Mallinckrodt agrees to settle DOJ Medicaid claims for $260 million

By Sarah Lizee

Olympia, Wash., March 8 – Mallinckrodt plc subsidiary Mallinckrodt ARD LLC has agreed to pay $260 million to resolve allegations that it violated the False Claims Act by knowingly underpaying Medicaid rebates due for its drug H.P. Acthar Gel, and using a foundation as a conduit to pay illegal co-pay subsidies in violation of the Anti-Kickback Statute for Acthar.

In 2019 and 2020, respectively, the government filed separate complaints detailing these allegations.

The settlement, which is based on Mallinckrodt’s financial condition, required final approval of the U.S. Bankruptcy Court for the District of Delaware, which approved the settlement on March 2, according to a press release form the Department of Justice.

“Mallinckrodt illegally reduced the amounts it paid to state Medicaid programs by improperly calculating the rebates it owed,” U.S. attorney Rachael S. Rollins for the District of Massachusetts said in the release.

“Today’s settlement vindicates the interests of the American taxpayer by ensuring that no pharmaceutical manufacturer can illegally boost its profits at the expense of state Medicaid programs, and the people and families those programs serve. This company unlawfully siphoned money out of the Medicaid program which poor people depend on for their medical care.”

Dublin-based Mallinckrodt develops, manufactures, markets and distributes specialty pharmaceutical products and therapies. The company filed Chapter 11 bankruptcy on Oct. 12, 2020 under case number 20-12522.

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