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Gordon Schnell and Max Voldman Published in Newsweek on How Whistleblowers are Key to Reining in Prescription Drug Costs

Posted  April 21, 2022

Newsweek published an OpEd by Constantine Cannon whistleblower lawyers Gordon Schnell and Max Voldman on the need to expand the Medicaid Drug Rebate Program to Medicare.  The piece was prompted by DOJ’s recent $235 million settlement with U.K. and St. Louis-based pharma company Mallinckrodt for allegedly violating the Medicaid rebate rule.

On the books since 1990, the rule requires drug companies to rebate state Medicaid programs for price increases that outpace inflation, benchmarked to when the drug was first approved (or 1990, if later).  According to the government, Mallinckrodt intentionally sidestepped the rule with its Acthar gel used to treat a variety of conditions, including MS and infantile spasms.

In 2001, when another drug company Questcor (which Mallinckrodt later acquired) secured the rights to manufacture and sell the drug, it cost only $50 a vial.  By 2013, Questcor had increased the price to $28,000 per vial.  The government claimed Mallinckrodt cheated the system by pegging rebates not to the drug’s relatively modest 1990 pricing (the drug was approved in 1952), but to its excessive 2013 pricing when the FDA approved the drug for additional diseases.

Schnell and Voldman argue the Mallinckrodt case spotlights what some drug companies might be doing to avoid this Medicaid pricing prescription.  They claim it is an especially pressing concern with so many drug companies working to repurpose existing drugs to find the next great cure.  But unless the inflation rebate is expanded to Medicare, Schnell and Voldman believe this pricing constraint will have a limited impact in keeping drug pricing in check.

Schnell and Voldman also point to the critical role whistleblowers play in enforcing this area of the law.  That was how the government learned of the Mallinckrodt scheme.  It was the company’s director of internal controls who filed suit under the qui tam provisions of the False Claims Act.  According to Schnell and Voldman, it is a common theme in fraud enforcement and why whistleblowers are routinely responsible for the bulk of the billions of dollars the government recovers under the False Claims Act every year.

Schnell and Voldman conclude that with cancer and COVID still very much a threat, both government and whistleblower vigilance are critical to ensuring drug companies play by all the rules.  So is having the necessary legislative and regulatory tools to get the job done.  Only then, they argue, “can we be sure the drugs we buy are safe and effective and all the life-changing elixirs hopefully just around the bend remain available to everyone.”

Click here to read the full OpEd piece in Newsweek.

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Tagged in: CC Lawyers, Drug and DME Pricing, Healthcare Fraud, Medicaid, Medicare, Pharma Fraud,