Ireland-based drug company Mallinckrodt sued HHS and CMS May 21 over a regulatory move that would change Medicaid rebates for its Acthar Gel, a best-selling injection for multiple sclerosis, lupus and other ailments, according to The Wall Street Journal.
The regulatory move, the drugmaker argues, could cost it $600 million and negatively affect its research and development, according to the Journal.
The lawsuit centers on the average manufacturer price used to set rebates that drugmakers are required to pay the government. Mallinckrodt claims CMS "unlawfully demanded that the drugmaker revert to an older and higher average manufacturer price.
The drugmaker claims CMS told Questor Pharmaceuticals, which owned the medicine before Mallinckrodt acquired it, that the Acthar Gel met the threshold as a single-source drug for a particular average manufacturer price. But when Mallinckrodt acquired the drug in 2016, the agency changed its mind and told the drugmaker it didn't meet that threshold, according to STAT news.
CMS reportedly told the drugmaker that if it didn't switch to the older, higher manufacturer price by May 24, Acthar Gel would be suspended from the Medicaid rebate program.
When the shift takes place, Mallenkrodt claims it will have to pay hundreds of millions in retroactive rebates that would "substantially eliminate" the 10 percent of Acthar Gel sales that come from Medicaid, according to Bloomberg.
Mallinckrodt shares plummeted 24 percent on news of the lawsuit, which seeks to reverse the decision on the average manufacturer price of Acthar Gel.
Read the full report here.