Mallinckrodt: The FTC's Monopolization Case Over How Questcor Bought and Buried the Only Drug That Could Compete With Acthar

The Federal Trade Commission's enforcement action against Mallinckrodt plc — which had acquired Questcor Pharmaceuticals, the maker of H.P. Acthar Gel — alleged that Questcor had engaged in unlawful monopolization by acquiring the United States and Canadian rights to Synacthen Depot, a synthetic form of the same hormone found in Acthar, specifically to prevent Synacthen from being developed as a competitive alternative to Acthar in the United States. By acquiring and then sitting on Synacthen, the company eliminated the only meaningful competitive threat to Acthar's monopoly position and allowed its pricing — which had increased from $40 per vial to more than $34,000 per vial under Questcor's ownership — to continue unchallenged.DOCUMENTED

The Acthar Gel case became one of the most studied examples of anticompetitive pharmaceutical conduct in FTC enforcement history — not because of a patent dispute or generic drug exclusion tactic, but because of a deliberate acquisition strategy whose explicit purpose was to prevent a competitive product from ever reaching U.S. patients.

What Acthar Gel Is and Who Uses It

H.P. Acthar Gel is a biologic drug containing a purified form of adrenocorticotropic hormone, a natural hormone that stimulates the adrenal glands to produce cortisol. It has a variety of approved indications including acute exacerbations of multiple sclerosis, infantile spasms — a severe pediatric seizure disorder — and certain rheumatological and nephrological conditions. For infantile spasms in particular, Acthar has been considered an important treatment option, and the condition's severity and the young age of affected patients makes treatment cost a particularly acute issue for families and insurance programs that must cover the drug's price.REVIEWED

Synacthen Depot — tetracosactide — is a synthetic form of ACTH that has been used in Europe and other markets for decades for similar indications. If approved by the FDA and commercialized in the United States, Synacthen could have competed directly with Acthar for many of the same indications, introducing price competition to a market where Questcor's monopoly had allowed it to raise prices by more than 85,000 percent over approximately a decade. The FTC's case turned on the allegation that Questcor's acquisition of the U.S. Synacthen rights from Novartis was not a legitimate business expansion but a strategic acquisition specifically designed to prevent this competition from materializing.DOCUMENTED

The Acquisition-as-Monopoly-Preservation Theory

The FTC's legal theory in the Mallinckrodt case was that an incumbent monopolist who acquires a nascent competitive threat — a product that could enter its market and compete if developed — for the purpose of preventing that competition engages in unlawful monopolization under Section 2 of the Sherman Act. This theory extends the antitrust laws' traditional focus on market share and exclusionary conduct to the specific scenario of an acquisition designed to eliminate a competitive threat before it materializes. The FTC argued that the relevant evidence was not whether Synacthen would certainly have competed with Acthar if developed, but whether Questcor's acquisition of the U.S. rights, combined with its decision not to pursue development, had the anticompetitive effect of preventing a product that could have competed from ever having the opportunity to do so.REVIEWED

Internal Questcor communications, reviewed as part of the FTC's investigation, documented that the company understood the competitive significance of Synacthen — that a synthetic ACTH product approved in the U.S. would directly challenge Acthar's market position. This documentary evidence of the acquisition's competitive purpose was central to the FTC's case, because it moved the analysis from speculation about Synacthen's development potential to concrete evidence of the acquirer's intent in removing the competitive option from the market. A company that acquires a competitive product because it understands that product could displace its own is engaged in a qualitatively different transaction than a company that acquires a product it intends to develop or that acquires it for legitimate strategic reasons unrelated to competition elimination.

Buying the one drug that could compete with your drug, and then not developing it, is not a business strategy. It is the use of money to remove from the market the only price constraint that stood between patients and a $34,000-per-vial drug with no alternative.

The Pricing Impact on Patients and Payers

The practical consequence of Acthar's uncontested monopoly was a pricing trajectory that imposed extraordinary costs on patients, government health programs, and private insurers. Medicare and Medicaid together spent billions of dollars on Acthar during the period of unchallenged monopoly pricing, with costs per course of treatment for infantile spasms reaching into the hundreds of thousands of dollars. Patients and families navigating insurance prior authorization for Acthar — an increasingly burdensome process as payers attempted to manage costs without the ability to substitute a lower-priced competitive product — faced delays in accessing treatment for serious conditions where time is clinically significant. The FTC's anticompetitive conduct finding acknowledged both the direct financial harm to payers and the indirect patient harm from the pricing environment the monopoly preservation enabled.DOCUMENTED

The $100 million settlement payment to the FTC represented a fraction of the excess profits generated through the monopoly pricing during the period the anticompetitive acquisition enabled — a gap that critics of the remedy characterized as insufficient to deter similar conduct by other pharmaceutical companies with the financial resources to purchase and suppress competitive threats. The FTC's settlement also required Mallinckrodt to make Synacthen available to competitors for development in the United States — a forward-looking remedy designed to introduce the competition that the anticompetitive acquisition had delayed, potentially years after the window of maximum competitive impact had closed.

Implications for Pharmaceutical Antitrust Enforcement

The Mallinckrodt case established an important precedent for pharmaceutical antitrust enforcement: the acquisition of a potential competitor's product can itself be an antitrust violation when the acquisition is motivated by the goal of preventing competition rather than developing the acquired product. This theory has implications for how pharmaceutical companies structure competitive acquisitions and for how the FTC and DOJ evaluate pharmaceutical mergers and asset purchases that involve competitive overlaps. Pharmaceutical companies that acquire rights to products that could compete with their existing products — and then do not pursue development of those products — may face antitrust scrutiny of whether the acquisition was designed to maintain monopoly pricing rather than to develop additional treatment options for patients.

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