Mallinckrodt's H.P. Acthar Gel
An old hormone gel, an 85,000% price increase and Medicare's multibillion-dollar tab
H.P. Acthar Gel is a repository corticotropin injection first introduced in 1952. Over two decades its price rose from tens of dollars to tens of thousands of dollars a vial, Medicare spending on it surged, and its owners faced an FTC monopoly case, a Medicaid fraud settlement and a kickback settlement. This article focuses on the drug itself: how its price rose and why the evidence for its use has been questioned.
Questions
What is Acthar Gel and what is it used for?
A long-acting injectable ACTH approved in 1952 for infantile spasms and serious conditions — the only US ACTH drug for years, with many indications resting on limited evidence by modern standards, which became central to criticism of how expensively it came to be used.
Acthar Gel is a long-acting injectable form of adrenocorticotropic hormone (ACTH), which stimulates the body's adrenal glands to produce corticosteroids. It is approved for infantile spasms, a rare and serious seizure disorder in babies, and is also used as a drug of last resort for other serious medical conditions, including multiple sclerosis relapses, nephrotic syndrome and rheumatological disorders. For many years it was the only ACTH drug sold in the United States. Critically, the drug was not new: it was first introduced to market in 1952. Because it was approved under older standards, many of its approved indications rest on limited evidence by modern criteria, which is central to criticism of how widely and expensively it came to be used.
Q2How much did Acthar's price increase?
The FTC's then-chair said Questcor raised the price from $40 in 2001 to more than $34,000 by 2017 — an 85,000% increase — with no new research or improved formulations behind the rises, making it one of the most cited examples of price gouging on old medicines.
The FTC's then-chair Edith Ramirez said Questcor raised Acthar's price from $40 per vial in 2001 to more than $34,000 per vial by 2017, "an 85,000 percent increase." By 2020 reports placed the price at around $40,000 per vial. A treatment course for infantile spasms could exceed $100,000. These increases were not linked to new research or improved formulations. Questcor had acquired the drug in 2001 and pursued a strategy of expanding its use and raising its price; Mallinckrodt then paid $5.8 billion for Questcor in 2014. Acthar is therefore one of the most frequently cited examples in congressional debates of price increases on old medicines lacking competition.
Q3How much has Medicare spent on Acthar?
Tenfold growth between 2011 and 2015, to more than $500 million in that year alone — concentrated among 203 high-prescribing specialists whose volume could not be explained by sicker patients, raising questions about whether marketing drove adoption.
A lot, and quickly. Researchers at Oregon Health & Science University and Oregon State found Medicare spending on Acthar increased tenfold between 2011 and 2015, totalling $1.3 billion, with more than $500 million in 2015 alone. Spending was highly concentrated: in 2014, 203 frequent prescribers, mainly rheumatologists, neurologists and nephrologists, accounted for about 42% of Medicare spending on the drug. The researchers found this prescribing could not be explained by these doctors treating sicker patients. The volume of spending prompted questions about how an old, niche drug had become one of Medicare's costliest medicines, and whether marketing to specialists had driven its adoption in conditions where cheaper alternatives existed.
Q4Is there good evidence that Acthar works better than cheaper steroids?
OHSU researchers found no evidence of superiority over steroids costing hundreds of dollars per course — versus Acthar's $100,000+ — and an Annals of Internal Medicine review used it as a case study of old drugs with limited evidence and questionable value.
This is one of the central criticisms. The OHSU researchers found no evidence that Acthar is superior to much cheaper forms of steroids. A course of prednisone costs at most a few hundred dollars, while an Acthar course can exceed $100,000. One researcher said many of Acthar's FDA-approved indications lack substantial evidence that it is effective at all, let alone better than inexpensive corticosteroids. An Annals of Internal Medicine review examined whether older drugs with limited trial evidence are worth the expense, using Acthar as its case study. Mallinckrodt has argued that Acthar works through mechanisms beyond steroid production and benefits patients who do not respond to other treatments, and it has funded further studies. But the evidence base has not persuaded many independent analysts.
Q5Did Mallinckrodt pay doctors who prescribed Acthar?
A 2018 study found 88% of frequent Acthar prescribers received payments from Mallinckrodt — 92,356 payments totalling $15.5 million, far exceeding the 30–50% prevalence typical in such studies — raising questions about whether promotion drove prescribing.
A 2018 study reported that 88% of the 235 specialist physicians who frequently prescribed Acthar received payments from Mallinckrodt, and 20% received more than $10,000. Using ProPublica data, the researchers counted 92,356 Acthar-related payments totalling $15.5 million, with the top ten recipients each receiving between $329,000 and $476,000. The lead researcher noted that nearly 90% payment prevalence far exceeds the 30% to 50% typically seen in such studies. Mallinckrodt responded that in 2015 and 2016, 73% to 76% of Acthar prescribers received either no payments or only nominal items such as meals and reprints. Payments to doctors are legal if they are for legitimate services, but such high prevalence led critics to argue that promotion rather than evidence was driving use.
Q6How did Questcor protect Acthar from competition?
Questcor paid $135 million for Synacthen Depot's US rights — against a rival bid of $16 million — specifically to eliminate the only potential US competitor, leading to a $100 million FTC settlement and a forced licensing to an approved third party.
