Category: Daily News

The White House Office of Management and Budget Director Mick Mulvaney and newly-confirmed Health and Human Services Secretary Alex Azar sat down with a small group of reporters Thursday morning to exclusively preview the White House’s Fiscal Year 2019 budget and how the administration plans to make good on the president’s commitment to tamper down drug prices.

Azar said the administration is framing the issue through two key questions: “How can we try to start flipping some of those incentives in the system geared towards higher prices? How do we find pockets of our programs where we maybe don’t negotiate enough or have people negotiating on our behalf to get as good of a deal?”

The administration is targeting a number of federal agencies, like the U.S. Food and Drug Administration (FDA), and federal policies, like Medicaid (Parts B and D), to accomplish those objectives.

The administration is planning on asking Congress to clarify the definition of generic, over-the-counter drugs in an effort to avoid misclassifications that lead to exorbitant waste and provide potential loopholes for manufacturers to game the system. Azar said the goal of asking Congress to specifically clarify drugs is to ensure that “generic and branded drugs are paying properly on the Medicaid rebate program.”

The HHS Office of Inspector General found that drug manufacturers likely misclassified 3 percent of the drugs in the Medicaid rebate program in 2016. The OIG found that misclassifications cost Medicaid more than $1 billion from 2012-2016.

Another initiative the admin will be pursuing is lobbying Congress to give HHS the authority to allow a small group of states to see if they are able to negotiate with manufacturers and get a better deal from manufactures than the federal government is currently able to negotiate from the Medicaid statutory rebate programs. “If they would like to take a shot at managing their formulary and negotiating better deals than we can get, we would like to do a pilot where up to 5 states could do that,” Azar said.

The administration is also trying to give Part D providers greater flexibility in how they provide benefits to seniors, like making generic medications completely free to Part D seniors.

“The first is actions that we could take address excessive price increases in Part B – the physician administered drugs that we currently pay for in Part B with what is called Average Sales Price (ASP) plus 6 methodology,” Azar said. Medicare Part B pays physicians and hospital systems for outpatient services. ASP is the current payment formula set in 2003. The rate is set from the average sales price, plus an additional 6 percent. Azar wants to take the payment rate for newly launched drugs, or drugs with no set ASP value, and move them toward a new payment rate of 103 percent.

Another of the key areas of focus will be on ending the gaming of FDA generic drug approval process. Barring some exceptions, after the FDA grants a manufacturer a “180-day exclusivity” period for a generic drug, it “cannot approve subsequently submitted” applications until that period has expired. In other words, some argue that the rule bars competing generic drugs from entering the market.

Getting rid of the ruling will help spark more market competition, which could help drive down prices, Azar argues. “This will accelerate the approval of generics and the entry to market from one particular aspect of gaming around the 180-day exclusivity that keeps multiple new entries from coming to market in the generic space,” Azar told reporters.

“What we would ask Congress to clarify is that once the FDA approves another drug, the clock on that 180-days starts. As it stands, the first to file gets approved. Right now, some companies will just sit on that and park it.”

The White House will roll out its plans in more detail Monday, along with its 2019 budget.

A whistleblower is a person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organization that is either private or public. Recognizing the public value of whistleblowing has been increasing over the last 50 years. In the United States, both state and Federal statutes have been put in place to protect whistleblowers from retaliation.

The False Claims Act is the federal Government’s primary litigation tool in combating fraud against the Government. The law includes a qui tam provision that allows people who are not affiliated with the government to file actions on behalf of the government, informally called “whistleblowing” especially when employed by the organization accused in the suit.

Whistleblowers who bring qui tam suits are required to file their cases under seal. The DOJ likes it that way, because it may pursue its investigation in a manner that does not tip off the target of the investigation.

California has a similar False Claims Act with qui tam provisions. Also under the California law, the whistleblower’s lawsuit is filed under seal to permit the California Attorney General or local prosecuting authority to investigate and, if warranted, intervene in the action.

But, Jeffrey Werkin, a former high-stakes corporate-fraud prosecutor with the Department of Justice, had secretly stockpiled sealed lawsuits brought by whistleblowers. His plan was to sell copies of the suits to the very targets of the pending government investigations – and his services to defend them.

Wertkin carried out his plan for months, right up until the day an FBI agent arrested him in a California hotel lobby last year. On that day, Wertkin believed he was meeting at a Cupertino hotel with a representative from a company with whom he would exchange the sealed whistleblower complaint for a duffel bag filled with $310,000. In truth, Wertkin was meeting with an undercover employee of the FBI.

