United States: Mallinckrodt Pays $100 Million In One Of FTC's Last Antitrust Actions Of The Obama Administration

On January 18, 2017, the U.S. Federal Trade Commission (FTC) and the Attorneys General of Alaska, Maryland, New York, Texas, and Washington filed a complaint in federal district court for the District of Columbia seeking a permanent injunction and other equitable relief against Mallinckrodt ARD Inc. and Mallinckrodt plc (Mallinckrodt) for unfair methods of competition in violation of Section 5 of the FTC Act and monopolization in violation of Section 2 of the Sherman Act, as well as various state antitrust laws.1Specifically, the FTC alleged that Questcor Pharmaceuticals, Inc. (Questcor), now owned by Mallinckrodt,2 harmed competition by acquiring the U.S. rights to Synacthen Depot (Synacthen), a potential competitor to Questcor's H.P. Acthar Gel product (Acthar).3 Mallinckrodt agreed to settle these charges in exchange for relinquishing its rights to Synacthen for certain medical conditions and for a payment of $100 million in equitable relief plus attorneys' fees.4

The case is noteworthy because, although this settlement was one of the last antitrust actions of the Obama Administration, the reaction of the FTC's lone Republican and now-Acting Chairman provides some guidance as to the FTC's likely approach to equitable monetary relief (i.e., disgorgement and restitution) under the Trump Administration. In this matter, the FTC's theory of harm—the elimination of potential competition in the pharmaceutical industry—is not necessarily groundbreaking, but the type and size of the remedy seem a clear attempt by the FTC to make a statement to dissuade such conduct in the future. This monetary settlement is one of the largest ever received by the FTC in an antitrust case.5 It also marks just the third time since withdrawing its Policy Statement on Monetary Equitable Remedies in Competition Cases (Policy Statement) in 20126 that the FTC has sought and obtained such relief. Because the Complaint was supported by all members of the FTC, parties should be mindful of acquisitions of potential competitors in concentrated industries. However, the Acting Chairman's concurring statement7 suggests that, as a result of the transfer of control of the FTC from the Democrats to Republicans, such monetary remedies may not be common in the next few years.

FTC's Complaint

The FTC's Complaint stated that Acthar is the only therapeutic adrenocorticotropic hormone (ACTH) product sold in the U.S. ACTH is the primary drug used to treat infantile spasms (IS), as well nephrotic syndrome (NS), a kidney disorder caused by idiopathic membranous nephropathy (IMN), among other disorders.8 Acthar was acquired by Questcor from Aventis Pharmaceuticals, Inc. for $100,000 in 2001.9 A synthetic ACTH alternative to Acthar, Synacthen, is used in Europe, Canada, and other parts of the world, but it has not yet received approval from the U.S. Food and Drug Administration for sale in the U.S.10

The FTC alleged that Acthar provided Questcor monopoly power as demonstrated by both direct and indirect evidence.11 As direct evidence, the FTC cites Questcor's ability to increase the price of Acthar from $40 to over $34,000 today (equivalent to an 85,000 percent price increase from 2001 to present).12

The FTC also noted that Questcor has been able to maintain that high price for Acthar even as payors restricted it from their formularies.13 Further, the Complaint stated that other bidders for Synacthen projected that that drug would be offered at a lower price than Acthar's current price, suggesting Acthar is priced at a supracompetitive level.14

As indirect evidence, the FTC alleged that Acthar has a 100 percent share of the market for ACTH drugs in the U.S.15 ACTH drugs are considered without substitute for the vast majority of IS patients and as the last line of defense for the treatment of IMN.16 When pricing Acthar, Questcor does not reference any other drugs used to treat these indications.17

In June 2013, Questcor acquired the exclusive rights to develop, market, and sell Synacthen in the U.S and 35 other countries for as much as $300 million (with $135 million guaranteed).18 The FTC contends the purpose of this acquisition was to prevent direct competition to Acthar from Synacthen, because Questcor had conducted only limited due diligence and had only "inchoate plans for Synacthen[.]"19 To achieve this, Questcor offered a significantly higher guaranteed bid than any other potential licensee.20

The Complaint stated that Questcor repeatedly concluded that Synacthen posed a competitive threat to its Acthar monopoly, and that other bidders had business plans and regulatory approval strategies to develop Synacthen to compete with Questcor.21 By acquiring Synacthen, the FTC claimed that Questcor "thwarted a nascent challenge to its Acthar monopoly and thereby harmed competition."22 Questcor claimed that it acquired Synacthen to develop the drug for new, non-Acthar indications, but the FTC suggested this was pretextual and that Questcor could have pursued these new indications using Acthar given the similarities between the drugs.23

The Settlement

To settle these charges, Mallinckrodt agreed to a stipulated order in which it is required to grant a sublicense to Marathon Pharmaceuticals, LLC (Marathon) with all rights necessary to allow Marathon to develop Synacthen for the treatment of IS and NS.24 However, Mallinckrodt will retain the rights to Synacthen to develop the drug for the treatment of another condition, Duchenne Muscular Dystrophy.25 The sublicense will be offered at no minimum price and on terms and conditions approved by the FTC within 120 days after entry of the order by the court.26 Mallinckrodt also agreed to other terms to ensure the successful transfer of the Synacthen rights, as well as to provide prior notification to the FTC if it attempts to develop or acquire rights to a synthetic ACTH product in the future.27

In addition, Mallinckrodt is required to pay $100 million in equitable relief, as well as $2 million in attorneys' fees to the state attorney general plaintiffs.28 Since the FTC withdrew its Policy Statement in 2012, it has settled only two other antitrust matters with large sums of equitable monetary relief.29 That statement previously required that to seek disgorgement, the FTC must: (1) find a clear violation of the antitrust laws, (2) have a reasonable basis for calculating a monetary equitable remedy, and (3) find that other remedies are likely to fail to accomplish fully the purposes of the antitrust laws or when such a monetary remedy otherwise may provide important additional benefits to non-monetary relief.30

