City sues company over drugs that went from $40 to $39,000
ATLANTA — The city of Marietta, Ga., has filed a class action lawsuit against a drug company after the price of a decades-old medicine went from $40 a vial to more than $39,000.
The city, which covers health care costs for employees and their families, says it has already spent more than $2 million on the drug for a single patient.
Stacie Dusetzina, an associate professor of health policy at Vanderbilt University School of Medicine, reviewed the complaint and said it’s indicative of a national problem with market-driven drug prices.
“A company can choose to do this to any drug a person is taking at any time,” she said. “I think it’s important for people to realize this has some particularly egregious elements, but this is not the only drug where we see this behavior.”
The drug, called Acthar, was first approved in the 1950s, and today is used primarily to treat infantile spasms — a seizure disorder in babies. It has other indications as well.
Marietta declined to answer questions about the case, but the complaint says the drug was prescribed to a covered individual for a “serious medical condition.”
A spokesperson for Mallinckrodt Pharmaceuticals, which manufactures Acthar, said the company had not been served with the lawsuit yet.
He provided a written statement saying the largest price hike occurred before Mallinckrodt acquired Acthar in
August 2014.
“Under our stewardship, any price adjustments to Acthar have been limited to the mid-single digit percentage range,” the statement said, adding that the company has invested more than $600 million in the drug.
Marietta says Mallinckrodt has been able to keep Acthar’s price artificially high by acquiring and then shelving the rights to a cheaper synthetic alternative.
In 2017, Mallinckrodt settled a Federal Trade Commission lawsuit over alleged antitrust violations for $100 million. It also had to agree to license development of the synthetic alternative to a competitor.
In 2019, it paid more than $15 million to the United States Department of Justice to settle claims that it paid illegal kickbacks to doctors. A pending DOJ lawsuit alleges the company illegally paid patients.
Reuben Guttman, an antitrust lawyer who has handled similar cases, said pharmaceutical companies consider such litigation the cost of doing business when profits are in the billions.
“When the government settles, the companies are effectively paying a fee for a license to break the law,” he said. “It’s pennies on the dollar that are being paid.”
The rising cost of drugs can be passed on to the public in the form of higher taxes, higher premiums and less coverage, even for those on employer-sponsored health plans. In 2018, for example, Medicare spent $725 million on Acthar for fewer than 2,500 patients, according to government data.