The 41-year-old partner at the prominent DC firm of Akin Gump Strauss Hauer & Feld  was caught wearing a wig and fake mustache trying to peddle a sealed federal lawsuit for $310,000 to a Silicon Valley technology company. “My life is over,” he told the undercover agent after his arrest at an intended cash drop at the Cupertino hotel.

Wertkin recently pleaded guilty to two counts of obstruction of justice and one count of transportation of stolen property.

Wertkin admitted that during the last month of his employment as a trial attorney with the Department of Justice, he began secretly reviewing and collecting sealed qui tam complaints that were not assigned to him. Further, Wertkin has admitted that after he left the Department of Justice, he used the stolen information to improperly solicit clients that were the subject of the sealed complaints.

He is scheduled to be sentenced on March 14, 2018 at 2:15 pm by federal judge Maxine M. Chesney.

Three American Indian tribes in South Dakota have sued the country’s top opioid manufacturers and distributors, accusing them of concealing and minimizing the addiction risk in tribal communities that have been devastated by such drugs.

“The effect of opioids on South Dakota Tribes has been horrific,” said Brendan Johnson, the former U.S. Attorney for South Dakota, who filed the lawsuit along with Tim Purdon, the former U.S. attorney for North Dakota. “This epidemic has overwhelmed our public health and law enforcement services, drained resources for addiction therapy and sent the cost of caring for children of opioid-addicted parents skyrocketing.”

Three tribes – Rosebud Sioux Tribe, Flandreau Santee Sioux Tribe and the Sisseton Wahpeton Oyate – sued 24 manufacturers and distributors, including Purdue Pharma, Teva Pharmaceuticals, Allergan PLC, McKesson Corp., Cardinal Health and AmerisourceBergen Corp. But the attorneys allege the opioid epidemic has wreaked havoc on all of South Dakota’s nine tribes.

The 106 page complaint filed in the United States District Court for the District of South Dakota alleges the opioid industry failed to comply with federal prescription-drug laws intended to prevent the diversion of prescription opioids and prevent their abuse. The lawsuit accuses the companies of violating federal Racketeer Influenced and Corrupt Organizations (RICO) laws, deceptive trade practices, and fraudulent and negligent conduct.

Kaelan Hollon, spokesperson for Teva Pharmaceuticals, released a statement saying the company is working to educate communities and health-care providers and comply with federal and state regulations. A Pharma spokesman said “we vigorously deny these allegations.” The company is “deeply troubled by the prescription and illicit opioid abuse crisis, and … dedicated to being part of the solution,” its statement says.

Hundreds of cities, states and counties have filed lawsuits against opioid drug manufacturers and distributors, among them seven counties in West Virginia, which has the highest prescription drug overdose rate in the nation. In April, the Cherokee Nation in Oklahoma became the first tribe to do so.

Walmart, CVS and the other companies that were sued went to a federal judge in Oklahoma in June and argued that Cherokee tribal courts do not have jurisdiction over them. The judge has not ruled on whether the case will remain in tribal court or be transferred to U.S. District Court

Thus far no California workers’ compensation carrier, or self-insured employer has initiated litigation to recover for the long term costs of claims made by an addicted claimant. One workers’ compensation defense attorney, Nigel Scott Baker Esq.,reports that he is investigating the feasibility of filing litigation on behalf of California self-insured employers and carriers. He has a copy of many of the civil complaints filed in various venues against drugmakers, and is communicating with national attorneys involved in those cases.

Understanding MSA trends – and the CMS review process – can assist workers compensation carriers and administrators as they identify cost drivers. This NCCI 2018 research update builds on a September 2014 study that NCCI conducted on MSAs and is based on data from approximately 11,500 MSAs submitted to CMS between September 2009 and December 2015.

CMS’s processing times have declined since 2012 and more recently hit their lowest level since 2010. In 2015, the average MSA processing time was about 70 days, which is the lowest average processing time between 2010 and 2015. This is in sharp contrast to 2011 and 2012, when average processing times were much longer. Median processing times appear to be longer for the largest MSA submissions than for smaller MSA submissions.

Estimated future drug costs are the main reason for CMS requiring increases of MSA amounts. CMS generally requires larger percentage increases to MSAs when the submission amounts are smaller. For example, CMS has requested an average 51% increase when the submitted MSA is under $25,000, while it has only requested an average 6% increase when the submitted MSA exceeds $200,000. Across all sizes of submitted MSAs, estimates of future prescription drug costs for injured workers are the main reason that CMS requires increases.

