Mallinck­rodt just got its hand slapped for il­le­gal­ly pro­tect­ing an 85,000% price hike

The view from End­points

More than three years ago, Quest­cor paid No­var­tis $135 mil­lion to gain US rights to a ther­a­py that posed a di­rect threat to its Ac­thar drug fran­chise. It was the deal of the decade, block­ing a com­peti­tor that could have carved in­to a block­buster fran­chise. An­drew Pol­lack at The New York Times laid it all out in sim­ple terms in a venue that no one who cared about drug pric­ing could have missed.

There was al­so no doubt what the deal on Syn­ac­then De­pot — a syn­thet­ic ver­sion of Ac­thar — meant to Quest­cor, which had been jack­ing up the price of Ac­thar by an as­tro­nom­i­cal amount that helped jus­ti­fy Mallinck­rodt’s $5.6 bil­lion ac­qui­si­tion a year lat­er. Its stock jumped 15% when the news came down.

“We be­lieve the ac­qui­si­tion re­moves a key over­hang as a po­ten­tial com­peti­tor to Ac­thar is re­moved,” not­ed an­a­lyst Biren Amin at the time.

Over 15 years the price on Ac­thar has gone up 85,000%, ac­cord­ing to the FTC, which just won a $100 mil­lion set­tle­ment from Mallinck­rodt for il­le­gal­ly main­tain­ing a drug mo­nop­oly. To put that set­tle­ment in per­spec­tive, it’s the about same amount as the an­nu­al in­crease of Ac­thar net sales in fis­cal 2016, when the drug earned $1.16 bil­lion — mak­ing it eas­i­ly the biggest drug in their port­fo­lio.

When Mallinck­rodt bought Quest­cor, Ac­thar cost $28,000 a vial. To­day, a lit­tle more than two years lat­er, the FTC says it’s $34,000 a vial.

Mallinck­rodt, for its part, has been scram­bling to shed a rep as a price grout­ing bio­phar­ma com­pa­ny, joined the pric­ing pledge that Al­ler­gan’s Brent Saun­ders start­ed, vow­ing to keep an­nu­al price hikes to sin­gle dig­its.

That would still al­low a price hike on Ac­thar that would equal what the FTC is get­ting in the set­tle­ment.

The com­pa­ny is al­so swear­ing to dou­ble its R&D bud­get, which hit $262 mil­lion in its last fis­cal year.

Per­haps the biggest penal­ty the com­pa­ny faces is an or­der to sell the li­cense on the com­pet­ing ther­a­py in a mat­ter of months. That su­per­vised trans­ac­tion will set up an even­tu­al com­peti­tor, but it will not nec­es­sar­i­ly do any­thing to sig­nif­i­cant­ly re­duce the price of the ther­a­py, as even a dis­count stick­er could still com­mand a price wild­ly high­er than the old list price for Ac­thar.

De­vel­op­ment al­so can take time, and the agree­ment does noth­ing im­me­di­ate to re­duce the cost of the drug.

Iron­i­cal­ly, Mar­tin Shkre­li is get­ting cred­it as the whis­tle blow­er in the case, which oc­curred when short sell­ers were try­ing every­thing to top­ple Quest­cor’s stock price. (Shkre­li’s Retrophin was out­bid on the No­var­tis drug, which he had his own plans for.) Shkre­li knows a thing or two about price goug­ing on old drugs, which he prac­ticed at Retrophin and Tur­ing. He’s now pri­mar­i­ly oc­cu­pied with a fed­er­al fraud case, which is com­ing up for tri­al this sum­mer.

But the fed­er­al case has noth­ing to do with price goug­ing Dara­prim or any oth­er drug. Shkre­li’s 5,000% price hike re­mains in force, as it was com­plete­ly le­gal. And he con­tin­ues to seek out high pro­file in­ter­views that al­low him to de­fend the price.

For now, goug­ing re­mains a lu­cra­tive and large­ly non-threat­en­ing en­deav­or which the feds have lit­tle pow­er to con­trol. It re­mains to be seen if new in­com­ing Trump ad­min­is­tra­tion will change that. PEO­TUS fa­mous­ly ac­cused phar­ma com­pa­nies with “get­ting away with mur­der” on drug prices.

Mallinck­rodt and the FTC helped make that case for him.

Scott Gottlieb, AP Images

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Right after jumping on Michael Milken’s FasterCures board on Monday, the newly departed FDA commissioner is back today with news about another life sciences board post that gives him a ringside chair to cheer on a lead player in the real-world evidence movement — one with very close ties to the FDA.

Aetion is reporting this morning that Gottlieb is joining their board, a group that includes Mohamad Makhzoumi, a general partner at New Enterprise Associates, where Gottlieb returned after stepping out of his role at the FDA 2 years after he started.

Gottlieb — one of the best connected execs in biopharma — knows this company well. As head of FDA he championed the use of real-world evidence to help guide drug developers and the agency in gaining greater efficiencies, which helped set up Aetion as a high-profile player in the game.

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Bright and early European time Monday morning the company announced that it will pay up to about $2 billion to buy Alder, a little biotech that is far along the path in developing a quarterly IV formulation of a CGRP drug aimed at cutting back the number of crippling migraines patients experience each month. In a followup call, Dunsire also noted that the company will likely need 200 to 250 reps for this marketing task on both sides of the Atlantic. And analysts were quick to note that the dealmaking at Lundbeck isn’t done, with another $2 billion to $3 billion available for more deals to beef up the pipeline.

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The company — which earlier this month decided to focus on its arsenal of kinase inhibitors — on Monday unveiled positive data from a pivotal study testing its lead experimental drug for use in common warts.

The drug, A-101, was tested in a 502-patient study called THWART-2 — patients enrolled had one to six warts before qualifying for the trial. Patients either self-administered A-101 topical solution or a vehicle twice a week over a two-month period. A higher proportion of patients on the drug (a potent hydrogen peroxide topical solution) saw their warts disappear at day 60, versus the vehicle (p<0.0001) — meeting the main goal of the study.  Each secondary endpoint also emerged in favor of A-101, the company said.

Charles Nichols, LSU School of Medicine

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