FILE - Mallinckrodt logo on a cell phone

In this photo illustration the Mallinckrodt Pharmaceuticals logo is displayed on a smartphone.

(The Center Square) – Oklahoma will receive over $3.8 million from a settlement with a pharmaceutical company accused of fraud for underpaying Medicaid drug rebates, the attorney general’s office said Tuesday.

Mallinckrodt ARD, LLC, formerly Questcor Pharmaceuticals, Inc., will pay over $233 million over seven years as part of the settlement with 50 states, plus Washington D.C., Puerto Rico, and the federal government.

The settlement stems from allegations that the company knowingly underpaid Medicaid rebates for its drug H.P. Acthar Gel (Acthar) from 2013 to 2020.

Under the Medicaid Drug Rebate Program, the company was supposed to pay the Medicaid program the difference between the drug’s current price and what the price would be if it had risen at the rate of inflation since 1990, which is when the drug first came to market, whichever was later.

The government said Mallinckrodt began paying rebates for Acthar in 2013 as if it was a new drug recently approved by the Food and Drug Administration (FDA), even though the drug first hit the market as far back as 1952. The government said Acthar’s price had already risen over $28,000 per vial by 2013, which would have made the Medicaid rebate payments significantly more than what the company paid between 2013 and 2020.

Under the settlement agreement, Mallinckrodt admitted the drug was not new as of 2013.

Oklahoma is set to receive over $3.8 million in restitution, according to the attorney general’s office.

The settlement came about after a whistleblower filed a lawsuit in Massachusetts with the federal government, the attorney general’s office said.

“My office will always investigate those who defraud our state’s healthcare and Medicaid system,” said Attorney General John O’Connor. “I applaud our Medicaid Fraud Control Unit for always pursuing those who attempt to jeopardize the health and well-being of Oklahomans.”

Mallinckrodt is a U.S. subsidiary of an Irish pharmaceutical company that sells and markets pharmaceutical products throughout the nation. Its U.S. headquarters is in New Jersey.

Final approval for the settlement was received by the U.S. Bankruptcy Court for the District of Delaware in March.

The Oklahoma Attorney General’s Office Medicaid Fraud Control Unit receives 75% of its funding for federal fiscal year 2022 from a grant totaling over $3.4 million from the U.S. Department of Health and Human Services, the attorney general’s office said. The other 25% of its budget is funded by the State of Oklahoma, totaling $856,235.