Category: Daily News

The California Attorney General Bonta reported a nationwide settlement agreement against Pfizer-owned Biohaven Pharmaceutical Holding Company for submitting false claims to the Medicaid program and other government healthcare programs. The settlement addresses claims that Biohaven participated in a kickback scheme from 2020 to 2022, where they provided cash and extravagant gifts to healthcare providers in return for prescribing their medication, Nurtec.

The allegations against Biohaven claimed that the company engaged in several practices to provide kickbacks to healthcare providers as follows:

– – Speaker Programs: Biohaven allegedly organized company-sponsored speaker programs where healthcare providers would give presentations about their migraine medication, Nurtec ODT. These programs were intended to promote the drug to other healthcare providers. In numerous instances, speaker events were allegedly attended by the providers’ spouses, family members, and friends, who had no educational need to attend. Also, certain providers allegedly attended multiple programs on the same topic, and received expensive meals and drinks paid for by Biohaven, without obtaining any meaningful educational benefit.
– – Remuneration: Healthcare providers who participated as speakers received honoraria payments and expensive meals at high-end restaurants. Some providers were allegedly paid tens of thousands of dollars, sometimes exceeding $100,000, for participating in these programs1.
– – Repeat Attendance: Certain providers attended multiple speaker programs on the same topic, which the government alleged provided no meaningful educational benefit.
Non-Educational Attendees: Biohaven allegedly invited individuals with no educational need to attend, such as the speakers’ spouses, family members, or friends.
– – Whistleblower Allegations: The allegations were initiated by a whistleblower, Patricia Frattasio, a former Biohaven sales representative, who reported these practices. On August 5, 2021, Frattasio filed a qui tam action in the United States District Court for the Western District of New York captioned United States of America et al., ex. rel Patricia Frattasio v. Biohaven Pharmaceuticals Holding Company Ltd., Case No. 6:2 l -CV-06539.

These actions were claimed to violate the Anti-Kickback Statute, which prohibits offering or paying anything of value to induce the referral of items or services covered by federal healthcare programs.Approximately $50.2 million of the settlement constitutes the federal portion of the recovery and approximately $9.5 million constitutes a recovery for State Medicaid programs. Ms. Frattasio will receive approximately $8.4 million as her share of the federal recovery in this case.

Pfizer has agreed to pay $59,746,277, plus interest, on behalf of Biohaven to resolve allegations that Biohaven engaged in unlawful kickback practices to encourage providers to prescribe Nurtec. That payment will be shared by the federal government and several states, including California. The State of California will receive $413,776 for its share of losses to California’s Medicaid program, Medi-Cal.

Pfizer-owned Biohaven Pharmaceutical Holding Company is headquartered in New Haven, Connecticut. Biohaven was established by a group of biopharmaceutical executives in 2013 with a vision to develop innovative treatments for neurological diseases. The company focused on research and development, targeting conditions such as Alzheimer’s disease, migraine, and anxiety disorders. Pfizer announced its intention to acquire Biohaven in 2022 for approximately $11.6 billion. The acquisition included Biohaven’s breakthrough calcitonin gene-related peptide (CGRP) portfolio, including Nurtec ODT, a migraine therapy.

In a statement, Pfizer emphasized that the settlement relates to conduct that occurred before Pfizer’s acquisition of Biohaven in October 2022. They also mentioned that they are pleased to resolve this legacy matter so they can continue focusing on patient needs. Pfizer promptly terminated the speaker programs once the acquisition was completed, which may have contributed to the favorable terms of the settlement.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

The FTC commissioners voted unanimously this month to publish a second report which makes similar critical allegations against the controversial drug middlemen known as Pharmacy Benefit Managers or PBMs, as did the agency’s first report released last summer. This second report, titled “Specialty Generic Drugs: A Growing Profit Center for Vertically Integrated Pharmacy Benefit Managers,” was released to the public on January 14, 2025.

According to the FTC prescription drugs represent a large and growing amount of healthcare spending – increasing from $393 billion in 2016 to $600 billion in 2023. While traditional drugs dispensed through retail and mail order pharmacies account for much of this spending, a disproportionate share of the growth has come from spending on a class of drugs known as specialty drugs, which more than doubled from $113 billion in 2016 to $237 billion in 2023.2

Historically, specialty drugs were characterized by their need for special handling and administration. This is no longer necessarily the case. There is no standard definition for a specialty drug, and today specialty drugs may be characterized by variety of factors, including their high cost.

