Mallinckrodtplc (NYSE: MNK), a global specialty biopharmaceutical company, today reported the company has reached an agreement in principle with the U.S. Department of Justice (DOJ) to resolve the previously disclosed government investigation of Questcor’s legacy sales and marketing activities, which is still subject to the finalization of certain terms. Under the civil False Claims Act settlement, Mallinckrodt expects to pay $15.4 million relating to legacy Questcor activities. While the agreement will not contain any admission of wrongdoing, it believes the agreement is fair and reasonable under the circumstances, and should put to rest these government claims relating to Questcor’s sales and marketing activities.
With respect to allegations in the newly filed DOJ civil complaint covering alleged legacy Questcor charitable foundation conduct between 2010 and 2014, the government is seeking to recover unspecified monetary damages for alleged violations of the False Claims Act and the Anti-Kickback Statute. Contrary to the DOJ’s characterizations in the complaint, the allegations relate to legacy Questcor conduct as all the donations to the Chronic Disease Fund (CDF) referenced in the complaint occurred prior to the acquisition of Questcor or were for grandfathered patients who had been approved by CDF for co-pay assistance prior to the acquisition. Mallinckrodtacquired Questcor in August 2014.
During the applicable period, CDF operated under a U.S. Health and Human Services (HHS) Office of the Inspector General (OIG)-issued advisory opinion, and CDF represented to Questcor that it operated in compliance with that opinion. In addition, the HHS-OIG stated in 2005 that single-donor, single-drug funds may, under prescribed circumstances, be lawful, and the agency reiterated publicly that position nearly a dozen times during the period in the complaint. Mallinckrodt believes Questcor’s relationship with CDF fell within this guidance, and as such was lawful and appropriate. Mallinckrodt denies any wrongdoing on the part of Questcor during the relevant period, and intends to vigorously defend the company in this matter.
“Mallinckrodt looks forward to finalizing our settlement agreement with the government relating to legacy Questcor sales and marketing activities. As we have said repeatedly, where we can resolve legacy legal matters in a reasonable and manageable way, we will do so,” said Mark Casey, General Counsel, Mallinckrodt. “Unfortunately, that has not been possible to date regarding the allegations relating to Questcor’s charitable foundation activities, despite what we believe was lawful and appropriate activity. We are confident that the litigation process will focus the contested issues and be a productive step in reaching resolution.”
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