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Western Md. school board sues drugmaker over specialty medicine price

A drug prescribed to two Washington County teachers is the basis of a $2.8 million lawsuit that claims the manufacturer has dramatically raised the medication’s price and stopped competitors from going to market.

Acthar is a prescription drug manufactured by Mallinckrodt Pharmaceuticals and used by the two teachers to treat rheumatoid arthritis, according to the lawsuit, filed in Washington County Circuit Court but since removed to federal court. A vial of the medicine, which used to cost around $40, now costs more than $40,000.

Acthar is the only drug of its kind sold in the United States, giving Mallinckrodt a monopoly. The lawsuit claims Mallinckrodt has engaged in an unjust, unfair and deceptive scheme and conspiracy along with its exclusive distributor, Express Scripts, to artificially inflate the price in violation of Maryland consumer protection laws.

“We’re trying to dial back this new normal,” attorney Donald E. Haviland Jr. said Tuesday. “What’s happening in drug pricing has got to change.”

Mallinckrodt, formerly Questcor Pharmaceuticals Inc., acquired the monopoly when it bought Acthar in 2001, according to the complaint. The formulation of the drug has not changed even though the price has risen sharply. Acthar is a specialty medication not available in pharmacies and sold only through Express Scripts.

In 2013, Questcor prevented a synthetic competitor from coming to market by significantly outbidding others and then never developing and distributing the medication. Afterward, the company raised the price of Acthar even more.

In 2017, the company reached a $100 million settlement with the Federal Trade Commission and five states, including Maryland. As part of the settlement, Mallinckrodt had to agree to license the synthetic drug, Synacthen, to a competitor.

Haviland said that, to date, Synacthen has not been brought to market and that Acthar remains the sole option for patients.

“What we do, as civil litigants, the government has already prosecuted for a portion of the claim,” he said. “They went after Mallinckrodt for antitrust, as are we. They settled for $100 million, meaning the federal government and the five participating states divided up $100 million.”

But the third-party payers have not been compensated for their overpayment to the company for the drugs, he said.

Washington County schools spent $2.8 million between 2016 and 2018 on prescriptions for Acthar, according to the complaint.

“The Washington County School Board cannot continue to pay essentially a million dollars a year for this medication,” said Haviland, of Haviland Hughes in Ambler, Pennsylvania.

The lawsuit alleges violations of the Maryland Consumer Protection Act, negligent misrepresentation, fraud, unjust enrichment and conspiracy to commit fraud.

A spokesperson for Mallinckrodt did not respond to a request for comment Wednesday.

New strategy

The school board’s lawsuit focuses on the “new strategy” developed by Mallinckrodt in 2007, which included a written agreement giving Express Scripts the exclusive distribution rights in exchange for Mallinckrodt’s promise to raise the price. That summer, the price increased more than 1,300%.

The strategy was allegedly created by Gaithersburg resident Gregg LaPointe, a member of the Questcor board of directors who was also named in the lawsuit.

The lawsuit also claims Mallinckrodt used “opinion leader” doctors to promote and market the use of Acthar, paying them tens of thousands of dollars for their work.

“The conclusion of (a study) was that most nephrologists, neurologists, and rheumatologists who frequently prescribe Acthar received Acthar-related payments from Mallinckrodt, suggesting that financial conflicts of interest may be driving the prescription and use of Acthar,” the complaint states.

The U.S. Department of Justice intervened in a whistleblower lawsuit earlier this year that alleged Mallinckrodt had a longstanding scheme to bribe doctors to prescribe Acthar and to inflate prices, according to the lawsuit.

More lawsuits coming

Haviland’s firm filed the first lawsuit over Acthar pricing in the country in 2017, according to the firm’s website. The case is a proposed class action brought by Rockford, Illinois.

The Washington County School Board is the first plaintiff to file a lawsuit in Maryland, according to Haviland, and only the fourth plaintiff Haviland’s firm is representing nationally. Haviland said he expects to have filed in around 20 states by the end of the summer, though he could not speak about more plaintiffs in Maryland.

The company filed a motion to dismiss the Washington County lawsuit on July 1, arguing it is “yet another in a series of cases attempted by (Haviland) complaining about the price of (Acthar).”

Mallinckrodt accused the plaintiff of “fishing for a theory that sticks” and making “a wide variety of disconnected but certainly disparaging allegations” about the defendants.

But Haviland said the plaintiffs will fight to have the case returned to state court to be litigated there.

“Our strategy has been to sue the company where they committed the harm,” he said.

Because the lawsuit was filed in circuit court with at least one Maryland defendant — LaPointe — federal rules prohibit the out-of-state defendants from removing the case to U.S. District Court.

The defendants claim LaPointe was added to the case improperly only to prevent the removal of the case to federal court.

Haviland said he expects the case to be remanded to state court and to survive a motion to dismiss and proceed to discovery.

The case is Washington County Board of Education v. Mallinckrodt ARD Inc. et al., 1:19-cv-01854.


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