Spending on drugs is increasing at a higher rate in the US than any other medical spending1;p3. Some studies estimated that the increase is as high as 75% since 20071;p3. In mid-2020, twenty-six leading drug manufacturers in the US were accused of driving up generic drug prices illegally2. Price rigging reduces purchasing power and affects mostly the lower income society3;p90.
H.P. Acthar, a drug owned by Mallinckrodt, is used to treat Multiple Sclerosis (MS) that affects around 400,000 people in the US4;p13. It is also used to treat 2,500 kids a year in the US affected by infantile spasms5.
Acthar is one of the most expensive drugs in the US, the price of which increased by 97,000% from $40 in 2001 to more than $39,000 per vial in 20186. While general inflation rate in the US between 2001 and 2018 was 41.8%7. Mallinckrodt engaged in anti-competitive practice to illegally boost the demand of the drug by using a charitable foundation, and they bribed doctors to prescribe Acthar6. Also, Mallinckrodt created a monopoly by acquiring a competing drugs, Synacthen Depot, from Novartis, which it abandoned without developing it for the US market6.
According to a study published in a British medical journal, more than 200 physicians were very frequent in prescribing Acthar and 88% of them received payments from Mallinckrodt for doing that6. The payment was even more than $10,000 for 20% of physicians6. The study concluded, for every $10,000 spent on the physicians resulted in extra $53,000 in Medicare spending on Acthar8. This activity led Mallinckrodt’s revenue from Medicare to reach $725 million in 2018 from $50 million in 20115. Mallinckrod earns around $1 billion every year from Acthar9. Overall, the drug is responsible for one third of the company’s net revenues in recent years9.
To summarize, Mallinckrod made significant amount of money by making Acthar unaffordable for many through it anti-competitive practice.
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