Category: Daily News

The Los Angeles Times reports that agents for the Federal Bureau of Investigation raided Proove Biosciences, an Irvine company that sells a DNA test it claims can determine whether a patient is at risk of addiction to opioid painkillers. In a press conference, FBI spokeswoman Cathy Kramer said the raid was part of an ongoing investigation concerning healthcare fraud. No arrests were made.

Anonymous company employees told STAT News, a healthcare news site, that about 25 agents arrived with a search warrant and spent several hours hauling out boxes of documents. The employees had been told by Proove to stay home for the day.

Proove maintains that its test can determine a patient’s risk of addiction with 93% accuracy. But, in December, an article published by STAT questioned the scientific basis for Proove’s test. Rockefeller University’s Dr. Mary Jeanne Kreek, who researches genetic links to addiction, told STAT that Proove’s test was “hogwash.” In February, the site said Proove’s method of paying physicians to participate in clinical trials might violate anti-kickback laws. That article included a statement from CEO Brian Meshkin, who said that “Proove is acting within the confines of the law – [and intends] to follow both the letter and spirit of the law.”

For doctors, the brochure from the California medical laboratory sounded like easy money: $30 for every person enrolled in a study of genetic tests meant to help select the best pain medication for each patient. A typical physician could make $144,000 a year in “research fees.”

And authorities have asserted that “research fees” are hidden kickbacks to physicians in other medical industries such as compounded pharmaceuticals.

For example, Jacksonville-based WELL Health Pharmacy and its owner have agreed to pay more than $3 million, as well as 50% of its net profits for five years, to resolve concerns that it knowingly filled prescriptions that were written by referral sources that had a financial interest in the prescriptions.  While these referring physicians were purportedly participating in a “research study” related to compounded prescriptions, the government contends that this research study was a sham and that the compensation far exceeded fair market value.

And Topical Specialists, a pharmacy based in Jacksonville, Florida, has agreed to pay the government more than $2.2 million for its role in submitting prescriptions that were tainted by so-called “research fees,” which was an elaborate guise for paying physicians to write prescriptions. This settlement is directly related, and in addition to, the WELL Health settlement described above.  

And there remain several compound pharmacies who advertise “clinical trials” programs today on their websites.  Greenpark Compounding Pharmacy in Houston Texas, McGuff Compounding Pharmacy in Santa Ana California, Pharmacy Creations in Randolph New Jersey, MasterPharm in New York are a few examples of some who can be identified by a Google search.  It would require an intense investigation to discover if any compounding pharmacy is engaged in a hidden kickback scheme disguised as research fees to physicians, or if it is legitimate medical research.

Proove Biosciences had 2016 revenues of $28 million, according to STAT. The company was able to collect more than 100,000 DNA specimens, largely because of a regulatory loophole regarding “laboratory-developed tests.” Essentially, these tests are free from Food and Drug Administration regulation so long as they’re designed, manufactured and used within a single laboratory.

Last November, the Obama administration halted plans to close the loophole, and the FDA elected to leave the decision for the Trump administration.

The authenticity of a “research fee” is one more investigatory task for the SIU unit to consider in claim reviews.

The U.S. Supreme Court cut the time it will take for copycat versions of biologic drugs to get to the market in a pivotal ruling about an expensive class of medicines that can yield billions of dollars in sales for drug companies.

The justices, in a 9-0 ruling, overturned a lower court decision that had prevented Swiss pharmaceutical company Novartis AG  from selling its copycat version of California-based Amgen Inc’s Neupogen until six months after the U.S. Food and Drug Administration approved it.

The decision has major implications for the pharmaceutical industry because it will dictate how long brand-name makers of biologic drugs can keep near-copies, called biosimilars, off the market. Even the six months at issue in the case can mean hundreds of millions of dollars in sales.

Health insurers expect biosimilars to be cheaper than original brands, like generics, saving consumers billions of dollars each year.

The dispute involved a section of the 2010 Affordable Care Act, dubbed Obamacare, that created an expedited path for regulatory approval of biosimilars while trying to respect the patent rights of brand-name manufacturers.

Novartis complained that the 2015 ruling by the U.S. Court of Appeals for the Federal Circuit in Washington handed Amgen an extra six months of exclusivity on top of the 12 years already provided under the law.

Rising drug prices are a matter of concern for patients and policymakers. President Donald Trump has criticized the pharmaceutical industry over pricing practices, promising to encourage competition and bring down drug costs.

