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U.S. Approvals of New Drugs Highest Since 1996

After years of disappointing research and development productivity, a new report backed by leading institutional investors sees “early indications of a recovery”, with U.S. approvals of new drugs last year the highest since 1996. The PharmaFutures thinktank said on Wednesday that getting the most out of an improving flow of novel – and costly – drugs in areas such as oncology will require a more flexible approach to developing, licensing, using and paying for medicines. But, the report summarized by Fox News says that pharmaceutical companies need to boost the benefits of drug research by working with regulators and healthcare providers to overhaul the way medicines are approved and paid for, a thinktank backed by investors says. This would allow investors in drug companies to benefit from earlier cash flows, reduced regulatory risk and less uncertainties over whether drugs will be paid for.

The thinktank has the backing of investors such as Fidelity Worldwide Investment, JPMorgan Asset Management, Robeco and Universities Superannuation Scheme Investment Management, as well as drugmakers like GlaxoSmithKline and Johnson and Johnson. PharmaFutures director Sophia Tickell saw scope for change as governments seek to overhaul healthcare and get better value, sometimes prompted by austerity.

“Today’s binary decision-making at the point of regulatory approval and price setting will need to be replaced by iterative, dynamic decision-making that adapts as evidence is accrued, and value determined over time,” the new report said. In particular, regulators should have more flexibility to take into account evidence about a drug’s effectiveness as it is rolled out and used. At the same time, the industry needs to move away from ideas of a fixed price point for medicines to a system where prices are adapted according to changing perceptions of the value of a medicine, based on how it works in clinical practice. On both fronts, there are signs that industry and regulators are starting to change. The U.S. Food and Drug Administration, for example, recently launched a programme to accelerate life-saving therapies designated as a “breakthrough,” opening to door to earlier approval based on quicker studies, where clinical data is compelling.

The European Medicines Agency also has a scheme to allow conditional approval based on good interim clinical trial results, while Britain currently plans to introduce a system of value-based pricing for new drugs in 2014, although details of this measure are still awaited.

DWC Rolls Out Proposed RBRVS Fee Schedule Regulations

The Division of Workers’ Compensation has issued the notice of public hearing for a resource – based relative value scale (RBRVS) based physician fee schedule. A public hearing on the proposed regulations has been scheduled at 10 a.m., July 17, in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland, CA, 94612. Members of the public may also submit written comment on the regulations until 5 p.m. that day.

Senate Bill 863 directs DWC’s administrative director to adopt a physician fee schedule based upon the federal RBRVS used in the Medicare payment system.

“I am thrilled that the Division of Workers’ Compensation has issued the proposed physician fee schedule regulations. We believe these regulations will put in place a fee schedule for physicians that will support the right incentives for appropriate care and return to work. We also believe that with these regulations we can more readily keep pace with updates and ensure all the changing technologies are available,” said Christine Baker, the director of the Department of Industrial Relations.

In the RBRVS – based system, relative value units interact with payment ground rules and the conversion factor to determine the maximum fee in light of the resources to provide the service. The new provisions of Labor Code section statute 5307.1 direct the administrative director to “adopt and review periodically an official medical fee schedule (OMFS) based on the resource – based relative value scale for physician services and nonphysician practitioner services.”

“We expect the workers’ compensation system to see many cost saving and efficiency benefits from adopting the RBRVS-based fee schedule, and the benefits will be enhanced by adopting the schedule prior to the ‘default’ fee caps that will automatically apply on Jan. 1, 2014 if a regulation is not adopted,” said Destie Overpeck, acting administrative director. Adoption of the regulations is preferable to the “default” option in Labor Code section 5703.1 that would apply on Jan. 1, 2014 if the administrative director does not adopt a RBRVS-based fee schedule. The proposed regulations differ from Medicare where appropriate for workers’ compensation. Adoption of conversion factors in the regulations improves accuracy over the “default” fee caps, as the proposed conversion factors were derived by RAND with updated and more representative data.

The notice, text of the regulations, and forms can be found on the proposed regulations page.

Supreme Court Approves FTC Suits Against Drugmakers for “Pay for Delay Deals”

The Supreme Court ruled on Monday that federal regulators can challenge deals between brand-name drug companies and generic rivals that delay cheaper medicines from going on sale, which regulators say increase costs to consumers by billions of dollars. But the court, in a 5-3 vote with Justice Samuel Alito recused, declined the Federal Trade Commission’s request to declare the deals to be presumed to be illegal. The regulatory agency has fought the practice for more than a decade.

According to the summary prepared by Reuters Health, the companies in the case were brand-name drug maker Solvay Pharmaceuticals Inc, now owned by AbbVie; generic makers Actavis Inc, previously Watson Pharmaceuticals; Paddock Laboratories Inc, now part of Perrigo Co, and Par Pharmaceutical Cos.Solvay had sued generic drugmakers in 2003 to stop the sale of cheaper versions of AndroGel. In a settlement of the lawsuit, Solvay paid as much as $30 million annually to the generic drug makers to help preserve its annual profits from AndroGel, estimated at $125 million. Under the deal, the three would keep their generic versions off the market until 2015. The patent expires in 2020. Generic drugmakers like the “pay for delay” arrangements because if they bring out their products before patent infringement litigation is over, they run the risk of paying triple damages on sales if they are found to have infringed.

The FTC filed a lawsuit against the companies in 2009, arguing that the companies had simply split up Solvay’s monopoly profits and prevented the generic firms from bringing out a cheaper version of the drug. The FTC lost at the district court level, and that loss was affirmed by 11th Circuit Court of Appeals. The Supreme Court overturned the appeals court ruling and sent the case back to the lower courts for further proceedings.

