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Compounders Can Be Cheaper Than Drugmakers

In a radiation-proof room at the Erasmus Medical Center in Rotterdam, Emar Thomasa sits behind shielded glass as he carefully measures and mixes lutetium octreotate, an intravenous treatment for certain types of cancer.

The Dutch hospital has been offering it to patients for more than a decade at 16,000 euros ($18,000) for one course of treatments. Drug firm Novartis, which in 2018 acquired rights to sell it in Europe, is asking more than five times that for its proprietary version, Lutathera.

Thomasa is part of a protest against high drug prices launched by an unlikely group of rebels: Dutch pharmacies.

Three – Erasmus, Amsterdam’s University Medical Center (UMC) and the Transvaal Pharmacy in The Hague – have vowed to bypass drug company products and make treatments for a handful of rare diseases themselves, exercising their right to “compound” medicines.

The dispute is part of a growing global backlash against high drug prices, from the United States and Canada to Japan, and campaigners said it was being closely watched by health experts elsewhere.

Compounding is the ancient practice of preparing medicines for individual patients. Pharmacists are trained to compound, though nowadays most medicines are made by industrial producers.

UMC received a 5-million-euro grant last month to expand its compounding program. It plans to use the money to set up a center to swap know-how with pharmacies at home and abroad.

The worldwide push against high drug prices has seen the Trump administration in the United States declare bringing down prescription prices a top priority.

The Dutch pharmacies, whose production is on a small scale, acknowledge they may face legal challenges from the drug industry. However, such a case could set a precedent for other European countries.

Pharmacies retain the right under European and American law to prepare medicines for individual patients. Common examples including making lower dosage versions for children or liquid versions for people with difficulty swallowing.

However, in the United States, for-profit compounding pharmacies have tested the limits of what they are allowed to do in recent years, including mixing medicines in large quantities. In some cases, that has prompted legal conflicts with drugmakers.

Official scrutiny of the practice increased after the 2012 deaths in Massachusetts, which led to U.S. lawmakers requiring bulk compounding facilities to register with the Food and Drug Administration (FDA) and meet quality and labeling standards – still not as stringent as full FDA drug approval.

The first two drugs targeted by Dutch pharmacies are Novartis’s Lutathera and a drug called CDCA, registered in Europe by Leadiant.

Novartis boss Narasimhan said he was worried by developments in the Netherlands. “The Netherlands’ characterization that the local medicine that is made in the hospitals is the same as what we’ve done from a regulatory, full-development standpoint, particularly given (the Dutch) will house the European Medicines Agency, I think is troubling,” he told Reuters in an interview.

Knee Surgery Does Not Help Everyone

According to the American Orthopedic Society Sports Medicine, worldwide, more than 4 million people get arthroscopic knee surgery each year.

During the operation, a surgeon makes a small incision in the knee and inserts a tiny camera called an arthroscope to view the inside of the joint, locate and diagnose the problem, and guide repairs. Sometimes surgeons remove all of the meniscus, the cartilage that works as a cushion between the shin and thigh bones, and other times they only remove part of it.

While this is minimally invasive, it’s not risk-free. Patients receive anesthesia, which in any surgery may lead to complications such as allergic reactions or breathing difficulties. In addition, this specific procedure might potentially damage the knee or trigger blood clots in the leg.

A review of past studies published in the British Journal of Sport Medicine by researchers, and reviewed by Reuters Health, suggests that many middle-aged and older adults with torn cartilage and pain in their knee are not likely to benefit from arthroscopic surgery.  

Researchers analyzed 10 previous clinical trials that randomly offered some patients knee surgery and others nonsurgical options including exercise or medication. Overall, knee surgery was no better than these alternatives for improving physical function, and resulted in only a small reduction in pain.

In the current analysis, all of the trial participants who got knee operations had a partial meniscectomy, removing only some of this cartilage.

For all types of patients – including people with and without arthritis pain – surgery was slightly better than physical therapy at reducing pain after 6 to 12 months, an analysis of five trials with a total of 943 patients found.

