Health Law Daily Wrap Up, PRESCRIPTION DRUGS—E.D. Penn.: Class action seeking recovery of payments for hyper inflated drug price dismissed, (Aug 21, 2026)

By Leah S. Poniatowski, J.D.

RICO, state consumer protections, and related claims were not sufficiently supported in complaint.

A Federal District Court in Pennsylvania has dismissed claims against a manufacturer of the prescription drug H.P. Acthar Gel. The suit, filed by a third-party payor that provides prescription drug benefits to its employees, sought to recover purported overpayments for the gel, whose price was incrementally raised from $40 to over $40,000 from 2001 to 2018 following several acquisitions and other business changes. The court, finding the prospective class action failed to meet the pleading requirements of the RICO, various state consumer protection laws, negligence misrepresentation, aiding and abetting, and unjust enrichment claims, dismissed the suit (Steamfitters Local Union No. 402 v. United Biosource Corp., No. 19-3047 (E.D. Penn. Aug 17, 2026)).

Background. H.P. Acthar Gel (the gel) is an adrenocorticotropic hormone classified as a “specialty pharmaceutical” not sold or distributed through retail pharmacies. Following its FDA approval in the early 1950s, its label uses have been narrowed to 19, which target treatment for multiple sclerosis, rheumatic disorders and similar inflammatory disorders. The FDA has not approved any additional uses.

Ownership and transitions. Aventis Pharmaceutical Products owned the gel, selling it to Questcor Pharmaceuticals, Inc. for $100,000 in July 2001. Pharmacy benefit manager Express Scripts, Inc. wholly owned United Biosource Corporation (UBC) as a subsidiary from 2007 until 2017. At the time, Express Scripts also controlled specialty pharmacy distributor CuraScript, Inc., and specialty pharmacy provider Accredo Health Group, Inc.

In 2007, Questcor and Express Scripts allegedly undertook a “new strategy” to restrict distribution of the gel only to Express Scripts as wholesaler and distribution and payment through UBC. Thus, UBC filled a special role as the “exclusive agent” for Questcor by operating as the hub for distribution and payment of the gel through the Acthar Support and Access Program (ASAP). The process entailed doctors calling gel prescriptions to UBC, which then directed CuraScripts, another subsidiary of Express Scripts, to deliver the gel to the patient. Additionally, the gel purportedly was “re-launch[ed]” at a higher price in order to appear to be the only product to treat an off-label condition not yet approved by the FDA. The strategy also allegedly sought to market the gel for other off-label treatments in order to drive up demand.

When Questcor acquired the gel, the end payor price or average wholesale price for the prescription was $40. Questcor raised the price by September 2001 to $935.20 and by 2007, it was $2062.79. Around the implementation of the “new strategy” in 2007, Questcor, CuraScript, and UBC purportedly agreed to raise the third-party payor price to $29,086.25 within a month. By 2018, the gel’s average wholesale price had risen to over $40,000.

In 2014, Mallinckrodt ARD LLC acquired Questcor for $5.9 billion. However, by 2020 Mallinckrodt had filed for Chapter 11 bankruptcy.

Class action. Steamfitters Local Union No. 420 operates as a third-party payor (TPP) to provide healthcare and prescription benefits to its employees. Independence Blue Cross coordinates the union’s prescription drug benefits under Future Scripts, a pharmacy benefits manager. The union and its beneficiaries pay the full cost of prescriptions. The union had paid over $150,000 for four prescriptions of the gel to treat an off-label rheumatic disorder of a spouse of a union member. Concerned about the inflated price, the union filed a putative class action to recover overpayments, alleging that the distributor had conspired to restrict distribution, grossly inflate the price, and market non-FDA-approved uses and doses of the gel in violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 44 other state consumer protection laws, federal Racketeer Influenced and Corrupt Organizations Act (RICO), negligent misrepresentation, aiding and abetting/conspiracy, unjust enrichment, and declaratory and injunctive relief. UBC filed the present motion for judgment on the pleadings to dismiss the case.

The attorney for the union had filed a “carbon copy” lawsuit in another jurisdiction. The state law claims in that lawsuit were dismissed with prejudice for being time-barred, but the RICO and anti-trust claims were dismissed with leave to amend.

Procedural rulings. As an initial matter, the court concluded that because no trial date had been set, UBC’s motion for judgment on the pleadings was not improper because it did not improperly delay trial, especially as Rule 12(c) motions may be brought anytime “[a]fter the pleadings are closed.”

Additionally, the court determined that the law of the case doctrine did not bar the court’s consideration of UBC’s motion and the court could reconsider issues decided in a prior order. The court explained that the prior order was premised on an unresolved legal question as to the indirect purchaser rule in a RICO claim. Because a decision had been made in another case affirmed by the appellate court, that ruling was constituted supervening new law, as persuasive authority, to warrant reconsideration of the prior order.

RICO. In order for a RICO claim to succeed on the merits, a party must allege two or more predicate acts of racketeering activity. The union argued that UBC engaged in mail fraud and wire fraud in furtherance of its scheme. The court was not persuaded.

First, under the persuasive supervening case, indirect purchasers do not have standing to assert a RICO claim. The union’s complaint identified CuraScript as the exclusive purchaser of the gel, in addition to describing the union’s payments as “reimbursements” to its prescription benefit manager. The union contradicts this assertion by also contending that it was directly overcharged. In light of this self-contradiction, the court could not find that the complaint supported standing under RICO.

Second, the union did meet the particularity requirement for the fraud claims as required under law. The claims implicating the actions of Mallinckrodt were misplaced as it was no longer a party to the lawsuit, and no other remaining claim described UBC’s alleged fraudulent misrepresentation to omission vis-a-vis the marketing or pricing schemes.

Finally, the union did not plead facts establishing proximate causation between the injury and the misconduct. Accordingly, the RICO claim was dismissed.

Pennsylvania law. Similarly, the court found that the union did not make any specific allegations that it had access to, much less relied upon, any alleged misrepresentations when purchasing the prescription. Because this falls below the necessary pleading requirements under the state statute, this claim was dismissed.

Remaining claims. The court determined that the complaint also lacked any facts to connect the union or the alleged injury to any states outside of Pennsylvania. Because there was no standing under these other jurisdictions, the claims under the other states’ laws were dismissed. In light of the union’s failure to effectively allege negligent misrepresentation, the aiding and abetting/conspiracy claim also failed. The equity claims were also dismissed for failure to meet the pleading requirements for unjust enrichment, and the inadequate federal and state law claims. Although the complaint was dismissed, the court granted time to replied in order to correct the noted deficiencies.

The case is No. 19-3047.

Judge: Hodge, K.

Attorneys: Donald E. Haviland, Jr. (Haviland Hughes LLC) for Steamfitters Local Union No. 420. Alec Levy (Quinn Emanuel Urquhart & Sullivan LLP) for United Biosource Corp.

Companies: Steamfitters Local Union No. 420; United Biosource Corp.

Cases: CaseDecisions DrugBiologicNews PrescriptionDrugNews PennsylvaniaNews