Company Raised Drug Price 97,000% Then Bribed Doctors to Boost Sales

By Wayne Drash, CNN.

Two whistleblowers at a pharmaceutical company responsible for one of the largest drug price increases in US history said the company bribed doctors and their staffs to increase sales, according to newly unsealed documents in federal court.

The effort, the whistleblowers said in a lawsuit against the company, was part of an intentional “multi-tiered strategy” by Questcor Pharmaceuticals, now Mallinckrodt, to boost sales of H.P. Acthar Gel, cheating the government out of millions of dollars.

The price of the drug, best known for treating a rare infant seizure disorder, has increased almost 97,000%, from $40 a vial in 2000 to nearly $39,000 today.

The Justice Department has now intervened in the case after conducting its own extensive investigation — a sign that the government believes the allegations levied by the whistleblowers are credible. In a statement to CNN, Mallinckrodt did not deny the accusations but said the fault lies primarily with Questcor.

The bombshell allegations lay bare what the whistleblowers say was a culture designed to sell the drug at all costs, from lying to the Food and Drug Administration to offering bribes to doctors.

The price increase, combined with an aggressive sales push in rheumatoid arthritis, multiple sclerosis and other areas, has pushed the drug’s annual sales over $1 billion.

Many of those sales are driven by Medicare reimbursements. A CNN investigation last year found that Medicare spending on Acthar had risen dramatically — more than tenfold over six years — to some $2 billion.

In their lawsuit, the whistleblowers said the drugmaker’s conduct “has cheated the federal government out of millions of dollars that should not have been paid, thereby enriching [the company] and subjecting patients to unapproved, unsafe and potentially ineffective uses of H.P. Acthar Gel.”

Marc Orlow, an attorney representing the two whistleblowers, hailed the government’s decision.

“Our clients are true heroes to stand up to a corrupt corporate culture that cost the taxpayers hundreds of millions of dollars,” he said.

“Under the current administration, there does appear to be a real effort to combat various forms of healthcare fraud, and I do know the DOJ is using data analytics to identify doctors who are defrauding the government,” she said. “The data could be used very effectively in a case like this.”

CNN’s investigation last year found that Acthar’s manufacturers had paid doctors millions.

The drug is approved for 19 indications, including multiple sclerosis, rheumatoid arthritis and kidney disease. But critics note that the drug was approved for many of those conditions long before the FDA’s more rigorous standards of today and that there are few randomized clinical studies showing its efficacy, especially in adult conditions.

“Medicare has been spending billions of dollars for Acthar for questionable indications,” said Dr. Dennis Bourdette, chairman of the Department of Neurology at Oregon Health & Science University who has studied the drug’s price and the doctors prescribing it for years.

According to the suit, Mallinckrodt “intentionally engaged in an illegal scheme to increase its sales and profits by engaging” in array of illegal activity, including:

  • Violating the federal Anti-Kickback Statute by “using valuable incentives, rewards and other forms of remuneration to induce healthcare providers to promote and prescribe” Acthar.
  • “Systematically promoting and marketing H.P. Acthar Gel for unapproved, off label uses.”
  • “Causing hundreds or thousands of false claims for reimbursement of H.P. Acthar Gel to be submitted to, and paid by, federal healthcare programs.”

The suit alleges that Questcor had trouble entering the multiple sclerosis market because there was a cheaper alternative that was considered the standard of care for MS flareups.

“Questcor’s response to this challenge has been to bribe physicians to prescribe and promote H.P. Acthar Gel,” the suit said.

                Editor: Does your doctor take drug company money?

The drug’s price has been a source of controversy for more than a decade, since the price shot up overnight in August 2007 from $1,600 to $23,000 a vial. At the time, the drug was primarily marketed for infantile spasms, a debilitating seizure disorder in babies.

Despite protests from the nation’s top epilepsy foundations and neurology groups over the drug’s high cost, Acthar’s price has climbed another $16,000 per vial. Today, it’s listed around $39,000 a vial.

The price hike puts it among the most dramatic drug price increases in the nation’s history, said Stephen Schondelmeyer, director of the PRIME Institute, a research organization that studies economic and policy issues related to pharmaceuticals.

“If gas [prices] increased from 1993 to 2019 at the rate of H.P. Acthar, gas today would cost $1,300 a gallon,” he said.

Apr.30, 2019

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