However, when researchers looked just at a subset of patients without knee pain from arthritis in their knee, surgery did appear moderately better than physical therapy for reducing pain from the tear.

In three trials of 402 patients without arthritis pain, surgery had a small to moderate advantage in knee pain improvement after 6 to 12 months over physical therapy.

Two trials with 244 patients without arthritis pain also found surgery associated with a moderate to much larger improvement in quality of life than nonsurgical treatment.

“Surgery does not work for everyone but in selected cases we show that surgery should be available to patients,” said lead study author Simon Abram of the University of Oxford in the UK.

“In most circumstances, patients should try physiotherapy first,” Abram said by email. “If this does not improve symptoms, knee surgery may be beneficial, especially in patients without osteoarthritis and with specific symptoms.”

CNA Adopts AI Fraud Detection Solution

Paris-based Shift Technology has raised another $60 million funding round, and announced a new contract with CNA. Shift Technology claims to have a 70% hit rate in detecting fraudulent insurance claims.

Bessemer Venture Partners is leading the round and existing investors Accel, General Catalyst, Iris Capital and Elaia Partners are also participating.

This March it announced that it has entered into an agreement with CNA Financial Corporation, one of the largest commercial property and casualty insurance companies in the United States, to automate the carrier’s fraud detection capabilities. CNA is the first commercial insurer based in the United States to partner with Shift Technology to take advantage of FORCE, the company’s AI-native, SaaS-based fraud detection solution.

FORCE uses advanced artificial intelligence (AI) and data science to not only detect potentially fraudulent claims but also provide contextual guidance for investigation and resolution.

Unlike other technologies which rely heavily on the use of static business rules to identify those claims which may be non-meritorious, FORCE uses AI to analyze vast amounts of data from multiple sources. The result is a dynamically generated fraud score for each claim that indicates how suspicious the claim is, contributing factors, and how the claim could be investigated.

CNA continues to focus on, and invest in, technology and analytics to advance claims,” said Rob Thomas, Senior Vice President of Claim Analytics, Finance and Operations for CNA’s Worldwide P&C Claim unit. “By partnering with Shift Technology, CNA will optimize its special investigations efforts by focusing on the most suspicious cases with pre-identified paths for investigation.”

There are 70 insurance companies around the world relying on its product, such as MACIF in France, Axa in Spain, and CNA and HyreCar in the U.S.

The startup has already grown quite a lot since its previous funding round. They now have 200 employees, and customers all around the globe. In addition to its headquarters in Paris, Shift Technology also has offices in Boston, London, Hong Kong, Madrid, Singapore and Zurich.

With today’s funding round, the company plans to hire more people in Boston, including data scientists and developers. The company is also developing an automated claim-processing solution.

Hesperia Man Arrested for Transporting $150M in Opioids

Two men are facing charges based on the seizure of approximately 45 pounds of deadly fentanyl.

Luis Aponte, 48, of Hesperia, California, and Denny Diaz, 29, of Philadelphia, Pennsylvania, were charged by complaint with one count conspiracy to possess with intent to distribute 400 grams or more of fentanyl.

They appeared before U.S. Magistrate Judge Joseph Dickson in Newark federal court. The defendants were detained without bail.

Aponte on Friday drove a tractor trailer from California to a rest stop in Bloomsbury where he stayed, according to court documents. Agents from the Drug Enforcement Administration were following him.

On Saturday, Aponte got out of a truck with a backpack. Authorities saw Aponte remove a plastic bag from the backpack and put it behind the driver’s seat before driving off, according to court documents.

Both were later stopped in the Jeep by authorities where they searched it and discovered about 15 pounds of fentanyl in the plastic bagl, heroin and $17,000 in cash.

They arrested Diaz and Aponte, who later waived his Miranda rights and said he had more drugs in the tractor-trailer. Agents searched the truck cab and a refrigerator on board and found another 29 pounds of fentanyl and 11 pounds of heroin.

