Mallinckrodt has filed a lawsuit against the US Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS) over a decision to change Medicaid rebates for its Acthar Gel.

CMS recently asked Mallinckrodt to change the drug’s base date average manufacturer price (AMP), which is used to calculate the rebates. This move reverses CMS’ written authorisations of the base date AMP provided in 2012, which has been in use since 2013.

Mallinckrodt claims that the agency’s decision will eliminate Acthar Gel’s 10% Medicaid net sales and lead to non-recurring charges of up to $600m.

The decision could also hinder its investment in research and development (R&D) for a pipeline focused on therapeutic areas with fewer treatment options.

Mallinckrodt general counsel Mark Casey said: “With our repeated attempts to engage both HHS and CMS in productive discussions ultimately rebuffed, we find ourselves with no other choice than to vigorously defend our position, through the courts, that Medicaid patients should have access to this important therapy.”

Acthar Gel is indicated for spasms in babies and children aged less than two years and to treat multiple sclerosis (MS) in adults. The medicine was approved by the US Food and Drug Administration (FDA) in 2010 and received reaffirmations for approval of 18 Acthar Gel indications, based on supportive clinical data submission.

Mallinckrodt noted that upon the basis of the 2010 approval, CMS expressly authorised a base date AMP for the drug in writing in 2012. The company argues that the latest CMS decision that the medicine with the infantile spasms indication is not eligible for its own base date AMP violates regulations.

In its lawsuit, Mallinckrodt is asking the court to overturn the CMS’s decision.