You may not have heard of Acthar, but if you pay taxes, you’re an interested party.
H.P. Acthar is marketed for a variety of severe afflictions, including acute exacerbations of multiple sclerosis and rheumatic disorders.
According to the Medicare Drug Spending Dashboard for 2015, it was the single most expensive drug, per patient, that the government paid for during the course of last year. Of the 3,100 beneficiaries using Acthar, Medicare spent an average of $162,371.
Total Medicare spending on Acthar was $504 million last year, a 29 percent increase from the year before. The 2015 spending was up from $49.5 million in 2011.
With Acthar topping the Medicare dashboard on a per-patient basis, I asked Mallinckrodt if it was worried that Congress might soon examine its operations. After all, Acthar’s pricing pattern is very similar to those of the companies singled out by the Senate Aging Committee.
Daniel Yunger, a company spokesman, said Mallinckrodt believes it has none of the characteristics that troubled the Aging Committee about the four companies it studied.
For example, he noted, Acthar is not a drug with no immediate competition, and Mallinckrodt has not controlled access to it through a closed distribution system. Neither does the drug serve a small market, which would make it unattractive to competitors.
As for the drug’s cost, Mr. Yunger said, Mallinckrodt did not dictate Acthar’s price when it acquired it in August 2014. Under Mallinckrodt, price increases on Acthar have averaged in the low single digits, he said.
It is true that Acthar’s biggest price increases came under the drug’s previous owner, Questcor.
Obviously, though, Mallinckrodt benefits mightily from the high cost of Acthar. And the company has made no sign it will cut the price.
A look at Mallinckrodt’s financials tells the story. Acthar accounted for 34 percent of the company’s $3.381 billion in net sales in its most recent fiscal year; that makes Acthar a $1.15 billion drug for the company.
Still, Mallinckrodt did allow in its annual report that “if legislative or regulatory action were taken or insurers changed their reimbursement practices to limit our ability to maintain or increase the prices of our products, our future revenue and profitability could be negatively affected.”
Taxpayers are paying the Acthar freight to a greater degree than private insurers. While Aetna, Cigna and UnitedHealthcare have restricted reimbursement on Acthar in recent years, Medicare continues to pay, no questions asked.
That’s because the Center for Medicare and Medicaid Services, a unit of the Health and Human Services Department, provides reimbursement for any medication determined to be a covered Medicare Part D drug. Acthar meets that criteria.
Other insurers aren’t so lax.
The Food and Drug Administration has approved Acthar for over a dozen conditions, including infantile spasms, a rare and dangerous seizure disease; rheumatoid arthritis; sarcoidosis; nephrotic syndrome; and systemic lupus erythematosus. Many of the indications are listed even though there are few clinical trials proving that Acthar is more effective than other cheaper medications. Acthar was approved for use in 1952, before such trials were required by the F.D.A.
A July 2016 policy from UnitedHealthcare, the nation’s largest payor, determined that Acthar is more expensive than alternatives that are likely to produce equivalent results. Therefore, the drug “is unproven and not medically necessary” for all but three of the indications on the label.
Tricare, the insurer for members of the United States military, also limits reimbursement solely to infantile spasms.
Mallinckrodt contends that Acthar provides value for very sick patients who have few alternatives. Nevertheless, its financial filings confirm that “clinical trials demonstrating the efficacy of Acthar are limited,” and that this could keep doctors from prescribing the drug.
The history of Acthar shows just how profitable this off-patent drug has been. In 2001, Questcor bought the medication for $100,000; nine years later, the F.D.A. approved Acthar for the treatment of infantile spasms.
Questcor soon began marketing the drug aggressively for other illnesses such as lupus, nephrotic syndrome and multiple sclerosis. And by 2013, Acthar was generating virtually all of Questcor’s almost $800 million in sales; Mallinckrodt paid $5.6 billion for the company the following year.
Before the sale, Questcor had disclosed that its marketing practices were under investigation by United States attorneys in the Southern District of New York and Eastern Pennsylvania. The investigations are continuing, Mallinckrodt’s regulatory filings show.
And Mallinckrodt has not entirely escaped the attention of the Senate committee. Over a year ago, Tim Scott, a Republican from South Carolina who is a committee member, raised questions about Acthar’s pricing. In a September 2015 letter to the acting administrator for the Center for Medicare and Medicaid Services, Mr. Scott asked why the government continued reimbursements on Acthar when so many other insurers had severely restricted coverage on it.
Through a spokeswoman, Mr. Scott declined to comment on his letter. But in it, he noted that Medicare pays for an overwhelming majority of Acthar prescriptions. “It is my fear,” he wrote, “that C.M.S. and reimbursements by the government for this drug will be the next headline story on the national news.”