Outside the US, doctors used Synacthen Depot, a synthetic ACTH product available at a fraction of Acthar's US price. In June 2013 Questcor bought the US rights to Synacthen from Novartis, outbidding companies that planned to develop it and sell it at a significant discount to Acthar. The FTC alleged the acquisition was designed to eliminate the greatest competitive threat to Acthar's monopoly. One rival, Retrophin, had bid $16 million; Questcor paid $135 million. In January 2017 Mallinckrodt paid $100 million to settle the FTC and state charges and agreed to license Synacthen for infantile spasms and nephrotic syndrome to an FTC-approved licensee, which became West Pharmaceuticals. The company did not admit liability.
Q7How did Acthar's price affect Medicaid?
By treating Acthar as a new drug first marketed in 2013, Questcor reset the rebate baseline to a price already above $28,000 — wiping out decades of prior increases — and paid $234.7 million to resolve the resulting Medicaid fraud allegations.
Under Medicaid's rebate rules, when a drug's price rises faster than inflation, the manufacturer must pay an extra rebate calculated from the drug's price when it first entered the market. The government alleged that from 2013, Questcor and then Mallinckrodt paid rebates as if Acthar were a new drug first marketed in 2013, erasing all prior price increases from the calculation, even though Acthar already cost over $28,000 per vial by then. The allegations covered January 2013 to June 2020. Mallinckrodt paid about $234.7 million to resolve the Medicaid claims and admitted Acthar was not a new drug as of 2013. It agreed to reset the rebate calculation so that state Medicaid programs receive 100% rebates on Acthar Medicaid sales based on current pricing.
Q8What were the Acthar copay kickback allegations?
Questcor allegedly partnered with the Chronic Disease Fund from 2010 to 2014 to cover Medicare copays through three foundation funds, marketing Acthar as effectively free to patients — while its price kept rising and Medicare paid in full — settling for $26.3 million.
The same Justice Department resolution included about $26.3 million to settle allegations that Mallinckrodt paid illegal subsidies through three funds at a foundation to induce Medicare-reimbursed Acthar purchases and to counter concerns from doctors and patients about the drug's high cost. According to Fierce Pharma, the claims covered 2010 to 2014, when Questcor allegedly partnered with the Chronic Disease Fund to subsidise Medicare copays and market the drug as effectively free to patients, even as its price rose. If patients do not feel a drug's price, they and their doctors have less reason to question it, while Medicare continues to pay the full amount. The case was part of a wider federal crackdown on manufacturer-funded copay charities.
Q9Have private payers sued over Acthar?
Yes — a 2017 class action by Rockford, Illinois alleged anticompetitive conduct since 2007, and a $65.75 million shareholder settlement over concealed federal-reimbursement dependence was approved by the bankruptcy court.
Yes. In April 2017 the City of Rockford, Illinois filed a putative class action on behalf of self-funded entities that paid for Acthar from August 2007 onwards, alleging that Mallinckrodt engaged in anticompetitive, unfair and deceptive acts to artificially raise and maintain Acthar's price, including by acquiring Synacthen. Investors also sued, and Mallinckrodt's bankruptcy court approved a $65.75 million settlement with shareholders who claimed the company concealed its reliance on federal reimbursement for Acthar. The Acthar liabilities also contributed to Mallinckrodt's financial difficulties; its Acthar settlement with the government was structured to be paid over seven years as part of its first Chapter 11 reorganisation.
Q10How does the Medicaid inflation rebate work, and how was it gamed?
Manufacturers owe rebates for every dollar of price increase above inflation since a drug's first market entry — but by treating Acthar as new in 2013, Questcor reset the baseline to $28,000+, eliminating the most damaging decades of increases from the calculation.
Under the Medicaid Drug Rebate Program, when a manufacturer raises a drug's price faster than inflation, it must pay an extra per-unit rebate. As Idaho's attorney general explained, the rebate is the difference between the drug's current price and what its price would be if it had risen only at inflation since 1990 or since the drug first came to market, whichever is later. For Acthar, the relevant baseline should have reflected its pre-1990 market history. By treating Acthar as a new drug in 2013, the companies effectively reset the baseline to a price already above $28,000 a vial, wiping out decades of increases from the calculation. Because most of Acthar's price growth had occurred before 2013, the reset sharply reduced rebates owed. Mallinckrodt agreed to correct Acthar's base date average manufacturer price and never to change it again. The case illustrated how technical rebate rules can have very large financial effects.
Q11What is the significance of the Acthar case?
Acthar contains every element critics cite — monopoly, buyout of potential competition, steep price increases, prescriber payments, copay subsidies masking true costs, and Medicaid rebate manipulation — making it the clearest example of how an old drug without competition can become extraordinarily expensive.
Acthar is arguably one of the clearest examples of how an old drug with little competition can become extraordinarily expensive without new evidence of benefit. Every element that critics worry about is present: a monopoly, a buyout of a potential competitor, steep price increases, heavy payments to prescribers, spending concentrated among a small group of specialists, subsidised copays that blunt price signals, and alleged manipulation of Medicaid rebate rules. Regulators did respond, through the FTC's divestiture-style remedy and the Medicaid rebate reset, but only after Medicare and Medicaid had spent billions. The case has influenced policy thinking on inflation rebates, copay charities and the FTC's approach to acquisitions of pipeline or foreign products that could compete with a US monopoly drug.