REUTERS: Mallinckrodt Plc filed a lawsuit against the U.S. Department of Health and Human Services and forecast an about 10per cent hit to annual net sales of its gel used to treat multiple sclerosis symptoms following changes to Medicaid rebate calculations, sending shares plunging as much as 34per cent on Tuesday.
The drugmaker filed the lawsuit, which also named the health agency's Centers For Medicare And Medicaid Services division, after CMS changed how it calculated Medicaid discounts for the company's Acthar gel.Mallinckrodt said the change could result in a one-time charge of up to US$600 million. Acthar Gel, which is used to treat infantile spasms and multiple sclerosis, brought in revenue of US$1.11 billion in 2018, accounting for 35per cent of the company's total revenue.
Mallinckrodt said CMS' decision could impede the company's efforts to develop new therapies for patients with fewest treatment options.The Medicaid program provides health coverage to low income Americans and is jointly paid for by the states and the federal government. The U.S. Justice Department last month joined a pair of whistleblower lawsuits alleging a drugmaker now owned by Mallinckrodt improperly promoted Acthar and paid kickbacks to doctors who prescribed the treatment.
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