Mallinckrodt tanks as it reveals lawsuit against HHS and CMS over Acthar Gel access

US drugmaker Mallinckrodt (NYSE: MNK) saw its shares tumble 26.7% to $9.55 in pre-market trading today as is revealed that, through a subsidiary, it has filed suit in federal district court against the Health and Human Services (HHS) Department and Centers of Medicare and Medicaid Services (CMS).

The action seeks to hold unlawful and set aside the agency's recent “unjustified” decision to require that Mallinckrodt change the base date average manufacturer price (AMP) used to calculate Medicaid drug rebates for ActharGel (repository corticotropin injection). The CMS decision attempts to reverse without explanation the agency's 2012 express, written approval (on two occasions) of the base date AMP used since 2013, prior to Mallinckrodt's acquisition of Acthar Gel. The complaint can be viewed here, and CMS' written authorization letters may be viewed here.

"We are disappointed with the action taken by CMS. With our repeated attempts to engage both HHS and CMS in productive discussions ultimately rebuffed, we find ourselves with no other choice than to vigorously defend our position, through the courts, that Medicaid patients should have access to this important therapy," said Mark Casey, general counsel at Mallinckrodt.