Unlike traditional drugs, biologics are made from living cells and cannot be copied exactly to make generic versions. They are used to treat a range of conditions, including Crohn’s disease, ulcerative colitis, rheumatoid arthritis, plaque psoriasis, breast cancer and diabetes.

Novartis unit Sandoz in September 2015 began selling Zarxio, the first biosimilar drug to win U.S. regulatory approval. Amgen’s Neupogen and Zarxio boost white blood cell counts in cancer patients to help fight infections.

After launch, Zarxio cost 15 percent less than Neupogen at list prices, according to Novartis. Sales of Neupogen, meanwhile, dropped from more than $1 billion in 2015 to $765 million last year, primarily due to competition in the United States, the company said in regulatory filings.

Biologics account for an ever-increasing share of U.S. prescription drug costs, according to an insurer trade group. It cited as an example AbbVie Inc’s Humira, which costs more than $50,000 per year.

Amgen sued Sandoz in 2014 in San Francisco federal court alleging patent infringement and violations of the Affordable Care Act provision governing biosimilars.

The companies disagreed on how to apply that law’s requirement that a biosimilar drug maker give the brand-name manufacturer 180 days notice before launching its copycat version.

In July 2015, the appeals court ruled that the 180-day notice must be given after FDA approval. Novartis appealed to the Supreme Court, with the Trump administration backing the company’s arguments.

The California Department of Insurance has reached a settlement agreement with Berkshire Hathaway subsidiaries in the Shasta Linen case. The settlement includes a dismissal of the writ petition filed by the insures and the commissioner’s administrative decision in the Shasta Linen case will continue to stand as a precedent decision.

The company will however continue to sell a revised version of its controversial workers’ compensation insurance policies to California employers. The revised version will contain disclosures about the financial risks of Reinsurance Participation Agreements or RPAs,

Workers’ compensation insurance was partially deregulated by the legislature in the1990s and as a result, the insurance commissioner has only limited authority over rates and product features.

Commissioner’s regulatory authority over workers’ compensation rates is limited. The rates must be sufficient to make sure the companies remain solvent, The rates cannot tend to create a monopoly in the market. And they cannot be unfairly discriminatory.

Nonetheless, workers’ compensation insurers are required to file their policy forms with the department.  However, the commissioner has very limited authority over product features.

In May 2016, in response to a complaint by Shasta Linen, and after a hearing by an administrative law judge, the commissioner determined California Insurance Company and Applied Underwriters, both subsidiaries of Berkshire Hathaway, were selling a workers’ compensation product with illegal side agreements that modified the obligations of the parties under the policy.

Such agreements, known as Reinsurance Participation Agreements or RPAs, require department review and approval. But the Berkshire companies used the agreements without first obtaining the department’s approval.

The RPA did not disclose basic premium information, levied hefty penalties for policy cancellation, failed to disclose required binding arbitration outside the U.S., and obfuscated the methodology for calculating premiums, deposits, or other payments due.

The department concluded Applied Underwriters was trying to avoid regulatory oversight, as noted in their U.S. patent application where the company described how its patent purports to evade regulatory oversight and ostensibly allows the company to sell a complicated type of policy to smaller businesses, which most states prohibit.

The settlement effectively constitutes an acknowledgement that rates and supplementary rate information must be filed with the department consistent with longstanding insurance law. The settlement includes new disclosures that will provide policyholders with key details regarding the product.

However, the CDI claims that even the revised products are not appropriate for businesses unable to adequately evaluate the pricing, obligations, and risks of such a complex product. The department advises any employer considering such a complex product to consult an expert with legal and actuarial expertise in workers’ compensation products.

The U.S. Securities and Exchange Commission on Wednesday declined to interpret whether a workers’ compensation policy executed by a Berkshire Hathaway insurance unit can be characterized as a swap, saying its interpretation could influence an ongoing $18 million suit concerning the policies.

The agency declined to issue a joint interpretation with the Commodity Futures Trading Commission as to whether a “reinsurance participation agreement” executed by Applied Underwriters Captive Risk Assurance Company Inc. is a swap, citing a suit filed by delivery service Breakaway Courier Systems.

The Department of Industrial Relations and its Division of Workers’ Compensation have suspended Pasadena psychiatrist Jason Hui-Tek Yang from participating in California’s workers’ compensation system.

Dr. Yang was convicted in Riverside County Superior Court for his involvement in an insurance fraud conspiracy that referred patients for unnecessary care to justify workers’ compensation billing.

