Michigan to receive more than $14 million following pharmaceutical lawsuit

Published: Jun. 22, 2022 at 5:11 PM EDT
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LANSING, Mich. (WILX) - The state of Michigan will receive $14.5 million from Mallinckrodt, after they allegedly underpaid Medicaid rebates for nearly seven years.

Every state, Washington, D.C., Puerto Rico and the federal government were involved in the lawsuit against the pharmaceutical company Mallinckrodt ARD, LLC.

The lawsuit alleges that Mallinckrodt knowingly underpaid rebates due for its drug H.P. Acthar Gel, violating the Federal False Claims Act and the Michigan Medicaid False Claims Statute.

Under the Medicaid Drug Rebate Program, when a manufacturer increases the price of a drug faster than the rate of inflation, it must pay the Medicaid program a per-unit rebate of the difference between the drug’s current price and the price of the drug if its price had gone up at the general rate of inflation since 1990 -- or the year the drug first came to market, whichever is later.

Authorities said and Mallinckrodt its predecessor Questcor began paying rebates for Acthar in 2013 as if it was a new drug just approved by the Food and Drug Administration, rather than being introduced in 1952. This meant the companies reportedly ignored all pre-2013 price increases when calculating and paying Medicaid rebates until 2020.

The total value of the settlement is roughly $234 million, which will be paid out over the course of seven years. Of this amount, Michigan will receive $14,450,193.22.

The first payment, estimated to be $180,000, is expected in July.

It’s not the company’s first lawsuit settlement. Mallinckrodt had previously agreed to pay $1.6 billion in 2020 in connection with the opioid crisis.

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