Much criticized Mallinckrodt bows out of PhRMA ahead of some tightened restrictions on membership
Just ahead of some new, more muscular rules governing who can be a part of the industry lobbying organization PhRMA, one of its most heavily criticized members is pulling out.
PhRMA confirmed to me Wednesday afternoon that Mallinckrodt — at the center of a lingering drug pricing scandal — has resigned from the trade group.
Just a few months ago, Mallinckrodt agreed to pay a $100 million fine to resolve a probe of the long, rather sordid history behind Acthar, an infantile spasm drug which cost $28,000 a vial when Mallinckrodt picked it up in the $5.6 billion acquisition of Questcor. Questcor had been jacking up the price on Acthar when it paid Novartis $135 million to gain US rights to a therapy that posed a direct threat to its drug franchise. And Mallinckrodt was forced to pay the fine for illegally maintaining a drug monopoly — not the kind of sanction PhRMA likes to see for members.
Today, a little more than two years later, the FTC says Acthar costs $34,000 a vial. Over 15 years the price on Acthar has gone up 85,000%. Mallinckrodt earned $1.16 billion on Acthar last year, when it spent a total of $262 million on R&D, 7.7% of its net revenue of $3.4 billion.
This was all playing out when Marathon Pharmaceuticals grabbed an FDA approval for an old steroid, deflazacort, specifically for Duchenne muscular dystrophy and priced the therapy — available from UK sources at around $1,000 a year — at $89,000. Marathon CEO Jeff Aronin, who still sits on PhRMA’s board, ducked low when a controversy burst out over the price as well as questionable claims about what it spent on researching the steroid and later sold deflazacort to PTC Therapeutics for $140 million, plus a royalty stream and a potential $50 million milestone.
PhRMA, meanwhile, was rolling out a multimillion dollar ad campaign aimed at improving public opinion about drugmakers. The public has registered only notoriously low support for pharma companies overall. The group launched a review of its membership rules, suggesting that Marathon and others might not stay members once they tightened the criteria for joining, clearly preferring to stick with big players who traditionally invest heavily in R&D.
For Mallinckrodt’s part, the departure was routine and amicable. A spokesperson tells me:
Mallinckrodt routinely evaluates its engagement in trade associations and policy organizations and has concluded that the significant financial and time commitment required as a full PhRMA member outweighs its direct policy value to us at this time, given our present size and staff footprint. We continue to subscribe to the PhRMA Code of Conduct, support many of the group’s positions and initiatives and look forward to continuing our positive working relationship with PhRMA and its members.
Mallinckrodt was singing a different tune when they joined in early 2015.
“We are proud to be sitting at the same table as most of the top innovative pharmaceutical companies in the world, which puts us in a position to help shape our industry in a way that supports patients and providers for the coming decades,” said Mark Tyndall, Vice President of Government Affairs, Policy and Advocacy, at the time.