He was implicated in a second round of charges that expanded a Riverside County case against Peyman Heidary, a chiropractor accused of masterminding a legal and medical scheme to maximize profits by recruiting injured workers and giving them a one-size-fits-all battery of medical treatments. Prosecutors claimed Heidary ran an operation that paid people referred to as “cappers” $100 per patient to recruit injured workers who were provided the same medical care regardless of their injuries.

Heidary and three associates were initially charged in July 2014.  Later charges were filed filed against an additional six people, including three physicians. The 26 page grand jury indictment accused Yang of referring patients for unnecessary care to justify billing for “med-legal” reports, costing about $1,000 each.  Several carriers were specifically named as victims.

Dr. Yang is a 1995 graduate of the University of Southern California, Keck School of Medicine. He was licensed in California in 1998. The Medical Board of California records show his license is still active, and there is no record of disciplinary action.

DWC issued a Notice of Suspension, which Yang appealed. The appeal was heard in April by Hearing Officer William E. Gunn, who issued a recommended determination and order on May 25. The recommended decision was adopted by DWC Acting Administrative Director George Parisotto and the suspension confirmed on June 1. Dr. Yang has over 2,000 active workers’ compensation liens with an estimated total claim value of more than $13.7 million.

AB 1244 (Gray and Daly) requires the DWC Administrative Director to suspend any medical provider, physician or practitioner from participating in the workers’ compensation system in cases in which one or more of the following is true:

1) The provider has been convicted of a crime involving fraud or abuse of the Medi- Cal or Medicare programs or the workers’ compensation system, fraud or abuse of a patient, or related types of misconduct;

2) The provider has been suspended due to fraud or abuse from the Medicare or Medicaid (including Medi-Cal) programs; or

3) The provider’s license or certificate to provide health care has been surrendered or revoked.

DIR’s fraud prevention efforts are posted online, including frequently updated lists for physicians, practitioners and providers who have been issued notices of suspension, and those who have been suspended pursuant to Labor Code §139.21(a)(1).

John Carlisle, a consultant anesthetist at Torbay Hospital in the UK, used statistical tools to conduct a review of thousands of papers published in leading medical journals. While a vast majority of the clinical trials he reviewed were accurate, 90 of the 5,067 published trials had underlying patterns that were unlikely to appear by chance in a credible dataset.

While some of these errors may be the result of “misinterpretation, statistical error, or plain simple mistakes,” Carlisle says in a press release emailed to The Scientist, it’s likely that some of the research in question “may have been deliberately falsified.” He published his results on June 5 in the medical journal Anaesthesia.

The tool works by comparing the baseline data, such as the height, sex, weight and blood pressure of trial participants, to known distributions of these variables in a random sample of the populations.

If the baseline data differs significantly from expectation, this could be a sign of errors or data tampering on the part of the researcher, since if datasets have been fabricated they are unlikely to have the right pattern of random variation.

“This study is about working to correct the scientific record,” Andrew Klein, the editor-in-chief of the journal, said in a press release. “The new Carlisle screening tool has been developed here in the U.K. and it is now clear that it should be used by medical publications around the world. The integrity of medical science demands that we do everything we can to ensure complete accuracy in the publication of research.”

In the case of Japanese scientist, Yoshitaka Fuji, the detection of such anomalies triggered an investigation that concluded more than 100 of his papers had been entirely fabricated.

The latest study identified 90 trials that had skewed baseline statistics, 43 of which with measurements that had about a one in a quadrillion probability of occurring by chance.

The published review includes a full list of the trials in question, allowing Carlisle’s methods to be checked but also potentially exposing the authors to criticism. Previous large scale studies of erroneous results have avoided singling out authors.

Relevant journal editors were informed last month, and the editors of the six anesthesiology journals named in the study said they plan to approach the authors of the trials in question, and raised the prospect of triggering in-depth investigations in cases that could not be explained.

The flagged studies came from eight journals, including the New England Journal of Medicine, Anaesthesia, and JAMA. As Klein tells Retraction Watch, all the journals responded “swiftly and positively” to Carlisle, who reached out with the findings of his study. Six of the journals in the new analysis are in anesthesiology, where Carlisle has focused his efforts for several years, refining the method since 2012.

That earlier work led to the revelations that much of Yoshitaka Fujii’s research was fraudulent, and Fujii now has made 183 retractions of his voluminous “research”. The method has also been used by others to identify issues in more than 30 papers by bone researcher Yoshihiro Sato.