May 21, 2019 - Health

Drugmaker sues feds over medication payment change

Bob Herman

The HHS federal building and the HHS sign. — HHS headquarters in Washington. Photo: Saul Loeb/AFP via Getty Images

Mallinckrodt is suing the Centers for Medicare & Medicaid Services and the Department of Health and Human Services for changing the way Medicaid rebates are calculated for its pricey H.P. Acthar Gel medication, a move that would require Mallinckrodt to pay back large sums of money to the federal government.

Why it matters: The drug company expects the change will eliminate 10% of its Acthar sales, and that it will have to pay up to $600 million in retroactive rebates — news that sent the company's stock plunging by 24% Tuesday to a record-low $9.87 per share.

Reality check: Acthar has been under the gun for several years now. Independent experts say the drug, which is a half-century old and treats multiple sclerosis and infantile spasms, is excessively priced and isn't any better than cheaper alternatives.

The rising cost of Acthar has cost taxpayers and workers billions of dollars.

The bottom line: Mallinckrodt is fighting tooth and nail to protect Acthar because it is the lifeblood of the company. The drug makes up 35% of Mallinckrodt's revenue.

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Drugmaker sues feds over medication payment change

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