City files landmark lawsuit against drug company
By Jim Hagerty
DOWNTOWN – The City of Rockford Thursday filed a federal lawsuit accusing Mallinckrodt Pharmaceuticals of price gouging for a drug that treats seizure symptoms in babies.
The city is seeking around $5 million in damages associated with the drug, called Achthar, that was administered to two children covered by the city’s health plan.
“The City of Rockford has paid an extraordinary price,” Mayor Larry Morrissey said. “We believe our health fund, as well as those in places like Winnebago County, Rockford Public Schools, similarly situated governments – even private sector employers not only in our community but throughout the country will benefit from this class-action lawsuit.”
Morrissey said Achthar cost $40 per vial when he first took office. It is now $35,000, and the only FDA-approved medication that treats epileptic-like seizures and spasms in children younger than 2.
The cost to treat the two Rockford children totaled $489,058. The city is also seeking punitive damages and interest.
Like the county and school district, Rockford is a self-insured public entity, meaning it sets aside funds for health care costs and other losses as opposed to paying hefty insurance premiums.
There are 3,300 people covered under the city’s health plan.
“To our knowledge (the lawsuit) is the first of its kind that has been filed nationally,” the mayor said. “We expect this to get a lot of attention because there is a lot of claimants that will be similarly situated across the nation.”
Mayor-elect Tom McNamara, who takes office May 1, said his administration will see the lawsuit through.
“I am firmly in support of Mayor Morrissey and the entire City Council, as we stand united on this egregious attack on children across America,” McNamara said. “This is an attack on the city of Rockford taxpayers, children and our employees. This fight will certainly continue.”
Rockford is being assisted by the law firm of Meyers & Flowers of St. Charles, and a firm from Philadelphia.
“When you have a drug company overcharging and gouging for the price of a specific drug without any changes in technology, you see the whole pharmaceutical industry taking advantage of folks,” Fourth Ward Alderman Kevin Frost said.
This is not the first time Mallinckrodt has had to defend similar allegations. The United Kingdom-based company was ordered to pay $100 million in January to settle a Federal Trade Commission complaint that in 2014 it violated antitrust laws by purchasing rights to a drug similar to Achthar in order to corner the market. Four states shared $10 million in the settlement; Mallinckrodt paid $2 million in legal fees and court costs.