Category: Daily News

Walmart Stores Inc. operates over 290 retail stores in California; approximately 283 of these locations have pharmacies.

U.S. Attorney Phillip A. Talbert announced that the company has agreed to pay $1.65 million to resolve allegations that it violated the federal False Claims Act when it knowingly submitted claims for reimbursement to California’s Medi-Cal program that were not supported by applicable diagnosis and documentation requirements.

“These Medi-Cal regulations are essential to protect both patients and limited heath care funding,” said U.S. Attorney Talbert. “My office will continue to hold pharmacies accountable when they fail to comply with regulations like these.”

Medi-Cal utilizes a formulary list, commonly known as “Code 1” drugs, which designates certain restrictions for each listed drug, including restrictions pertaining to diagnoses. Medi-Cal will reimburse certain Code 1 drugs only for approved diagnoses, taking into account criteria such as the drug’s safety, efficacy, misuse potential, and cost.

Pharmacies serve the critical gatekeeping function of confirming and certifying that these Code 1 drugs are dispensed for the approved diagnoses. Walmart may bill for drugs prescribed outside of the approved diagnoses only if it submits a request to DHCS that includes a justification for the non-approved use.

The current settlement resolves allegations that Walmart failed to confirm and document the requisite diagnoses, and in some instances dispensed drugs for non-approved diagnoses, then knowingly billed Medi-Cal for these prescriptions.

The allegations resolved by this settlement were first raised in a lawsuit filed against Walmart under the qui tam, or whistleblower, provisions of the False Claims Act by a pharmacist who has worked at Walmart locations in the greater Sacramento area. The False Claims Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The whistleblower in this matter will receive approximately $264,000 of the recovery proceeds.

This settlement is the result of a joint effort by the United States Attorney’s Office for the Eastern District of California and California’s Bureau of Medicaid Fraud and Elder Abuse. Assistant U.S. Attorney Catherine J. Swann handled the matter for the United States, with assistance from the Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Last May Talbert announced that Walmart competitor Walgreen Co. paid $9.86 million to resolve similar allegations. Walgreens is one of the largest drugstore chains in the United States, operating approximately 630 stores in California.

The allegations resolved by Walgreen settlement were first raised in two lawsuits filed against Walgreens also under the qui tam, or whistleblower, provisions of the False Claims Act by a former Walgreens pharmacist and a former pharmacy technician. The whistleblowers in the Walgreen case will collectively receive approximately $2.3 million of the recovery proceeds.

In February 2010 Jack Baker slipped on some tools in a walkway while working as a diesel mechanic for Sierra Pacific and insured by State Compensation. He injured his right knee, neck, left shoulder, and psyche, and received medical treatment.

The PTP prescribed the drugs Pennsaid and Norco for Baker in February 2014. UR timely denied the RFA for these drugs on March 12. Baker appealed the UR denial through an IMR by filing an application on March 19, 2014. Maximus did not assign the matter to IMR until June 23, 2014.

After the matter was assigned to IMR, both Baker and Sierra Pacific promptly submitted medical information to Maximus. Maximus issued its final decision on July 21, 2014, finding the prescriptions for Norco and Pennsaid not medically necessary or appropriate.

Baker filed a petition appealing the director’s IMR on August 19, 2014. A hearing followed on November 5, 2014. The WCJ in its findings determined: “In this case the delay of 96 days to assign this matter is unreasonable. As the designee of the [director], Maximus’ delay resulted in an act in excess of her powers.” The WCJ continued, “Applicant’s appeal from IMR is granted. He is entitled to a new IMR.” The WCJ ordered the matter remanded to the director for the conduct of a new IMR.

The WCAB granted the appeal on November 26, 2014, finding Baker’s remedy was a new IMR pursuant to section 4610.6, subdivision (i): “Although this seems like a somewhat futile act, in that the substantive decision by IMR was not plainly errant to a lay person, that is the remedy provided by the applicable law.”

Maximus issued a final determination after the second IMR on February 4, 2015, and upheld the UR denial for the authorization of the medications. Baker again appealed the IMR decision. The WCJ concluded that since this is a matter of conflicting medical opinions applicant has not met his standard of proof for his appeal. The WCJ did not discuss the timeliness of the decision.

