Federal prosecutors say a pharmaceutical firm improperly used a charity to pay kickbacks that subsidized Medicare patients' copayment obligations, allowing the firm to keep raising prices for the drug.
The suit filed Wednesday claims the scheme was designed to enable Mallinckrodt to raise the price of Acthar from $50 to $32,000. The drug is used to treat acute exacerbations in multiple sclerosis, lupus and rheumatoid arthritis.
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Mallinckrodt could face fines of nearly $240 million. Prosecutors say the scheme operated from 2010-2014, causing the submission of millions of dollars in false Medicare claims for the drug. Drug companies are not allowed to cover patients' copayments.
Mallinckrodt said it intends to vigorously defend itself against the allegations.