Questcor Pharmaceuticals Inc. has agreed to pay $38 million to end a consolidated securities class action. It was alleged in the suit that the company lies about the efficacy of its biggest moneymaker, multiple sclerosis drug Acthar. U.S. District Judge Dolly Gee had entered an order granting class certification in November.
The lead plaintiffs, Plumbers and Pipefitters National Pension Fund and West Virginia Investment Management Board, accused Questcor in the suit of lying about the efficacy of Acthar, which accounts for more than 99 percent of its annual revenue, in order to inflate the price of its stock shortly before Aetna Inc. reduced reimbursements for the drug, causing a stock drop.
It’s alleged in the suit that Questcor mischaracterized the nature and results of scientific tests of Acthar to create the impression that the drug was a successful and medically necessary method of treating multiple sclerosis and nephrotic syndrome. The litigation includes six separate class action suits that were consolidated before Judge Gee. While Acthar is prescribed for 19 medical conditions, the suit focuses on Questcor’s marketing of the drug for infantile spasms, multiple sclerosis and nephrotic syndrome.
The class includes all investors who were damaged by buying stock in the company between April 2011 and September 2012. A subclass includes those who were damaged by buying stock at the same time as CEO Don Bailey was selling it. After Aetna issued a bulletin revising its policies concerning coverage for Acthar on Sept. 14, 2012, Questcor’s stock lost almost half its value. Less than two weeks later, the company announced the U.S. government was investigating its sales and marketing tactics. The law firm of Robbins Geller Rudman & Dowd LLP was appointed class counsel for both the class and the subclass.