Mallinckrodt was ordered to pay $650 million to CMS for underpaying Medicaid rebates on its drug Acthar, STAT reported.
Drugmakers are required to pay state Medicaid programs quarterly rebates in exchange for Medicaid coverage. Rebates include an inflammatory component and are designed to protect Medicaid from drug price increases that outpace the rate of inflation.
The U.S. Justice Department sued Mallinckrodt earlier this month, claiming the drugmaker calculated its rebate payments based on the drug's price in 2013, but it had raised the price by 20 percent since then. Acthar now costs about $39,000 per vial, according to STAT.
Mallinckrodt argued that CMS "unlawfully" changed its rebate policies without giving the drugmaker proper notice.
U.S. District Judge Thomas Hogan ruled in favor of CMS March 16 and ordered Mallinckrodt to pay $650 million in rebates, according to STAT.
Mallinckrodt said it expects to lose $90 million to $100 million in Acthar sales on top of what it has to pay CMS. The drugmaker said it plans to appeal and has filed an emergency motion for preliminary injunction.
After the ruling was announced, Mallinckrodt's shares fell by 24 percent, STAT reported.
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