Mallinckrodt shares rebound after ’60 Minutes’ report on drug prices

Mallinckrodt sells Acthar now, but the most dramatic price hike actually took place a few years ago, when the drug was owned by a company called Questcor. In 2007, Questcor hiked the price of Acthar from $1,650 a vial to more than $23,000 a vial overnight despite no notable improvements in the product.

Mallinckrodt acquired Questcor for $5.6 billion in 2014.

Since 2014, the price has continued to rise, and Acthar now costs more than $40,000 a vial — a total increase of 100-thousand percent from its selling price of $40 a vial in 2001, according to the “60 Minutes” report.

Last year, the Federal Trade Commission charged Mallinckrodt with violating antitrust law in its quest to “maintain extremely high prices for Acthar” by buying its main competitor, a drug called Synacthen. Mallinckrodt ultimately settled the matter for $100 million without admitting wrongdoing.

Mallinckrodt told CNBC that, regarding the lawsuit, the company did not violate any laws.

“[Mallinckrodt] strongly believes that no company action outlined in the city of Rockford’s lawsuit constitutes a violation of any law, and, therefore, believes that the complaint should be dismissed in its entirety.”

As for the price of Acthar, Mallinckrodt says that, since it acquired the medicine, it has made “only modest price adjustments” in line with its pledge to price drugs responsibly.

But the lawsuit did not solely target the drug manufacturer. Express Scripts, the country’s largest pharmacy benefits manager, has also been pulled into the legal battle.

Express Scripts owns a business, CuraScript, that exclusively distributes Acthar to hospitals and pharmacies. Rockford’s lawsuit alleges that the distributor helped keep prices high, according to the ’60 Minutes’ investigation. Because towns hire pharmacy benefit managers to negotiate prices down, Rockford argues that Express Scripts unlawfully failed to advocate in the town’s best interest.

The pharmacy benefit manager has denied any wrongdoing in the Rockford lawsuit and, in its motion to dismiss, makes the case that it was “not contractually obligated” to contain costs. A company spokesperson added, in a statement to CNBC, that CuraScript’s distribution of Acthar has no bearing or influence on how Express Scripts manages the use of the medication for its clients, as well as no bearing on its price.

Express Scripts shares opened trading Monday up about a half percent, but they turned down more than 1 percent in midday trading after Center for Medicare and Medicaid Services Administrator Seema Verma tweeted that pharmacy benefit managers harm patients. Shares of CVS also fell, more than 2 percent.

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