Mallinckrodt’s Questcor Said Facing States’ Antitrust Probe

Updated on

Mallinckrodt Plc’s Questcor Pharmaceuticals Inc. faces a multistate antitrust investigation, according to a Texas attorney general’s office letter revealing that state’s participation in the probe.

The inquiry may expand on existing investigations by federal prosecutors and regulators. Texas said that, as of last month, it “anticipated being involved” in the multistate case, according to the June 12 letter, a response to a freedom of information request in May.

Katherine Wise, a spokeswoman for Texas Attorney General Ken Paxton, authenticated the letter while declining to comment further on the probe.

Questcor, bought last year by Mallinckrodt for $5.6 billion, previously disclosed that U.S. attorneys in Pennsylvania and New York, along with the U.S. Securities and Exchange Commission, were investigating its promotional practices. That probe has been going on since at least 2012.

In late November, the Medicaid fraud unit of the Texas attorney general’s office asked for information for an investigation into potentially inflated prices of drugs, the company said in a regulatory filing in February. Also last year, Questcor received a subpoena from the Federal Trade Commission about its acquisition of Synacthen Depot from Novartis AG, as part of an investigation as to whether it violated antitrust laws, according to that filing.

Nancy Stauder, a Mallinckrodt spokeswoman, declined to comment on the letter.

Shares Drop

Questcor shares plummeted last year after a research report questioned the quality of its autoimmune drug, H.P. Acthar Gel. Acthar was Questcor’s best-selling drug, contributing 95 percent of the company’s $798.9 million in net sales for 2013, according to a regulatory filing. Acthar was acquired by Questcor in 2001. It is approved for 19 uses and costs about $28,000 a vial, the company said.

Mallinckrodt fell 1.9 percent to $117.68 in trading in New York Wednesday.

Mallinckrodt used the Questcor acquisition to move the target’s headquarters to Ireland for a lower tax rate. In April 2014, Mallinckrodt Chief Financial Officer Matthew Harbaugh said the tax rate on Questcor’s business would drop by about 10 percent because of the move. Mallinckrodt has been domiciled in Ireland since it spun out of Covidien.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE