Mallinckrodt Pharmaceuticals is no longer a member of the powerful pharmaceutical lobby, the Pharmaceutical Research and Manufacturers of America, or PhRMA, the group said.
The Wall Street Journal earlier reported that Mallinckrodt resigned ahead of potential changes in PhRMA’s bylaws that would require members to spend a certain amount of money on research and development. PhRMA’s been making a push to improve the perception of drug companies — highlighting innovation in the industry — after two years of bad press about skyrocketing prices and gouging by companies that acquire old drugs and don’t spend much on research.
PhRMA’s spokeswoman didn’t elaborate on the reasons for Mallinckrodt’s departures. A spokesman for Mallinckrodt didn’t respond to requests for comment on the matter.
PhRMA has made a point of distinguishing itself from companies that have drawn outrage about drug prices. When Valeant Pharmaceuticals was under fire for its practice of acquiring medications and drastically raising their prices, the group wrote in an October 2015 blog post that, the “strategy is more reflective of a hedge fund than an innovative biopharmaceutical company.”
The group has also called out Martin Shkreli, the hedge fund manager turned pharmaceutical CEO whose company acquired a decades-old AIDS-related treatment called Daraprim and jacked up its price by 5000%.
Mallinckrodt itself has been criticized for similar practices with some of its drugs. Its drug Acthar, used primarily as a treatment for infantile spasms, dates back to the 1950s. Mallinckrodt and the previous owner of Acthar (which Mallinckrodt acquired) have raised the price to over $35,000 a dose from as little as $1,650 in 2007. The drug has become a blockbuster for the company.
The company has in the past described its business model to Business Insider as follows:
“Mallinckrodt’s goal has been — and continues to be — to acquire under-resourced, under-utilized products like H.P. Acthar Gel, which are utilized in areas of high unmet medical need, typically in narrow patient populations, and then for Mallinckrodt to invest significantly in those products.”
PhRMA is an incredibly powerful ally to have in Washington. Last year it spent almost $20 million lobbying Capitol Hill. Since drug pricing has become such a hot-button issue in Washington, the group started to consider changing its bylaws a few months ago.
When Mallinckrodt joined the group in early 2015, it touted that influence and said the decision “points to the commitment Mallinckrodt has made to supporting public policies that support patient access to needed drug treatments.”
Last April, Mallinckrodt CEO Mark Trudeau suggested that its membership in PhRMA was a sign of the company’s integrity.
“I am a PhRMA board member,” he said on a call with Morgan Stanley in April of last year. “I couldn’t sit across the table from my other PhRMA board members and do things that were inappropriate.”