One of the Most Controversial Drug Companies in America Is Out of the Industry's Lobby

Published: Apr 07, 2017

One of the Most Controversial Drug Companies in America Is Out of the Industry's Lobby April 6, 2017
By Alex Keown, Breaking News Staff

NEW YORK – Scrutinized and controversial drugmaker Mallinckrodt , a company at the center of a drug pricing scandal, has resigned its membership from the Pharmaceutical Research and Manufacturers Association (PhRMA) ahead of changes to membership bylaws, according to reports.

The drug industry lobbying organization is setting up new rules on who can be members based on monies spent on research and development of in-house drugs. The new changes, set to be voted on in May, “would require that members are committed to conducting significant medical and scientific research,” according to a Wall Street Journal report posted on Marketwatch. It was unclear if PhRMA has set a monetary threshold for the funding used in internal R&D. As the clock ticks closer to the adoption of the new rules, Mallinckrodt opted to leave.

“Mallinckrodt routinely evaluates its engagement in trade associations and policy organizations and has concluded that the significant financial and time commitment required as a full PhRMA member outweighs its direct policy value to us at this time,” the company said in a statement provided to The Wall Street Journal, as reported on Marketwatch.

Last year Mallinckrodt’s Chief Executive Officer Mark Trudeau said being a member of PhRMA was a sign of integrity, Business Insider reported.

Mallinckrodt has been heavily criticized for its pricing practices surrounding the drug, Acthar, used in the treatment of patients with Systemic Lupus Erythematosus who are receiving corticosteroid therapy. Since acquiring the drug in a 2014 deal, the price of the drug has skyrocketed to $35,000. Questcor, the company that Mallinckrodt acquired, had been steadily increasing the drug on its own from a price of approximately $1,650 in 2007, according to Business Insider. Earlier this year, Mallinckrodt was forced to shell out $100 million to the Federal Trade Commission over the acquisition of Questcor. Mallinckrodt made the payment without any admission of wrongdoing, the company said in a January statement. The company noted that it disagreed with many of the claims made by the FTC, but was still willing to pay the $100 million.

Mallinckrodt has a history of snapping up drugs it believes are under-utilized by companies that have rights to them. In an interview with Business Insider, Mallinckrodt noted its business model is largely built around acquiring drugs in “areas of high unmet medical need, typically in narrow patient populations,” and then for “Mallinckrodt to invest significantly in those products." That significant investment usually comes with price increases.

And those kinds of deals that involve dramatic price hikes, such as Turing Pharmaceuticals’ 5,000 percent price hike on daraprim, are things PhRMA has sought to distance itself from, particularly as consumers in the United States are increasingly critical of high drug prices. As Business Insider notes, PhRMA has criticized companies for those practices. The organization said Valeant Pharmaceuticals ’ practice of acquiring drugs and increasing prices is a strategy “more reflective of a hedge fund than an innovative biopharmaceutical company."

Last year, PhRMA released its "We’re Fighting Back” ad that highlights the stories of patients and researchers who have made it their mission to develop treatments for these diseases. The ad stresses the industry’s goal of fighting back against disease that have struck the young and old, highlighting more than 7,000 drugs being developed to combat the illnesses. In 2014, the organization launched the ‘From Hope to Cures’ campaign to highlight the value biopharmaceutical innovation provides to patients, society and the economy.

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