The gap between approved and submitted MSAs appears steady between 2013 and 2015 mainly because of the decrease between approved and submitted prescription drug amounts. While the gap between approved and submitted amounts for Medicare Parts A and B amounts (covering hospital stays, office visits, and related services) appears stable between 2010 and 2015, the same could not be said for Part D amounts (covering prescription drug services). The gap between prescription drugs approved and submitted MSA amounts was rather large between 2010 and 2012, but has significantly decreased since then and appears to be stable since 2013. This stabilization is the main contributor to the steadiness in the overall MSA amounts between 2013 and 2015.

The larger the MSA, the larger the share of drug costs. Prescription drug shares typically increase as the MSA gets larger. MSA settlements above $100,000 are typically associated with more serious injuries, such as back injuries, limb or finger amputations, burns, or head trauma. Many of these claimants are experiencing chronic pain or depression, so it is not surprising that the majority of MSA settlement costs are for prescription drugs.

Most MSAs are for claimants who are Medicare-eligible at time of settlement. About 64% of claimants are eligible for Medicare, not because of age but because they have been on Social Security Disability for at least two years. Another 29% of claimants are eligible due to age, and about 7% are likely to become eligible within 30 months.

The largest percentage of MSA submissions occur four years after the work-related accident. Submissions gradually decrease after that, but it is not uncommon to have a submission 20 or 25 years after an accident. Very few MSAs are submitted in the same year as the accident.

Overall, MSAs represent more than 40% of total submitted workers compensation settlement costs. On average, 22% of the total settlement is for the portion of the MSA covering Medicare Part D (prescription drugs) and 20% is for the portion of the MSA covering Medicare Parts A and B (hospital stays, office visits, and related services). About 58% of the submitted total workers compensation settlement is for costs other than MSAs, typically including indemnity coverage, medical costs not covered by Medicare, and other expenses such as attorney fees.

More than half of MSA submissions involve an attorney. About 54% of the time, MSA claimants seek assistance from an outside attorney when establishing their MSA arrangements. About 46% do not. The involvement of outside legal counsel does not vary much based on whether the total submitted settlement amount is large or small.

A six-year-old lawsuit against California’s State Compensation Insurance Fund, EK Health services – their utilization review vendor – and over a dozen utilization review physicians, recently settled. The case was filed by Electronic Waveform Lab, Inc., maker of H-Wave® – a physician prescribed drug-free medical device that helps those with chronic pain.

In 2011, Electronic Waveform Lab filed a lawsuit against EK Health and eleven Utilization Review Physicians alleging improper conduct in denying the H-Wave® Electrotherapy Device in Utilization Review. The lawsuit was amended to add State Compensation Insurance Fund and three additional Utilization Review Physicians as a party to the action and the case proceeded in federal court with a third amended complaint..

The case alleged, for the first time ever, a RICO statue violation accusing the groups of conspiring to deny physician treatment requests for the FDA cleared H-Wave® device, which can be prescribed by doctors as an alternative to opioids. The parties reached a confidential financial settlement in October 2017.

H-Wave®, a device made by Electronic Waveform Lab, Inc. of Huntington Beach, California, claimed that California’s State Compensation Insurance Fund, allegedly conspired with their contracted utilization review vendor and their independent contractor physicians who are responsible for approving or denying the use of any device for patients on a case-by-case basis, to deny all H-Wave® requests no matter what the medical necessity issues were.

As a result of the litigation settlement, State Fund, EK Health and EK Health’s Utilization Review Physicians will now recognize that Home H-Wave® is a drug-free treatment option, medically necessary in appropriate circumstances, and may be approved for use by injured patients pursuant to current evidence-based medicine and prevailing guidelines.

Authorization requests that prescribe Home H-Wave® should be evaluated on a case-by-case basis, focusing on the needs of the injured patient.

This could be perceived as a big win for medical device makers which deal with denials from claims adjusters on a daily basis. With today’s widespread focus on the national opioid epidemic, this case is encouraging for patients and their physicians who are demanding alternative treatments for chronic pain.

H-Wave, a scientifically-reviewed device that uses electrotherapy to treat chronic pain and speed recovery from injury, has been used by physicians and their patients for more than 35 years.

Most patients who are prescribed H-Wave have been suffering with chronic pain for more than 500 days and have exhausted other conservative treatments, according to the company. Besides being prescribed by doctors for work-related injuries or pain, H-Wave is currently used by more than 70 professional sports teams. More than 200,000 thousand people have been prescribed H-Wave over the last 35 years.