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Catch of the Week – Mallinckrodt Pays for Kickbacks on Acthar; Investigation into Copayment Subsidies Continues

Posted  September 6, 2019

This week, the Department of Justice announced that pharmaceutical company Mallinckrodt ARD LLC had agreed to pay over $15 million to resolve allegations that it paid illegal kickbacks to physicians to induce them to prescribe Acthar.

AKS Allegations

Two whistleblower lawsuits brought under the False Claims Act against Mallinckrodt alleged that from 2009 to 2013, the pharma company, then known as Questcor, entertained doctors with lavish dinners and other entertainment to induce them to prescribe Acthar.  The injectable drug is used to treat conditions including multiple sclerosis, lupus, and infantile spasms; previously, it has attracted attention because of rapid increases in its price and corresponding growth in government spending for the drug.  In 2007, Questcor raised the price of Acthar more than tenfold, from $1,650 per vial, to $23,000 per vial.  According to reporting by ProPublica, “Medicare’s tab for the medication . . . jumped twentyfold from 2008 to 2012, reaching $141.5 million.”

The whistleblowers are slated to receive an almost $3 million share of the recovery. The government also announced that it is continuing to investigate allegations under the False Claims Act against Mallinkrodt that it used a foundation as a conduit to pay kickbacks in the form of copayment subsidies.

Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division said “The Department of Justice will hold companies accountable for the payment of illegal kickbacks in any form. Improper inducements have no place in our federal healthcare system, which depends on physicians making decisions based on the healthcare needs of their patients and not on or influenced by personal financial considerations.”


This settlement highlights the continued efforts by DOJ to combat kickback schemes in all forms. The government will continue to pursue pharmaceutical companies, device manufacturers, and providers that pay or attempt to pay illegal remuneration to physicians in order to induce referrals of patients under government health programs.

As in this case, whistleblowers play a vital role in assuring that kickback schemes come to light, are stopped, and the government is reimbursed for the fraudulent payments it made to culpable parties. Whistleblowers are often in a prime position to provide information on improper conduct by their employers, competitors, or related entities that can lead to the government’s recovery of ill-gotten gains. Such recoveries ensure that patients do not suffer the negative effects of manufactures or providers attempting to limit patient options when it comes to care of serious conditions such as those treated by drugs like Acthar.

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Tagged in: Anti-Kickback and Stark, Catch of the Week, FCA Federal, Healthcare Fraud, Importance of Whistleblowers, Pharma Fraud, Whistleblower Eligibility, Whistleblower Rewards,