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."
"Questcor has attempted to conceal and cover-up its
payment of kickbacks and its illegal promotion of H.P. Acthar Gel by making
false statements to the FDA and directing employees to conceal evidence by
failing to disclose ... the full nature and extent of its advertising,
promotional and marketing materials and plan."
Mallinckrodt purchased Questcor in 2014 as part of a $5.6
billion deal. "The illegal practices that Questcor had been engaging in
since 2007," the suit said, "have knowingly been continued since the
merger and acquisition of Questcor by Mallinckrodt."
The whistleblowers' allegations were unsealed after the
Justice Department filed notice on March 6 to intervene in the lawsuit. The
Justice Department has 90 days to file its own complaint, according to the
March filing.
If found liable, Mallinckrodt could be required to pay up to
three times any amount the government is found to have been defrauded, as well
as penalties ranging from $5,500 to $11,000 for each false claim, according to
the whistleblower statute.
The Justice Department declined comment for this story.
In its statement to CNN, Mallinckrodt said that it was
disappointed with the Justice Department's decision to pursue the case and that
it was cooperating with the agency. The drugmaker also sought to distance
itself from Acthar's previous owner, Questcor.
"The allegations pertain principally to legacy Questcor
conduct," Mallinckrodt said.
"Mallinckrodt has cooperated fully with the DOJ in its
review of this historical conduct, voluntarily providing documents and
information to the government. While we are disappointed the DOJ has elected to
proceed with the lawsuit, we have been in advanced settlement talks with the
government over the past several months.
"The company believes these sales and marketing claims
are likely to be resolved in the near term through ongoing negotiations, and
further believes a resolution that is reasonable and manageable for all parties
is achievable. As the lawsuit principally concerns allegations of legacy
conduct prior to Mallinckrodt's acquisition of Acthar Gel, we do not envision
any impact to how Mallinckrodt conducts business today."
In its statement, the company referred to the whistleblowers
as two former Questcor employees. Yet the suit makes clear that one of the
employees stayed on after the 2014 merger and worked for Mallinckrodt, leaving
the company in June 2017.
After CNN published this story, Mallinckrodt sent an
additional statement: "Mallinckrodt strongly disagrees with the substance
of the complaint and the sensational characterization of the allegations."
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.
Expert: 'Bad sign' for company
The government doesn't take the decision to intervene in a
whistleblower case lightly, said Jennifer Arlen, a professor of law at New York
University who specializes in corporate enforcement.
"The government has tended to take over cases that
become winners," said Arlen, who serves as director of NYU's Program on
Corporate Compliance and Enforcement. "Historically, the government's
decision to take this over is a bad sign" for the company being
investigated.
The government intervenes in fewer than 25% of whistleblower
cases, according to the Justice Department.
But cases alleging health care kickbacks, Arlen said, can be
"very challenging because pharmaceutical companies regularly have
legitimate consulting and research arrangements with doctors."
"The government has to show that the intent was to
reward doctors for their prescribing behavior," she said.
What will be interesting, Arlen said, is if the government
uses its vast amount of prescribing data by doctors to bolster its case.
"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.
More than 80% of doctors who filed Medicare claims in 2016
for Acthar received money or other perks from the drugmakers, according to the
CNN analysis of publicly identified prescribers.
The analysis, which looked at doctors who filed more than 10
Part D claims, found that Mallinckrodt and Questcor paid 288 prescribers more
than $6.5 million for consulting, promotional speaking and other Acthar-related
services between 2013 and 2016.
$1,000-a-gallon gas
The whistleblowers' lawsuit had been under seal for seven
years in US District Court in the Eastern District of Pennsylvania, since it
was originally filed against Questcor in 2012. The suit has been amended to
reflect Mallinckrodt's purchase of Questcor in 2014.
When the government files notice to intervene in a
whistleblower case, the complaint becomes unsealed -- in this case, the fourth
amended complaint, filed June 8, 2017. All other documents related to the case
remain sealed.
This isn't the first time Mallinckrodt has faced government
scrutiny related to Acthar. The pharmaceutical company reached a $100 million
settlement in 2017 after the Federal Trade Commission accused the drugmaker of
violating antitrust laws to thwart competitors from undercutting Acthar's
exorbitant price. The company settled without admitting wrongdoing.
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.
The whistleblower suit was filed by Charles Strunck, who
worked for Questcor as a multiple sclerosis sales specialist from September
2010 to August 2011, and Lisa Pratta, who was an Acthar neurology specialist
with Questcor and then Mallinckrodt from September 2010 to June 2017.
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."
Sales representatives were compensated royally for increased
sales, the suit said, with lucrative monthly bonuses designed to promote a
"sell at all cost" mentality. One sales specialist was awarded a
$124,000 bonus in the second quarter of 2011, including $75,000 in one month
alone; another received a $110,000 bonus in the same quarter, including $80,000
in one month, the suit alleged.
Sales reps were given a daily report "tracking the
productivity of all specialists in order to motivate them."
"This practice continued after the merger with
Mallinckrodt," the suit said.
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.
The suit went on to say that many doctors treating MS
patients refused to speak with Questcor sales representatives, but the company
devised a work-around: "One way in which Questcor has overcome this threshold
obstacle is to bribe office staff to arrange such meetings."
Bourdette, executive director of Oregon Health & Science
University's Multiple Sclerosis Center, found those allegations especially
intriguing.
"In the multiple sclerosis field, there are a very
small number of physicians who prescribe Acthar, and I've never understood why
these physicians do that," he said. "If these accusations are true,
it may provide an explanation."
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.
https://www.cnn.com/2019/04/30/health/mallinckrodt-whistleblower-lawsuit-acthar/index.html?no-st=1556663417
Courtesy of a colleague
