Senator Claire McCaskill (D-MO) has sent a letter to Mallinckrodt Pharmaceuticals, asking the company for details about the pricing of its pain medication, Ofirmev.
Ofirmev can be used as a safer alternative to opioids, and Mallinckrodt acquired the drug in 2014 when it purchased Cadence Pharmaceuticals for $1.4 billion. Almost immediately after the sale, Mallinckrodt doubled the price of Ofirmev to 1,019.52 for a pack of 24 vials.
This is costing hospitals a fortune, so some of them are using cheaper more dangerous painkillers – highly addictive opioids. So, Senator McCaskill, who is also investigating a number of opioid manufacturers, is looking into the impact Ofirmev’s price increase has had on “hospital decision making.” Mallinckrodt says that it has and will cooperate with the Senator’s investigation.
- Markets Insider
Mallinckrodt has gained notoriety on Wall Street over this year, but not for Ofirmev. Instead, it is because of its blockbuster drug, Acthar. That’s another old drug that has seen its price skyrocket as it was sold from one drug company to the next. Earlier this month at a conference in Las Vegas, famed short seller Jim Chanos presented his case that Mallinckrodt’s revenue relies too heavily on Acthar sales, despite the fact that it’s a drug with questionable efficacy for many of the ailments it is prescribed for.
He’s not the first on Wall Street to make that point either. Andrew Left of Citron Research has been challenging the company to test Acthar, which is primarily used to treat infantile spasms.
What makes Acthar so strange, is that most of its revenue comes from Medicare, which is a program for the elderly – a point that hasn’t escaped the short selling community. We should also note that former Turing CEO Martin Shkreli, a man who became public enemy number one after jacking up the price of a life-saving AIDs treatment, also took issue with Mallinckrodt. In 2014, he complained to the feds – specifically the Federal Trade Commission – about a drug company’s anticompetitive behavior. It later settled that matter for $100 million.
Currently, the Department of Justice, the SEC and other US attorneys are all investigating the company.
So you can see why the last thing the company needs is Senator McCaskill asking for documents.
You can read her full letter below.