming to prevent competition from entering the market and engaging in illegal kickback schemes.
When another company developed a drug called Synacthen with similar properties to Acthar, “Mallinckrodt swept in at the eleventh hour and agreed … to pay a minimum of $135 million, a bid several multiples higher than the other bidders, for the exclusive rights to Synacthen,” according to Marietta’s lawsuit.
In January 2014, another drug company sued Mallinckrodt for antitrust violations in the United States District Court for the Central District of California over its acquisition of Synacthen. Mallinckrodt settled that lawsuit for $15.5 million.
Marietta’s complaint says Mallinckrodt never sought FDA approval for Synacthen after buying the rights.
Mallinckrodt also settled a 2017 lawsuit from the Federal Trade Commission alleging the company exercised monopoly power in the United States, based in part on its Synacthen acquisition. The company settled that case for $100 million.
In September 2019, Mallinckrodt paid over $15 million in a settlement with the U.S. Justice Department, which claimed the company funneled money to doctors who prescribed Acthar in cases where it was not necessary.
In another lawsuit filed in June 2019, the Justice Department alleges the company illegally used a foundation to pay patients’ co-payments so they could market the drug as free while raking in huge sums of money for each prescription.
Marietta Mayor Steve Tumlin said the city cannot comment on pending litigation.
“We were just forced to do the right thing,” he said.
In a statement to the Associated Press, Mallinckrodt said it has invested more than $600 million in clinical trials and other development programs for Acthar and offers significant discounts to many customers and a “range of free drug and commercial copay assistance options.” It also said price adjustments to Acthar under its watch have been limited, and much of the increase in the drug’s price occurred under Questcor.
The company told the AP it was following federal guidelines.
Marietta’s suit seeks class action status on behalf of all other “third-party payors,” their beneficiaries and people without insurance who paid for Achtar over the last several years and asks a court to award actual and punitive damages.