Mallinckrodt Pharmaceuticals’ agreed to pay $100 million to settle Federal Trade Commission (FTC) charges it used its monopoly on a lupus and multiple sclerosis drug, Acthar, to unfairly jack up its price. The FTC has been looking into the matter since 2014, and the New York Post earlier reported that it wasMartin Shkreli (yes, you read that correctly, Martin Shkreli) – who infamously engaged in the same pricing practice when he was running a small drug company – who blew the whistle.
The Post reported that Shkreli filed suit against MNK back in 2014 for acquiring the drug Synacthen, from Novartis, and then shutting it down to protect its own product. The Feds have been investigating MNK ever since. Shkreli was indicted on securities fraud charges unrelated to Turing in December 2015. The FTC’s complaint was against Questcor, which is a unit of MNK. Here’s what the regulator said about the acquisition of Synacthen: “Questcor illegally acquired the U.S. rights to develop a competing drug, Synacthen Depot. The acquisition stifled competition by preventing any other company from using the Synacthen assets to develop a synthetic ACTH drug, preserving Questcor’s monopoly and allowing it to maintain extremely high prices for Acthar.”
MNK’s shares dove Wednesday afternoon, and then recovered after the company said it has reached a settlement over the issue. The FTC later released the details of the settlement, including the size of the fine.
MNK has gotten plenty of negative attention on Wall Street in the past. Last year, short seller Andrew Left of Citron Research – who has said the company is more offensive than pariah Valeant Pharmaceuticals – challenged the company to prove that Acthar actually works by appearing on TV and offering $1 million to the National Multiple Sclerosis Society if MNK provided test results.
MNK company purchased Questcor, the company that makes Acthar, in 2014. Acthar is used to control muscle spasms in infants. Before MNK acquired the drug, Questcor had raised the price to $28,000 a vial, from $1,235 a vial in 2005. The FTC said the price has further increased to $34,000 today. “Questcor took advantage of its monopoly to repeatedly raise the price of Acthar, from $40 per vial in 2001 to more than $34,000 per vial today – an 85,000 percent increase,” the FTC said in its release. “We charge that, to maintain its monopoly pricing, it acquired the rights to its greatest competitive threat, a synthetic version of Acthar, to forestall future competition. This is precisely the kind of conduct the antitrust laws prohibit.”
