Settlement With Drug Maker Allows Texas University To Resume Pediatric Neurological Research

AUSTIN, TX — The Baylor College of Medicine will receive a $2 million settlement reached by the state against a pharmaceutical company that had raised the price of a drug used in research by 85,000 percent—from $40 a vial to $34,000.

The settlement yields much-needed funding related to innovative pediatric neurological research projects researchers at the school had undertaken, the state attorney general said. Texas joined four others states in resolving a lawsuit against Questor Pharmaceuticals Inc. alleging it had monopolized the market on Acthar, the only adrenecorticotropic hormone (ACTH)-based therapeutic drug sold in the U.S., Texas Attorney General Ken Paxton explained in a media advisory.

Acthar is used to treat several diseases, including infantile spasms, a condition marked by epileptic seizures that can result in severe injury or death. Paxton said Questcor blocked competition for Acthar by acquiring the U.S. rights for Synacthen Depot, the only other ACTH-based drug sold in the world. Questcor also increased the price of the drug by 85,000 percent, steadily raising the cost over a decade to more than $34,000 for a vial of the drug that had previously cost $40 per unit, Paxton said.

According to a 2014 report by the New York Times, Questcor Pharmaceuticals had been widely criticized for steadily raising the price of Acthar, a 60-year-old immune system drug that was its most valuable product. While critics categorized the price hikes as excessive, the aggressive pricing strategy paid off for the drug maker after agreeing to be acquired by Mallinckrodt Pharmaceuticals for some $5.6 billion in cash and stock in a deal worth more than $86 a share, representing a 27 percent premium to Questcor’s closing price when the deal was finalized.

Derived from the pituitary glands of slaughtered pigs, Acthar had long been relegated to obscurity before Questcor acquired the rights for $100,000 in 2001. Upon purchasing those rights, the company began to steadily increase the price, saying needed the high price to stay in business as Acthar was used primarily to treat a rare disease in babies. Since then, the company began marketing the drug for more common conditions—multiple sclerosis, the kidney disorder nephrotic syndrome and rheumatic diseases like lupus.

At the Baylor College of Medicine, research demonstrated Acthar was an effective treatment for infantile spasms in work conducted by a team lead by Richard Hrachovy at Baylor College of Medicine in the 1970s and 1980s, Paxton said.

“Baylor College of Medicine has long been a leader in researching treatments for children with neurological problems,” the AG said. “We are pleased that this lawsuit and settlement will allow Baylor to continue its critical research.”

In addition to paying disgorgement, Questcor must transfer Synacthen to a firm that will have the incentive to develop and market the drug in the U.S., according to Paxton. Texas was joined by the attorneys general of Alaska, Maryland, New York and Washington in entering into this settlement.

To view the settlement complaint click here.

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