By Brent Kendall and Peter Loftus

Irish drugmaker Mallinckrodt PLC and a U.S. subsidiary will pay $100 million and agree to other conditions to settle government antitrust allegations they unlawfully prevented competition for Acthar, a drug that has seen enormous price spikes in recent years.

The Federal Trade Commission and attorneys general from New York and four other states alleged the U.S. subsidiary, formerly known as Questcor Pharmaceuticals, violated antitrust laws when it acquired therights to a competing drug, Synacthen, that threatened its monopoly in the U.S.

The Food and Drug Administration originally approved Acthar, an injected drug, in 1952, and it eventually became used as a treatment for many conditions including multiple sclerosis.

Questcor acquired the drug from a predecessor company of Sanofi SA in 2001, and in 2007 Questcor began to implement sharp price increases for it, jumping to $23,269 per vial from $1,650, and it has continued to rise since then, according to Securities and Exchange Commission filings.

In 2010, the FDA approved Acthar's use to treat a rare seizure disorder in infants, which conferred market exclusivity that barred copycat versions for that use for a seven-year period.

Mallinckrodt acquired Questcor for $5.9 billion in 2014.

Synacthen is used in Europe and Canada to treat patients with the same conditions, but at a fraction of the practice, antitrust enforcerssaid. They said Questcor acquired the U.S. rights to Synacthen from Novartis AG in 2013, outbidding several other companies that might have made the drug available in the U.S. to compete with Acthar.

In addition to the $100 million payment, the settlement requires Mallinckrodt to license the rights to Synacthen to another firm that could then commercialize the drug in the U.S.

Federal and state officials said the agreement would allow for the competition that Questcor sought to prevent.

New York Attorney General Eric Schneiderman said the matter was "an egregious case of a monopolist doing a deal to eliminate potential competition."

A Mallinckrodt spokesman said the company was "pleased with the agreement reached to resolve this legacy matter, although we continue to strongly disagree with allegations outlined in the FTC's complaint, believing that key claims are unsupported and even contradicted by scientific data and market facts."

The outcry over the big price increases for Acthar was a harbinger of the more recent backlash against rising prices for many other drugs, such Mylan NV's EpiPen emergency-allergy treatment and Turing Pharmaceuticals' anti-infective Daraprim.

Write to Brent Kendall at brent.kendall@wsj.com and Peter Loftus at peter.loftus@wsj.com

(END) Dow Jones Newswires

January 18, 2017 20:16 ET (01:16 GMT)

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