This post has been updated to reflect comments from Mallinckrodt Pharmaceuticals.
As if Andrew Left needed another reason to be short Mallinckrodt Pharmaceuticals (MNK).
On Monday, reports emerged from Canada that the Dublin-based pharmaceutical company abruptly raised the price of Synacthen Depot, a drug used to treat seizures in infants, by 2,000%.
The sudden price increase -- to $680 a vial from $33.05 -- caused Alberta Health to delist the drug in July, which means that it is no longer paid for by Canada's government-subsidized health care system.
The price gouging on Synacthen Depot alone is reason enough to raise activist short seller Andrew Left's ire. Left, of Citron Research, has been critical of Mallinckrodt's practices for a long time, and has at times been short the company. Last week, he confirmed on CNBC that he currently has a short position on Mallinckrodt.
While the 2,000% increase of Synacthen Depot is troubling, it adds another layer to Left's long-standing case against Acthar, another drug owned by Mallinckrodt that is also used to treat spasms associated with seizures in infants.
Acthar costs $35,000 a vial and is the standard prescribed drug for infantile seizures in the U.S. In 2005, the drug cost $1,235 a vial. The first steep increase in the price of Acthar occured in 2007 , and the price of drug has risen steadily since. Meanwhile, Synacthen Depot, the synthetic form of Acthar, is the standard prescribed drug in Canada to treat infantile seizures.
"Mallinckrodt is taking the synthetic form of this drug and they're gouging the price on it also," Left said in an interview with Real Money.
Mallinckrodt defended the rational behind raising the price of Synacthen Depot, saying that the drug had been losing money for years.
"In the spring of 2014, Mallinckrodt was told by the existing supplier of the product that they would cease production in early 2016," a Mallinkrodt spokesperson told Real Money. "Faced with a product that was losing money and the need to find a new supplier, Mallinckrodt had a choice to make -- take Synacthen off the market or invest in its future."
The company also said that in addition to the price-hike that it is "also investing significantly in manufacturing and market access," which could mean that the price-hike is a temporary measure.
Still, the efficacy of the drugs, Acthar and Synacthen Depot, have never been compared against one another, Left said. Instead, the drugs have only been tested against a placebo, which Left says is insufficient for determining the proper standard of care. While it is indeed true that the generic and synthetic form of a drug may not treat an illness in the same manner, it would seem to make sense that they be tested against each other -- especially when there is such a steep difference in price.
"If you really want to take it a step further -- when you're charging $35,000 -- what you really have to do is [compare] your drug versus the generic form, versus the synthetic form and the placebo," Left said.