Last month, the city of Marietta filed a lawsuit against the drug company Mallinckrodt after the price of a medication was raised from $40 to more than $39,000.
Now, the United States Department of Justice has filed a complaint alleging Mallinckrodt used that price increase to defraud Medicaid out of hundreds of millions of dollars.
The company continued to knowingly underpay Medicaid rebates despite repeated government warnings, the complaint says.
Medicaid is the the government program that provides healthcare to low income people and people with disabilities.
“The government will always target this kind of exploitation of a program designed to provide health care to vulnerable members of our society,” said U.S. Attorney Andrew Lelling for the District of Massachusetts.
The allegations were originally alleged in a lawsuit filed in Massachusetts under the False Claims Act. The act permits the government to intervene in such cases, as it has by filing the complaint.
In a statement, Mallinckrodt called the government’s position “wrong both on the law and the facts.”
It said the lawsuit was unnecessary because a similar lawsuit on the same issue is currently pending in a Washington, D.C. federal court.
Mallinckrodt has found itself in hot water with the government before. It’s previously paid more than $100 million to settle claims with the DOJ and the Federal Trade Commission.
Reuben Guttman, an antitrust lawyer who has handled similar cases, previously told the AJC that pharmaceutical companies consider such litigation the cost of doing business when profits are in the billions.
“When the government settles, the companies are effectively paying a fee for a license to break the law,” he said. “It’s pennies on the dollar that are being paid.”
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