Acthar

Drugmaker sues feds over medication payment change

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.

High-priced drug watch: H.P. Acthar Gel

Whitney Curtis / AP

Researchers are questioning the value, effectiveness and prescribing patterns of H.P. Acthar Gel, a drug used to treat multiple sclerosis and other conditions that costs $38,000 per year, Business Insider reports. Medicare continues to pay more for the drug every year even though experts believe cheaper alternatives would suffice.

Why this matters: It's another knock against Acthar and its owner Mallinckrodt Pharmaceuticals, which has routinely found itself in the spotlight for high drug prices. The New York Times and ProPublica have reported about Acthar's soaring price and taxpayer spending since 2012.