The First Interim Staff Report provided an overview of the vertically integrated and highly concentrated markets in which pharmacy benefit managers (“PBMs”) operate and highlighted the increasing importance of specialty drugs to the three largest PBMs, Caremark Rx, LLC (“CVS”), Express Scripts, Inc. (“ESI”), and OptumRx, Inc. (“OptumRx”) (collectively the “Big 3 PBMs”) and their affiliated pharmacies. Among many other findings, the First Interim Staff Report showed:

– – Pharmacies affiliated with the Big 3 PBMs received 68% of the dispensing revenue generated by specialty drugs in 2023, up from 54% in 2016.6
– – The Big 3 PBMs marked up two specialty generic cancer drugs by thousands of percent and then paid their affiliated pharmacies hundreds of millions of dollars of dispensing revenue in excess of estimated acquisition costs for each drug annually.

Two months after this first report, the FTC sued Caremark, Express Scripts and Optum Rx.The lawsuit, filed in September 2024 is ongoing and alleges that these pharmacy benefit managers engaged in anticompetitive and unfair rebating practices that artificially inflated the list price of insulin drugs. The case is currently being overseen by Chief Administrative Law Judge D. Michael Chappell.

Cigna’s Express Scripts filed a countersuit against the FTC calling the report “unfair, biased, erroneous, and defamatory.” We don’t take this step lightly, but … we cannot let the FTC’s unlawful actions and false information stand,” Andrea Nelson, Cigna’s chief legal officer, said in a statement.

Yet “the FTC stands by our study,” said Douglas Farrar, a spokesperson for the agency, in a statement. “This is a complicated and opaque market, and the FTC is committed to using its clear authority to help the public and policymakers understand it.”

Express Scripts, which Cigna acquired for $67 billion six years ago, brought in $26.6 billion in revenue in the second quarter – 44% of Cigna’s entire topline.

This new January 2025 staff report relies on additional data and documents to analyze a broader subset of specialty generic drugs and expands on FTC staff’s initial findings regarding specialty drugs published in the  July 2024 staff report.Key findings in this January 2025 staff report include:

– – The Big 3 PBMs marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent.
– – A larger share of commercial prescriptions for the most profitable specialty generic drugs were dispensed by the Big 3 PBMs’ affiliated pharmacies compared with unaffiliated pharmacies.
– – The Big 3 PBMs’ affiliated pharmacies generated over $7.3 billion of dispensing revenue in excess of NADAC on specialty generic drugs over the study period.
– – In the aggregate, the Big 3 PBMs also generated significant income on the specialty generic drugs assessed in this report from spread pricing – i.e., billing their plan sponsor clients more than they reimburse pharmacies for drugs.
– – The top specialty generic drugs accounted for a significant share of the relevant business segments reported by the Big 3 PBMs’ parent healthcare conglomerates.
– – Plan sponsor expenditures and patient cost sharing on specialty generic drugs increased at double-digit compound annual growth rates during the study period.

These results illustrate the increasing financial importance of specialty generic drugs to the Big 3 PBMs, as well as to plan sponsors and patients. The results also reveal that the two case study drugs analyzed in its First Interim Staff Report were not isolated examples. This report confirms that the Big 3 PBMs impose significant markups on a wide array of specialty generic drugs.

The California Attorney General has filed litigation against drug manufacturers Eli Lilly, Novo Nordisk, and Sanofi, along with major PBMs CVS Caremark, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx for allegedly leveraging their market power to overcharge patients for insulin.

Riverside Healthcare System, LP, doing business as Riverside Community Hospital filed a Petition to Confirm an Arbitration Award against Service Employees International Union, Local 121 RN. The Hospital asked the court to confirm arbitration Opinions and Awards between the parties.

The Arbitrator found SEIU Local 121 RN struck for permissible reasons, related to staffing issues, and impermissible reasons, over safety issues related to COVID-19, which was not allowed under the Collective Bargaining Agreement.Further, the Arbitrator found the pre-strike flyer SEIU Local 121 RN issued to its members expanded the purpose of the strike beyond the staffing dispute to include the availability of Personal Protective Equipment and other staffing concerns.

On May 31, 2024, the Arbitrator issued a second written opinion awarding the Hospital damages in the amount of $6,262,192.11.

In the Motion to Confirm, the Riverside Community Hospital argued (1) the awards draw their essence from the CBA; (2) the arbitrator did not exceed the scope of the issues submitted; and (3) the awards do not conflict with public policy. Therefore there is no basis to vacate the Awards issued by the Arbitrator, and the Court should confirm the Awards and enter judgment against the SEIU Local 121 RN in the amount of $6,262,192.11.

In the Motion to Vacate, SEIU Local 121 RN argued (1) the awards do not draw their essence from the CBA; (2) the Arbitrator exceeded the scope of her authority because (i) she impermissibly added to the CBA and (ii) she lacked jurisdiction to hear the matter; and (3) the awards conflict with three public policies. Therefore, SEIU Local 121 RN argues the Arbitrator’s awards should be vacated.