The count with which the defendants are charged carries a mandatory minimum sentence of 10 years in prison, a maximum of life in prison and a fine of up to $10 million.

They made their initial court appearances in Newark federal court. The government is represented by Assistant U.S. Attorney Andrew Macurdy of the U.S. Attorney’s Office Criminal Division in Newark.

March 4, 2019 News Podcast


Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: WCAB Panel Rejects Combined Ratings, Massive So. Cal. Comp Fraud Ring Sentenced, Agent Prosecuted for Theft of Comp Premiums, Two So. Cal. Insurance Agents Face Premium Theft Charges, FBI Seeking Victims of Comp Policy Fraud Scheme, Another Attempt at “Medicate for All” Gets Underway, Researchers Develop Targeted and Precise Drug Delivery, Berkshire Hathaway to Exit Comp Market?, SCIF Launches SafeAtWorkCa Web App, Employers Face March 2 Deadline for Form 300A.

WCAB Says UR Time Limits are Mandatory

Jorge Orozco was a carpenter for Southland Framers. On September 7, 2001, he sustained and industrial injury to his back, neck, and head, and filed three claims for benefits.

His primary treating physician noted in 2012 that he was ambulating with a wheeled walker and that his wife was providing continuous home care services for him. He said “Patient requires home care assistance. He is a candidate at least eight hours a day, five days a week for home care assistance to assist with bathing, dressing, food preparation, laundering, and cleaning.” The request was later increased to 12 hours a day.

On May 15, 2012, Anthem Workers’ Compensation, and the PTP agreed that, as part of the UR process, “a relatively expedited RN evaluation should be done to assess the patient’s needs.”

On July 25, 2014, 26 months after this agreement, the nurse case manager performed the evaluation. She found applicant “requires maximum assistant with the majority of his activities of daily living.” She recommended home health care assistance 12 hours per day, seven days a week to assist applicant with nutritional meal preparation, grocery shopping, grooming, hygiene, transfers into and out of the shower, bathing, dressing, transportation services and assistance in and out of vehicles, home cleaning, laundry, opening medication bottles, and verbal reminders to take medications.

The PTP reviewed nurse case manager’s report and adopted its recommendations in his own October 13, 2014 report. On October 17 he submitted an RFA to the employer.

On December 9, 2014, the RFA was denied on the grounds that the Medicare Benefits Manual indicates “services should be part-time and not exceeding 28 hours per week, and authorization should not be made if these services are regularly performed by a member of the patient’s household.” The RFA was received on November 25, 2014, and the decision to deny was made on December 8, 2014.

The WCJ found that defendant did not conduct timely utilization review of the May 9, 2012 and November 25, 2014 requests for authorization (RFAs) for home health care services. The WCJ also found that defendant was liable for home health care services after May 1, 2012, up to 12 hours a day, seven days a week.

Defendant contended on reconsideration that the WCJ erred by awarding home health care services, arguing that she should not have found that the UR determination was untimely, among other arguments. The WCAB affirmed the WCJ’s decision in the case of Orozco v Southland Framers, SCIF.

Here, the initial delay was timely. However, no UR determination issued within the statutory period, “14 days from the date of the medical treatment recommendation by the physician.” (Former L.C. § 4610(g)(l).).

The RFA was received no later than November 25, 2014. Former AD Rule 9792.9.l(e)(3), in effect at the time of defendant’s UR determination, provided in pertinent part, “[A] decision to modify, delay, or deny shall be communicated to the requesting physician within 24 hours of the decision, and shall be communicated to the requesting physician initially by telephone, facsimile, or electronic mail.” (Former Cal. Code Regs., tit. 8, § 9792.9.l(e)(3).

The record reflects that defendant’s UR notified the PTP of the determination on December 9, 2014, nine working days after receipt of the RFA on November 25, 2014, and four days after the statutory time period lapsed. Therefore, the Board has jurisdiction to determine the medical necessity of the requests for home health care services.