Concurring Statement of Acting Chairman Maureen K. Ohlhausen

The Commission voted 3-0 in favor of issuing the Complaint and accepting the Settlement, but Acting Chairman Maureen K. Ohlhausen, the only Republican currently on the Commission, authored a concurring statement.31 In that statement, Acting Chairman Ohlhausen noted that she agreed Questcor's conduct was unlawful, and the licensing remedy was necessary to restore competition, but she expressed concerns about the equitable monetary relief obtained here.32

Acting Chairman Ohlhausen's concerns stemmed from the fact this action did not meet the standard for disgorgement set forth in the FTC's now-withdrawn Policy Statement, the withdrawal of which she opposed in 2012.33 Acting Chairman Ohlhausen did not provide details as to why this action failed to meet that standard, but did say she would have preferred to settle this case in the FTC's administrative process instead (where monetary equitable relief would not have been available).34


The FTC's action should be a reminder that the agency is particularly focused on competition issues in the pharmaceutical industry. Given the FTC's focus in this action on Questcor's price increases, pharmaceutical companies must be careful when pricing their products. If a product is faced with few competitive alternatives, parties should be particularly mindful of acquisitions that could be construed to eliminate either current or future competition. Further, the bipartisan support for the FTC's Complaint suggests that parties will need to be cautious of this type of behavior in the future.

However, the Acting Chairman's opposition to the equitable monetary relief suggests that the FTC is unlikely to seek such remedies in competition cases under the Trump administration. Her consistent opposition to monetary relief—both in her initial opposition to the 2012 withdrawal of the FTC's Policy Statement and her continued opposition in this matter—suggests these disgorgement actions may be less common under the new Administration.


1. Complaint, FTC, et al. v. Mallinckrodt ARD Inc. and Mallinckrodt plc, No. 1:17-cv-00120 (D.D.C. Jan. 18, 2017) (hereinafter, "Complaint").

2. Questcor is now known as Mallinckrodt ARD Inc.

3. Complaint at 3.

4. Proposed Stipulated Order for Permanent Injunction and Equitable Monetary Relief, FTC, et al. v. Mallinckrodt ARD Inc. and Mallinckrodt plc, No. 1:17-cv-00120 (D.D.C. Jan. 18, 2017) (hereinafter, the "Settlement").

5. It ties the FTC's 2000 settlement with Mylan Laboratories, Inc. as the FTC's second largest monetary relief received in an antitrust case. See Order and Stipulated Permanent Injunction, FTC v. Mylan Laboratories, Inc., et al., No. 1:98-cv-03114 (TFH) (D.D.C. Nov. 29, 2000). The largest antitrust case settlement is the FTC's $1.2 billion settlement with Cephalon, Inc. and Teva Pharmaceutical Industries, Ltd. in 2015. Stipulated Order for Permanent Injunction and Equitable Monetary Relief, FTC v. Cephalon, Inc., No. 2:08-cv-2141 (E.D. Pa. Jun. 17, 2015).

6. See Statement of the Commission, Withdrawal of the Commission's Policy Statement on Monetary Equitable Remedies in Competition Cases (Jul. 31, 2012).

7. Concurring Statement of Commissioner Maureen K. Ohlhausen, In the Matter of Mallinckrodt ARD Inc., File No. 131-0172 (Jan. 18, 2017) ("Ohlhausen Statement"). President Donald J. Trump designated Maureen K. Ohlhausen as Acting Chairman of the FTC on January 25, 2017.

8. Complaint at 2.

9. Id.

10. Id. at 2-3.

11. Id. at 5.

12. Id. at 5-6.

13. Id. at 6.

14. Id.

15. Id. at 8.

16. Id. at 6-7.

17. Id. at 6.

18. Id. at 11.

19. Id.

20. Id. at 8.

21. Id. at 9-10.

22. Id. at 12.

23. Id.

24. Joint Motion for Entry of Stipulated Order for Permanent Injunction and Equitable Monetary Relief, No. 1:17-cv-00120, at 3 (D.D.C. Jan. 18, 2017) (hereinafter, "Joint Motion").

25. Id.

26. Settlement at 10-11.

27. Id. at 11-16.

28. Id. at 16-18.

29. The first was a $26.8 million settlement with Cardinal Health, Inc. in 2015, which settled charges that Cardinal Health, Inc. monopolized 25 local markets for the sale and distribution of low-energy radiopharmaceuticals. Final Order and Stipulated Permanent Injunction, FTC v. Cardinal Health Inc., No. 15-cv-3031 (ER) (Apr. 23, 2015). The second was the $1.2 billion Cephalon settlement, also in 2015, relating to allegations Cephalon, Inc. monopolized the market for the sale of its sleep-disorder drug, Provigil. See Statement of the Federal Trade Commission, FTC v. Cephalon, Inc. (May 28, 2015).

30. See Fed. Trade Comm'n, Policy Statement on Monetary Equitable Remedies in Competition Cases, 68 Fed. Reg. 45820 (Aug. 4, 2003).

31. See Ohlhausen Statement.

32. Id. at 1.

33. Id.; see Statement of Commissioner Maureen K. Ohlhausen Dissenting from the Commission's Decision to Withdraw its Policy Statement on Monetary Equitable Remedies in Competition Cases (Jul. 31, 2012).

34. Ohlhausen Statement at 2.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Morrison & Foerster LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Morrison & Foerster LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions