What was the Medicaid rebate fraud case?
The government alleged Mallinckrodt paid Acthar rebates as if it were a drug first marketed in 2013 — resetting the baseline and erasing decades of prior price increases from the calculation, significantly reducing what it owed Medicaid.
Under the Medicaid Drug Rebate Program, when a manufacturer raises a drug's price faster than inflation, it must pay Medicaid an additional rebate calculated from the drug's price when it first came to market. The government alleged that from 2013 Mallinckrodt and Questcor paid Acthar rebates as if it were a new drug first marketed in 2013, rather than one approved in 1952.
That reset erased all prior price increases from the rebate calculation, even though Acthar had already exceeded $28,000 per vial by 2013, significantly reducing what the company owed. Under the settlement, Mallinckrodt admitted that Acthar was not a new drug as of 2013 and agreed to correct the baseline permanently. All 50 states, Washington D.C. and Puerto Rico joined the resolution.