Comp Startup Rides Wave of Global Dealmaking

Analysts at Research and Markets, predict that the global insurance market will reach $1.11 billion by 2023, fueled by growth in verticals like health, property, casualty, and life insurance.

Moreover, according to a recent analysis of CB Insights data by XL Innovate, over $1 billion has been invested in commercial insurance startups since 2015.

And FinTech Global estimates that deals totaled $2.5 billion in the first three quarters of 2018 – an 89.8 percent increase year-over-year.

Riding this wave is Pie Insurance, a Washington, D.C.-based workers’ compensation insurance provider that just announced it has raised $45 million in a series B funding round led by SVB Capital, with participation from Sirius Group, Greycroft, Moxley Holdings, Aspect Ventures, and Elefund. This follows an $11 million series A round in July and brings Pie’s total capital raised to $61 million.

CEO John Swigart, previously a senior executive at Esurance, says the fresh capital will be used to expand Pie’s geographic footprint and add new distribution sources.

Pie was founded in 2017 and operates as a managing general agency for Sirius America Insurance company. It sold its first insurance policy in March 2018 and claims to have generated nearly $10 million in written premiums from the “thousands” of small businesses among its customers.

It claims it saves those customers an average of 30 percent, thanks to a proprietary analytics backend that identifies risk, prices policies, and eliminates steps from the purchase process.

Is policies are available in 19 markets across the country: Arizona, Arkansas, California, Colorado, Georgia, Iowa, Illinois, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nebraska, New Mexico, New York, North Carolina, Pennsylvania, Tennessee, and Texas.

Facing It’s First Trial – Purdue Pharma Explores Bankruptcy

Business Insurance reports that OxyContin maker Purdue Pharma LP is exploring filing for bankruptcy to address potentially significant liabilities from thousands of lawsuits alleging the drug manufacturer contributed to the deadly opioid crisis sweeping the United States, people familiar with the matter said Monday.

Purdue and its wealthy owners, the Sackler family, are under pressure to respond to mounting litigation accusing the pharmaceutical company of misleading doctors and patients about risks associated with prolonged use of its prescription opioids.

Purdue denies the allegations, arguing that the U.S. Food and Drug Administration-approved labels for its opioids carried warnings about the risk of abuse and misuse associated with the drugs.

Filing for Chapter 11 protection would halt the lawsuits and allow the drugmaker to negotiate legal claims with plaintiffs under the supervision of a U.S. bankruptcy judge, the sources said.

More than 1,000 lawsuits accusing Purdue and other opioid manufacturers of using deceptive practices to push addictive drugs that led to fatal overdoses are consolidated in an Ohio federal court.

A lesser-known opioid case: Oklahoma v. Purdue Pharma, is scheduled for trial in May in Norman, Oklahoma. The Oklahoma trial could presage many of the arguments the jury may be presented in the national case set in the fall on 2019.

The Oklahoma lawsuit seeks to hold Purdue and three other opioid-makers, Allergan, Cephalon and Janssen Pharmaceuticals, responsible for economic damages to the state and its residents stemming from the opioid addiction and overdose crisis.

The presiding judge in the Oklahoma case ruled that television cameras may be used in the courtroom, every detail of what promises to be a dramatic trial could be broadcast to the American public, potentially affecting the outcome of any future opioid trials.

A Purdue bankruptcy filing is not certain, the sources said. The Stamford, Connecticut, drugmaker has not made any final decisions and could instead continue fighting the lawsuits, they said.

Purdue tapped law firm Davis Polk & Wardwell LLP for restructuring advice, Reuters reported in August, fueling concerns among litigants including Oklahoma Attorney General Mike Hunter that the company might seek bankruptcy protection before the trial.

Feds Prevail in Another Compounder Case

45-year-old former pharmaceutical representative Holly Blakely, of San Antonio, TX, pleaded guilty for her role in an $8 million health care fraud scheme that netted her over $1 million.

The 30 count indictment filed in 2017, portrays her as one piece in a conspiracy targeted by a wide-ranging investigation of pharmacies that provide compound pain medication to military veterans and others with private insurance.Investigations of pharmacies that provide compound pain medication took place in at least four states.

