AP NEWS

Georgia city sues alleging ‘unconscionable’ drug cost

February 10, 2020 GMT

ATLANTA (AP) — A Georgia city is suing a pharmaceutical company over a medication it says went from $40 to over $39,000 for a single vial, costing local taxpayers more than $2 million to cover one patient.

Mallinckrodt ARD LLC broke the law to keep the price of the drug Acthar artificially high, the city of Marietta said in a lawsuit filed Thursday in federal court in Atlanta. The suit accuses the company of “unjust enrichment.”

In a statement, the company said it had not been served with Marietta’s lawsuit, but it has invested more than $600 million in clinical trials and other development programs for Acthar and offers significant discounts to many customers and a “range of free drug and commercial copay assistance options.” It also said price adjustments to Acthar under its watch have been limited.

Much of the increase in the drug’s price occurred under a company that Mallinckrodt acquired in 2014, according to the lawsuit.

Marietta has a self-funded health plan. A family member of one of the plan’s beneficiaries requires Acthar, and the city covers the cost, according to the suit. The drug is used to treat a seizure disorder in babies and acute relapses of multiple sclerosis in adults, among other conditions.

A single course of treatment usually requires at least three vials, bringing the cost to nearly $120,000, the lawsuit says.

It calls the drug’s price “exorbitant” and “unconscionable” and accuses Mallinckrodt of stifling competition that could have brought the price down by purchasing the rights to an alternative medication. It also cites a lawsuit filed last year by the U.S. Department of Justice that accuses the company of illegal kickbacks for Acthar.

The company has said it was following federal guidelines.

The suit seeks class action status on behalf of all other “third-party payors,” their beneficiaries and people without insurance who paid for Achtar over the last several years and asks a court to award actual and punitive damages.