Baker filed a petition for reconsideration which the WCAB granted. In its decision after reconsideration, the WCAB determined the time periods set forth in section 4610.6, subdivision (d), are directory not mandatory and failure to meet the time limits did not invalidate the IMR process. The Court of Appeal affirmed in the unpublished case of Baker v WCAB.

The 3rd District Court of Appeal noted that in the recent 2nd District case of State Comp. Ins. Fund v. Workers’ Comp. Appeals Bd.(Magaris) (2016) 248 Cal.App.4th 349, 359 “the appellate court explored this very issue.” Where a government action is mandatory in the obligatory-permissive sense and the government fails to act, the government can be compelled (i.e., mandated) to act in accordance with the statute. But where a government action is mandatory in the mandatory-directory sense and the government fails to act, it effectively loses jurisdiction to act in accordance with the statute.

It concluded “we agree with the Margaris court’s assessment.” The absence of a penalty or consequence for the failure to comply with the 30-day time limit, coupled with the limited grounds for appeal, indicate that the Legislature did not intend to divest the director of jurisdiction to issue an IMR determination after the 30-day window expires.

Endo International just took its extended-release opioid painkiller Opana ER (otherwise known as oxymorphone hydrochloride) off the market.

According to the story in Business Insider, the move comes almost a month after the Food and Drug Administration asked that the drug be removed when it found that the drug’s benefits no longer outweighed its risk for abuse.

“We are facing an opioid epidemic – a public health crisis, and we must take all necessary steps to reduce the scope of opioid misuse and abuse,” FDA commissioner Scott Gottlieb said in a news release at the time.

“Endo International plc continues to believe in the safety, efficacy, and favorable benefit-risk profile of Opana ER (oxymorphone hydrochloride extended release) when used as intended, and notes that the Company has taken significant steps over the years to combat misuse and abuse,” the company said in a news release. “Nevertheless, after careful consideration and consultation with the FDA following the FDA’s June 2017 withdrawal request, the Company has decided to voluntarily remove Opana ER from the market.”

The company said it expects a $20 million impairment charge in the second quarter of 2017.

More than 183,000 people died from overdoses related to prescription opioid painkillers like oxycodone, hydrocodone, fentanyl, and morphine over the last 15+ years.

When Opana ER is taken properly orally, it slowly releases into the body as intended. But if the drug is snorted or injected, it releases its dose all at once.

In 2012, Endo reformulated Opana to have abuse-deterrent properties. The new formula turned the pill into a gel that supposedly made it hard to snort or inject when crushed. But in 2013, the FDA found Opana was still easy to inject or snort despite the new formulation.

The abuse-deterrent formulation of the drug was likely tied to an HIV outbreak in Indiana in 2015 that resulted in 165 cases of the disease. The CDC interviewed 112 of the people who contracted HIV, finding that 96% of them had injected Opana using shared needles.

By far the most common route of abuse, however, is ingestion, either by taking too many pills at once or crushing it to counter the timed-release properties. No abuse deterrence properties can stop that.

The FDA held an advisory committee hearing in March to discuss whether the drug’s benefits for pain still outweigh its risks. The panel voted that they did not.

The world’s top medical technology companies are turning to robots to help with complex knee surgery, promising quicker procedures and better results in operations that often leave patients dissatisfied.  And the report in Reuters Health says that demand for artificial replacement joints is growing fast, as baby boomers’ knees and hips wear out, but for the past 15 years rival firms have failed to deliver a technological advance to gain them significant market share.

Now U.S.-based Stryker and Britain’s Smith & Nephew believe that is about to change, as robots give them an edge.Robots should mean less trauma to patients and faster recovery, although they still need to prove themselves in definitive clinical studies, which will not report results for a couple of years.

Fares Haddad, a consultant surgeon at University College London Hospitals, is one of the first in Britain to use the new robots and has been impressed. However, he agrees healthcare providers need decisive data to prove they are worth an investment that can be as much as $1 million for each robot.

“The main reason for using a robotic system is to improve precision and to be able to hit very accurately a target that varies from patient to patient,” he said. “It is particularly useful in knees because they are more problematic (than hips) and there are a chunk of patients that aren’t as satisfied as we would like with their knee replacement.” Satisfaction rates are only around 65 percent for knee operations, against 95 percent for hips, according to industry surveys.

The rival types of robots vary in cost and sophistication, assisting surgeons with precision image guidance for bone cutting and the insertion of artificial joints.

Orthopaedic companies hope to emulate the success of Intuitive Surgical, an early pioneer of robots in hospitals, which now has more than 4,000 of its da Vinci machines installed around the world for procedures including prostate removal, hernia repair and hysterectomies. In addition to selling into big Western markets, they also want to expand robot use in India, China and other emerging markets, where owning a prestigious high-tech system can be a marketing advantage for private hospitals.

Stryker is leading the charge with its MAKO robotic arm, a platform it acquired for $1.65 billion in 2013 and which has pioneered robot-assisted whole-knee operations by determining optimal positioning and then helping with bone cutting. But it has competition from smaller rival Smith & Nephew, which last week launched a cheaper product called Navio for total knee replacements in the United States. The British group bought the company behind Navio for $275 million in 2016.

That has kicked off the battle in earnest, since both companies are now able to do total knee replacements, which represent the vast majority of knee procedures. MAKO, which uses only Stryker’s joints and implants, costs around $1 million to install, while Navio, which does not have as many features and is not tied exclusively to Smith & Nephew’s products, is less than half the price.

Both companies believe their robots will help them capture a bigger share of an orthopaedic market that has been split between four big players for more than a decade.

Indeed, Smith & Nephew Chief Executive Olivier Bohuon said it was his company’s most important strategic investment for a decade. “We are now basically head to head with Stryker,” he said in an interview. “I do believe we are going to gain market share due to the fact we have robots, whether it’s Stryker or us.”

Stryker, meanwhile, expects its MAKO system to start delivering market share gains from the end of 2017. “As we exit this year, we expect to start to see evidence in our knee market shares,” Katherine Owen, head of strategy at Stryker, told an investment conference in June. “Our goal with MAKO on knees is to capture hundreds of basis points of market share. What that time frame looks like, we haven’t been specific about.”

Zimmer Biomet and Johnson & Johnson, the two other big players in orthopaedics, are lagging in the robotics race but both have plans to enter the area in different ways. J&J is working on surgical robotics with Verily, the life sciences arm of Google parent Alphabet, while Zimmer last year bought a majority stake in France’s Medtech, a specialist in neurosurgery.

Jefferies analysts said the semi-automated bone resection offered by MAKO might well win out in the long term, but Navio offers a far cheaper option and is still well ahead of anything the other two major manufacturers have today.

The owners of Pacific Alliance Medical Center, an acute care hospital located in the Chinatown District of Los Angeles, have agreed to pay $42 million to settle allegations that they were involved in improper financial relationships with referring physicians, the Justice Department announced today.

PAMC, Ltd. and Pacific Alliance Medical Center Inc., the owners of the hospital, agreed to pay the settlement to resolve a lawsuit that alleged they had violated the False Claims Act by submitting false claims to the Medicare and MediCal programs.

The settlement, which was finalized this week, calls for PAMC Ltd. and Pacific Alliance Medical Center Inc. to pay $31.9 million to the United States and $10 million to the State of California.

The settlement resolves allegations brought in a “whistleblower” lawsuit that the defendants submitted or caused to be submitted false claims to Medicare and MediCal for services rendered to patients who had been referred by physicians with whom the defendants had improper financial relationships.

These improper relationships took the form of (1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and (2) marketing arrangements that allegedly provided undue benefit to physicians’ practices.

The lawsuit alleged that these relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.

The whistleblower lawsuit was filed by Paul Chan, who was employed as a manager by one of the defendants, under the qui tam provisions of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action. Mr. Chan will receive over $9.2 million as his share of the federal recovery.

“This settlement is a warning to health care companies that think they can boost their profits by entering into improper financial arrangements with referring physicians,” said Special Agent in Charge Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to crack down on such deals, which work to undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.”

The case, United States ex rel. Chan v. PAMC, Ltd., et al., CV13-4273 (C.D. Cal.), was monitored by the United States Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.