Blakely was scheduled for trial in February. Instead she pleaded guilty to one conspiracy to commit wire fraud, health care fraud, bribery, and paying kickbacks. She now faces up to five years in federal prison. She remains on bond pending sentencing scheduled for June 13, 2019.

As part of her plea, Blakely admitted her role in a scheme to defraud health care benefit programs by paying over $400,000 in kickbacks and bribes to health care providers that prescribed compounded medications to individuals who did not need the medications.

She and her co-conspirators attempted to disguise the kickbacks and bribes to health care professionals by writing fictitious and back-dated “consulting agreements.” In many instances, They submitted prescriptions to compounding pharmacies for patients that had never seen a medical professional.

Moreover, Blakely and her co-conspirators would occasionally forge the signature of a medical professional on prescriptions.

Blakely admitted that she conspired with two compounding pharmacies that would submit claims for reimbursement to health care benefit programs for compounded medications based on the prescriptions.

In exchange for her role in the conspiracy, the two compounding pharmacies paid Blakely approximately $1,147,885.14. Health care benefit programs reimbursed the two compounding pharmacies approximately $8,846,972.24 based on the claims submitted in connection with the compounded medications.

in 2015, the federal government reached a settlement with one of them, MediMix Specialty Pharmacy of Jacksonville, Florida, and a top-referring physician, Dr. Ankit Desai, for more than $3.7 million.

Under the deal, the parties resolved allegations that, from Jan. 1, 2009, until December 2014, Dr. Desai sent hundreds of prescriptions to MediMix. Desai was married to a vice president of MediMix.

SCOTUS Taxes Railroad Compensation Benefits

The Supreme Court has ruled that payments to injured employees for lost wages by a railway company are taxable under the Railroad Retirement Tax Act (RRTA).

The opinion in BNSF Railway Co. vs. Loos by Justice Ruth Bader Ginsburg, in which six other justices joined, likens the payments to wages under the Social Security system.

Michael Loos sued BNSF Railway Co. under the Federal Employers’ Liability Act (FELA) for injuries he received while working at BNSF’s rail yard. A jury awarded him $126,212.78, with $30,000 of that amount ascribed to wages lost during the time Loos was unable to work.

BNSF claimed that the lost wages constituted “compensation” that is taxable under the Railroad Retirement Tax Act (RRTA) and asked to withhold $3,765 of the $30,000 to cover Loos’s share of the RRTA taxes.

The District Court and the Eighth Circuit rejected BNSF’s requested offset, holding that an award of damages compensating an injured railroad worker for lost wages is not taxable under the RRTA.

But the high court has now overturned those lower courts with this ruling that a railroad’s payment to an employee for working time lost due to an on-the-job injury is taxable “compensation” under the RRTA.

The RRTA is a self-sustaining retirement benefits system for railroad workers that is funded by a payroll tax on both railroads and their employees, referring to the railroad’s contribution as an “excise” tax and the employee’s share as an “income” tax. The Railroad Retirement Act (RRA) entitles railroad workers to various benefits.

Taxes under the RRTA and benefits under the RRA are measured by the employee’s “compensation,” which both statutes define as “any form of money remuneration paid to an individual for services rendered as an employee.”

According to the court, the railroad retirement system mirrors that of the Social Security system. The Federal Insurance Contributions Act (FICA) taxes employers and employees to fund benefits distributed pursuant to the Social Security Act (SSA). Tax and benefit amounts are determined by the worker’s “wages,” the Social Security equivalent to “compensation.” Both the FICA and the SSA define “wages” employing language resembling the RRTA and the RRA definitions of “compensation.”

Citing previous decisions, the court held that “compensation” under the RRTA “encompasses not simply pay for active service but also pay for periods of absence from active service” provided that the remuneration in question stems from the “employer-employee relationship.”

Justice Gorsuch filed a dissenting opinion in which Justice Thomas joined.