Kenly Kiya Kato, United States District Judge found no basis to vacate the arbitration awards in the case of Riverside Healthcare System, LP, d/b/a Riverside Community Hospital v. Service Employees International Union, Local 121 RN -EDCV 24-1316-KK-PVCx (January 2025).

The Court found that the awards do not violate public policy. SEIU Local 121 RN has maintained that the labor strike was solely “over [Petitioner’s] failure to provide appropriate staffing levels,” as permitted by the CBA, and any discussion of “PPE, COVID-19, or other abnormally dangerous conditions . . . did not convert the staffing strike into a non-staffing strike.”

The Arbitrator rejected the SEIU Local 121 RN position, finding the strike was for both permissible (staffing) and impermissible (PPE and COVID-19) reasons under the CBA. “Respondent’s Motion to Vacate is ground, in part, on the awards supposed conflict with standing public policy: (1) § 502 of the Taft-Hartley Act; (2) California Labor Code Section 6311; and (3) § 301 of the LMRA.”

“None of these arguments were asserted during the arbitration, hence, this Court will not consider them at this stage….see McClatchy Newspapers v. Central Valley Typographical Union No. 46, 686 F.2d 731, 733-34 (9th Cir. 1982) (holding arbitrators exhaust their right to review disputes after they issue a final award); see also United Steelworkers, 74 F.3d 169 at 174. Further, Respondent failed to meet its obligation to identify the specific laws “

According to a report by Beckers’ Hospital Review Rosanna Mendez, executive director for SEIU 121RN, stood by the union’s belief that hospital nurses were within their rights to strike.

“The union and its members will never stop fighting and speaking out to protect patient care and to ensure safe working conditions in healthcare, including when we see troubling patterns of management decision-making at Riverside Community Hospital,” Ms. Mendez said in a statement shared with Becker’s.

“We disagree with the way that HCA has characterized the strike both generally and in the appeal process, and we disagree with this current ruling around the arbitration. As such, nurses will continue to weigh our next legal options along with how to best raise awareness about the many concerns that frontline nurses have about the HCA business model above and beyond this one particular ruling, which we consider to be at odds with the facts on the ground and the broader interests of patients and the public.”

Founded in 1898, the National Community Pharmacists Association is the voice for the community pharmacist, representing over 18,900 pharmacies that employ more than 205,000 individuals nationwide. Community pharmacies are rooted in the communities where they are located and are among America’s most accessible health care providers.

The Association recently submitted comments to the Centers for Medicare & Medicaid Services with a stern warning that more than 90 percent of independent pharmacies may decide, or have already decided, to not stock drugs in the Medicare Drug Price Negotiation Program because they will cause massive financial losses and potentially put them out of business.

“Pharmacies will have to float thousands of dollars every month waiting for refunds from the manufacturers. That will cause a massive cash flow problem in an environment where thousands of pharmacies have already closed,” said NCPA CEO B. Douglas Hoey.

In its comments, NCPA cited a recent national survey of independent pharmacists that found a jaw-dropping 93.2 percent of respondents have already decided to not stock the drugs in the program, or they are considering not stocking them.

“That will be devastating to the program,” said Hoey. “Patients who need these prescriptions will be unable to get them, because their pharmacies cannot participate in the program. It’s great the government removed big insurance’s PBMs from the negotiations and the result was lower prices for these prescription medications. That’s an important outcome for patients and taxpayers. But if almost no pharmacies can stock the drugs because they will sustain huge financial losses, the program will collapse before it even starts.”

According to the survey independent pharmacists:

– – 60.4 percent are considering not stocking one or more of the first 10 drugs listed in the Medicare Drug Price Negotiation Program.
– – 32.8 percent have already decided not to stock one or more of the drugs listed in the Medicare Drug Price Negotiation Program.
– – 96.5 percent said PBM and plan reimbursement for Medicare Part D threatened the viability of their business.
– – 40.8 percent said they were paid below what they pay to buy the drug, approximated by the National Average Drug Acquisition Cost (NADAC), on more than 40 percent of the prescriptions they filled for Medicare Part D patients.
– – 29.2 percent said they were paid below NADAC on 50 percent or more of the prescriptions they filled for Medicare Part D patients.
– – 80.3 percent said the financial health of their business declined in 2024.
– – 48.6 percent said the financial health of their business declined significantly in 2024.
– – 30.3 percent said they are considering closing their business in Calendar Year 2025.

If CMS and the new administration want to save the program, and if they want to prevent the disappearance of many more pharmacies, they will make a number of changes, said NCPA.

Among the changes the organization proposed, CMS should bar PBMs from requiring pharmacies to participate in the program in order to serve Medicare Part D patients, and it must also give pharmacies the ability to cancel PBM contracts without cause. NCPA made many additional recommendations.

