Questcor Raises Acthar Gel Price from $1,600 to $23,000 Overnight - Eventually Reaching 97,000% Increase Through Bribery Scheme

Questcor Pharmaceuticals implemented an overnight price increase for H.P. Acthar Gel from $1,600 to $23,000 per vial on August 27, 2007, launching a decade-long price gouging scheme that would eventually raise the drug’s price by 97,000% from its 2001 level. Questcor had acquired Acthar—a decades-old drug used to treat infantile spasms and other rare conditions—for just $100,000 in 2001, first raising the price from $40 to $750 per vial. After the 2007 mega-increase, the company continued raising prices while implementing an aggressive marketing campaign that whistleblowers later alleged included bribing doctors with millions in “consulting fees” to prescribe the drug for off-label uses. Mallinckrodt acquired Questcor in 2014 for $5.6 billion and raised Acthar’s price to $39,000 per vial, prompting FTC antitrust actions, congressional investigations, and fraud lawsuits alleging a “complex, multipart scheme involving monopoly, bribery, racketeering, fraud, and other deceptive and unfair practices.”

The Overnight 1,338% Price Increase

On August 27, 2007, Questcor implemented a price increase from $1,600 to $23,000 per vial—a single-day increase of 1,338%. This dramatic move came after Questcor had already raised Acthar’s price from $40 per vial when acquired in 2001 to $750, then to $1,600 over the following years. The 2007 mega-increase represented a strategic decision to abandon any pretense of cost-plus pricing and instead extract maximum revenue from patients with rare conditions who had no treatment alternatives. For families with children suffering from infantile spasms—uncontrolled seizures affecting babies—the overnight price increase transformed Acthar from an expensive but manageable therapy into a financially devastating necessity. Annual treatment costs that had been in the tens of thousands of dollars suddenly reached hundreds of thousands.

Monopoly Protection Through Competitor Acquisition

The aggressive pricing strategy was only possible because Questcor enjoyed monopoly protection. According to whistleblower allegations, while benefiting from an existing monopoly for Acthar, Questcor illegally acquired the rights to develop Synacthen Depot, a competing drug, specifically to preserve its monopoly and prevent any competitors from entering the market. This strategic acquisition of potential competition exemplified pharmaceutical industry tactics to maintain pricing power—rather than compete on price or quality, companies could simply buy potential competitors and prevent their development. In 2017, Mallinckrodt reached a $100 million settlement with the FTC for antitrust law violations related to the Synacthen acquisition, admitting that the company had purchased the competing drug rights solely to prevent market entry.

The Bribery Scheme: $6.5 Million to Prescribers

Whistleblower lawsuits alleged that Mallinckrodt and Questcor paid 288 prescribers more than $6.5 million for “consulting, promotional speaking and other Acthar-related services” between 2013 and 2016. The allegations described “a culture designed to sell the drug at all costs, from lying to the FDA to offering bribes to doctors.” The alleged crimes dated back to 2007, when Questcor sought to increase sales by promoting the drug for “unapproved doses and indications” beyond the FDA-approved uses for infantile spasms and other rare conditions. Doctors who prescribed high volumes of Acthar received lucrative consulting arrangements, speaking fees, and other payments that whistleblowers characterized as kickbacks designed to drive prescriptions for off-label uses. The bribery scheme allowed Questcor and later Mallinckrodt to expand Acthar’s market beyond the narrow rare disease indications, generating higher revenues to justify the extreme price increases.

Mallinckrodt’s $5.6 Billion Acquisition and Further Price Increases

Mallinckrodt acquired Questcor in 2014 for $5.6 billion—a staggering price for a company whose primary asset was a decades-old drug that cost $100,000 to acquire in 2001. The acquisition price reflected Wall Street’s valuation of Questcor’s pricing power and monopoly protection rather than any scientific or therapeutic innovation. After the acquisition, Mallinckrodt continued raising Acthar’s price, reaching $39,000 per vial by 2016—representing an 85,000% to 97,000% increase from the 2001 price depending on calculation method. The acquisition landed Mallinckrodt in extensive legal problems, including the FTC antitrust settlement, SEC charges for misleading financial disclosures, and fraud lawsuits from major insurers. Humana filed a lawsuit accusing Mallinckrodt of operating a “complex, multipart scheme involving monopoly, bribery, racketeering, fraud, and other deceptive and unfair practices” that defrauded the insurer of $700 million.

Congressional Investigation and Patient Impact

Senate investigators examining the Acthar price increases highlighted the drug Syprine’s trajectory as emblematic of the broader gouging pattern—a 3,000% increase after Questcor’s acquisition. Congressional hearings featured testimony from families financially devastated by Acthar price increases, including parents of children with infantile spasms who faced impossible choices between financial ruin and their children’s health. The House Committee on Oversight and Reform’s investigation documented how Mallinckrodt maintained its pricing power through the monopoly, marketing practices that expanded use beyond labeled indications, and aggressive legal defenses against any challenge to its market position. Despite congressional outrage and extensive documentation of patient harm, no price controls or meaningful regulatory changes resulted from the investigations.

The Financial Logic of Pharmaceutical Price Gouging

The Acthar story illustrated the financial incentives driving pharmaceutical price gouging: Questcor acquired the drug for $100,000, implemented price increases totaling 97,000%, and sold the company for $5.6 billion—a return of 56,000 times the acquisition price over 13 years. This extraordinary profit was possible because patients with infantile spasms and other rare conditions had no therapeutic alternatives, insurance companies ultimately paid the inflated prices, and regulatory agencies had no authority to challenge drug pricing. The FTC could only address anticompetitive conduct like acquiring competing drugs, not the price increases themselves. The FDA had no authority over drug pricing. Congress could hold hearings but faced pharmaceutical industry lobbying opposing any price control legislation. This regulatory gap allowed companies to charge whatever prices the market would bear—and for patients with rare diseases, the market would bear virtually any price.

Significance

The Acthar price gouging scandal exposed the most extreme form of pharmaceutical pricing abuse: acquiring a decades-old generic-like drug for minimal cost, raising its price by five orders of magnitude, and protecting the monopoly by purchasing potential competitors. The overnight 1,338% price increase in 2007 demonstrated pharmaceutical industry willingness to implement shocking price increases when protected by monopoly positions. The whistleblower allegations of systematic bribery revealed how companies could expand markets for overpriced drugs by paying doctors to prescribe for off-label uses, converting rare disease drugs into broader revenue sources. Mallinckrodt’s $5.6 billion acquisition of Questcor validated the price gouging strategy at the highest levels of corporate finance, showing that Wall Street would reward extreme pricing with premium acquisition valuations. The FTC’s $100 million antitrust settlement—less than 2% of the acquisition price—illustrated the minimal consequences for anticompetitive conduct compared to monopoly profits. The Acthar case became a symbol of pharmaceutical industry exploitation of rare disease patients, exemplifying how monopoly protection combined with regulatory gaps in pricing authority created opportunities for nearly unlimited price extraction. The fact that similar patterns continued industry-wide after Acthar’s notoriety demonstrated that congressional hearings and public outrage were insufficient to change industry behavior without structural reforms granting regulatory agencies authority over drug pricing.