Mallinckrodt (MNK) - Get Report shares were falling sharply in premarket trading Tuesday after the drugmaker announced it filed suit against the U.S. Department of Health and Human Services and Centers for Medicare and Medicaid Services in order to protect Medicaid patient access to its Acthar gel.
Mallinckrodt shares were down 27% to $9.51 in trading.
"We are disappointed with the action taken by CMS. 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," said Mallinckrodt general counsel Mark Casey.
Mallinckrodt is seeking to reverse a decision from the HHS that would recalculate the Medicaid drug rebates available to consumers for the companies Acthar repository injection gel, which is used to treat a range of diseases from lupus to infantile spasms.
"More broadly, if implemented, this CMS decision could impede Mallinckrodt's ability to continue its current pace of additional investment of hundreds of millions of dollars in research and development for a pipeline that seeks to benefit often very sick patient populations with some of the fewest treatment options available," the company said.