In 1996, Todd Hearn began working for PG&E as a meter reader. A few years later, he began training as a lineman and completed his apprenticeship in 2004. During the relevant time period, Hearn worked out of PG&E’s facility in Napa. PG&E became aware of performance issues at the Napa yard around 2016, including delays in maintenance and repair projects and rising overtime claims. Roy Surges, PG&E’s Electric Superintendent, began working with Tanya Moniz-Witten, a senior director at PG&E, to help address the situation.

In early 2018, Surges noted “excessive meal costs, suspicions of misconduct, a high number of rest periods, poor attendance, schedule performance, multiple retaliatory compliance and ethics complaints, poor moral and bad attitude” among “the bulk” of the senior crew and foreman in the Napa yard. Surges was working with the supervisors to provide “added oversight measures” and brought in corporate security to assist. PG&E began gathering data, including timecards and vehicle GPS records, in order to “deal with” some “bad apples.” Moniz-Witten also brought in ”HR/Labor” for “advisement and help” in addressing the situation.

The investigation was subsequently narrowed down to five and Hearn was identified as one of the five based on “potentially false time cards.” In late June 2018, Hearn and four other linemen were suspended. Hearn was informed he was being placed on “crisis leave” due to an “alarming amount of discrepancies” in Hearn’s timecards.The investigation was transferred to Kevin Cashman, a senior investigator in PG&E’s Corporate Security Department (CSD). In August 2018, Cashman interviewed Hearn.

PG&E then hired Tony Mar, a retired PG&E Director of Electric Operations, to conduct a separate investigation into the Napa yard. While Mar claimed he was not asked to investigate any specific employees, Mar acknowledged he only wrote reports on the five suspended linemen. In early December 2018, Mar informed PG&E he provided Internal Auditing “what we have identified related to Hearn,” including that he took multiple trips to his house, claimed overtime when he was not on site, requested unearned meals, and delayed his arrival to work locations.

Hearn presented evidence that beginning in 2017, he repeatedly expressed safety concerns to PG&E management about a device called a “Tripsaver” that PG&E began installing on its electrical lines in 2016. PG&E Superintendent Roy Surges responded negatively to Hearn and others who raised these safety concerns. As a result, PG&E retained a lawyer named Kelly Applegate to conduct an external investigation of retaliation claims made by employees against PG&E management, including the report Hearn made.

After additional investigations transpired, in a January 18, 2019 letter, PG&E informed Hearn his employment was terminated based on findings of an investigation into his conduct. Hearn filed a lawsuit against PG&E, alleging four causes of action: (1) retaliation for disclosing the company’s safety violations (Lab. Code, § 1102.5); (2) retaliation for lodging a bona fide complaint about unsafe working conditions (Lab. Code, § 6310); (3) wrongful termination in violation of public policy; and (4) defamation.

The jury found PG&E liable for defamation but rejected Hearn’s retaliation claim. The jury awarded damages totaling $2,160,417, comprised of separate awards as to past and future economic and non-economic damages. The verdict form did not ask the jury to consider or award any assumed reputational harm damages. The jury declined to award punitive damages.

On appeal, PG&E contends the trial court erred by denying its motion for judgment notwithstanding the verdict (JNOV) because Hearn’s defamation claim was not separately actionable – i.e., the defamation claim was premised on the same conduct that gave rise to his termination and the damages sought were solely related to his loss of employment. In his cross-appeal, Hearn alleges the verdict rejecting his retaliation claim is not supported by sufficient evidence and contends the trial court erroneously excluded relevant evidence.

The Court of Appeal reversed the judgment entered in Hearn’s favor on his defamation cause of action. The costs award premised on Hearn prevailing consequently was likewise reversed in the partially published case of Hearn v. Pacific Gas & Electric Co. -A167742 (January 2025).

The question PG&E asked to be resolved on appeal was “In a wrongful termination case, can a plaintiff recover in tort based on the same underlying harm as caused by the discharge?”

The California Supreme Court ruled that employees may generally assert tort claims against their employer, even in the context of their termination in three key cases, Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654 (Foley), Hunter v. Up-Right, Inc. (1993) 6 Cal.4th 1174 (Hunter), and Lazar v. Superior Court (1996) 12 Cal.4th 631 (Lazar).

Specifically, the California Supreme Court has specified two hurdles employees must overcome: (1) such tort claims must be based on conduct other than that giving rise to the employee’s termination and (2) the damages sought cannot exclusively “result from [the] termination itself.”

“Based on these principles, the trial court erred in denying PG&E’s JNOV because Hearn may not recover for defamation when it arose from the same conduct giving rise to his termination and the only result is the loss of his employment. In other words, Hearn cannot recover damages for wrongful termination by recasting his claim as one for defamation.”

TUCHER, P.J., Dissented in part with the majority opinion.