Former mayor of Rockford Illinois, Larry Morrissey, sat down with 60 Minutes’ Lesley Stahl for an interview that is so outrageous, one can barely believe it. Morrissey told her about a single prescription drug named Acthar, and how it nearly bankrupted his city. Acthar Gel is used to treat infantile spasms that occur in children under 2 years of age. In the city of Rockford, there were 2 babies that needed the drug. Acthar used to be 40 dollars a vial in 2011. Today, it’s 40,000 dollars — an increase of nearly 100,000 percent.
The city of Rockford provides healthcare for over 3,000 people, which include 1,000 employees and their families. In the end, Rockford paid about 500,000 dollars, just for helping 2 babies with what would have cost virtually nothing 6 years ago.
Why did this happen? To put it simply, unchecked capitalistic greed was the cause. In 2014, Questcor Pharmaceuticals was acquired by Mallinckrodt Pharmaceuticals. Questcor held the production rights to Acthar at the time. When Questcor was producing it, the medicine was affordable. Mallinckrodt got their hands on it, promptly jacked up the price, and their explanations as to why simply don’t pass the smell test.
The company got wind of the 60 Minutes exposé coming out, and 2 days before it aired, they posted a propaganda video on their corporate website called “Setting the record straight.” In it, their CEO defended the price hike by saying that previous owners had “under-invested in Acthar.” A vague statement at best, considering the drug was fully developed, past FDA testing, and in use in the public at large. Mallinckrodt also claimed that they as a company had invested 400 million dollars in Acthar for more clinical studies. Again, while technically this may be possible, it begs the question — why? Why, when you have a drug already successful and in use in the general public, do you go back and re-run clinical tests to the tune of nearly half a billion dollars on something you can turn a profit by selling at 40 dollars a unit? Who is getting this money to re-test an already proven drug? What “one hand washing the other” is going on? The company has so far failed to provide in-depth details on their “trials.”
The short answer seems to do with Acthar’s patient market. Current estimates say there are nearly 11 thousand Acthar patients at any given time in America. That works out to about 440 thousand dollars if every one of them needs a dose. Objectively speaking, this is not a huge windfall of profit for a pharmaceutical company. Now, take that to 40,000 dollars a dose. Suddenly it becomes 440 million dollars. Do they think the public is stupid enough to not notice this?
Rockford filed suit in 2017 against Mallinckrodt over the price gouging of their drug. In a class action complaint they claimed: “By establishing and maintaining a monopoly, exercising monopoly power, and engaging in other unlawful acts and practices, the Defendants [Mallinckrodt] were able to extract exorbitant revenue from consumers that had nowhere else to turn for treatment.” Rockford is asking a federal judge to force the company to set a fair price for their product, as well as 5 million dollars in compensation for price gouging, damages, and punitive damages.
Mallinckrodt is going to have a tough time arguing against this, due to the fact that they had literally nothing to do with the original development of the drug that they got simply by buying a competitor. Their claim of “under-investment” is vague, and the necessity of half a billion dollars in clinical trials for a drug already widely in use is another thin thread to hang a defense on. Hopefully the judge will do the right thing in this case and put children’s lives over shareholder value.