“This definitely legitimizes the role of antitrust law in these settlements that the FTC has been pursuing for a while,” said Noah Leibowitz, a patent expert with Simpson Thacher and Bartlett. “Any settlement is going to be more difficult and companies will think much more carefully about how they settle these cases,” he said.

FTC Chairwoman Edith Ramirez said the court had “taken a big step toward addressing a problem that has cost Americans $3.5 billion a year in higher drug prices.” “We look forward to moving ahead with the Actavis litigation and showing that the settlements violate antitrust law,” she said in an email statement.

CWCI Sees No Change in Opioid Use

Powerful Schedule II opioid painkillers accounted for about 7% of all outpatient drugs dispensed to California injured workers over the past two years, consuming nearly 20% of California workers’ compensation outpatient prescription dollars, according to new California Workers’ Compensation Institute (CWCI) data.

Using a large sample of prescriptions dispensed to California injured workers from 2002 through 2012, CWCI researchers confirmed major trends noted in earlier research, including a spike in the use of Schedule II opioid analgesics such as Oxycodone, Morphine, and Fentanyl about a decade ago, with the most dramatic increase occurring between 2005 and 2008 when these meds increased from 1.4% to 5.4% of injured worker prescriptions. That growth continued at a more moderate rate from 2008 through 2010, at which point Schedule II opioids hit 6.9% of all workers’ comp outpatient scripts, and 19.7% of prescription payments. The new results indicate that since then, Schedule II opioids have showed little change, hovering around 7% of workers’ compensation prescriptions and 20% of the prescription dollars for the past two years. Unlike CWCI’s 2012 analysis, which showed a potential drop off in the use of Schedule II opioids in the second half of 2011, the latest data reveal no such decline, and as noted last year, rather than signaling a reversal in the trend, the short-term decline in Schedule II opioid utilization suggested by the initial results from the last half of 2011 may have reflected factors such as billing cycles for year-end services, data submission delays due to processing utilization review decisions, and liens.

Whether use of these narcotics to treat injured workers will continue at this level remains to be seen, and a number of factors could affect the trend. For example, a current bill (SB 809) now before the Assembly would fund the state’s CURES prescription monitoring program and require those who dispense Schedule II opioids to report to the Department of Justice whenever they fill a prescription for these meds. Though doctors would not be required to check with CURES before writing a Schedule II prescription, a more robust CURES database and more user friendly program could help curb abuse and doctor shopping to the extent that more physicians voluntarily check the state database before prescribing Schedule II drugs. In any event, CWCI will continue to monitor the prevalence and costs associated with opioid analgesics in California workers’ compensation. In the meantime, the Institute has issued a Bulletin to its members and subscribers summarizing the latest opioid painkiller utilization and payment results in California workers’ compensation and plans to release a more detailed report on the 2002-2012 trends, including breakdowns by drug type, in the next few weeks. That report will be available to CWCI members and subscribers in the Research section of the Institute’s website, www.cwci.org.

Former Oxnard Cop Jailed for Comp Fraud

The Ventura County Star reports that a former Oxnard police officer was sentenced to 120 days in Ventura County jail on Friday after pleading guilty to two counts of felony workers’ compensation insurance fraud.

Ventura County prosecutors said Edward Idukas, 28, told his supervisors on Dec. 29, 2009, that he had hurt his back. Idukas said the injury occurred while he was bending over in the police locker room.

An investigation was launched after authorities were tipped off about his claim. Investigators learned that Idukas was playing baseball on a weekly basis while he was out on disability. Surveillance video showed Idukas engaging in prolonged physical activity without any sign of pain or discomfort. During this time, Idukas told his doctors and physical therapists that he was too disabled to go back to work, prosecutors said.

In addition to being sentenced to jail, Idukas also was ordered to pay $120,702 in restitution. He no longer works for Oxnard police department..

Pharmacy Resolves DEA Oxycodone Probe for $80 Million Penalty

Walgreens Corporation, the nation’s largest drug store chain, has agreed to pay $80 million in civil penalties, resolving the DEA’s administrative actions and the United States Attorney’s Office’s civil penalty investigation regarding the Walgreens Jupiter Distribution Center and six Walgreens retail pharmacies in Florida. The settlement further resolves open civil investigations in the District of Colorado, Eastern District of Michigan, and Eastern District of New York, as well as civil investigations by DEA field offices nationwide, pursuant to the Controlled Substances Act.

The settlement, the largest in DEA history, resolves allegations that Walgreens committed an unprecedented number of record-keeping and dispensing violations under the Act. According to documents filed in the underlying administrative actions, the Registrants negligently allowed controlled substances listed in Schedules II – V of the Act, such as oxycodone and other prescription pain killers, to be diverted for abuse and illegal black market sales.

The settlement agreement covers conduct that was the subject of DEA’s administrative actions and the U.S. Attorney’s Office civil penalty investigation. More specifically, the settlement covers allegations against Walgreens’ Jupiter Distribution Center and six Walgreens’ retail pharmacies. First, the Jupiter Distribution Center failed to comply with DEA regulations that required it to report to the DEA suspicious prescription drug orders that it received from Walgreens’ retail pharmacies. Walgreens’ alleged failure to sufficiently report suspicious orders was a systematic practice that resulted in at least tens of thousands of violations and allowed Walgreens’ retail pharmacies to order and receive at least three times the Florida average for drugs such as oxycodone.

Second, the six retail pharmacies in Florida that received the suspicious drug shipments from the Jupiter Distribution Center, in turn, filled customer prescriptions that they knew or should have known were not for legitimate medical use. In addition, these retail pharmacies and others elsewhere in the United States failed to properly identify and mark, as required by DEA regulations, hardcopy controlled substance prescriptions that were outsourced to a “central fill” pharmacy for filling. Without Walgreens’ retail pharmacies identifying these outsourced prescriptions, DEA could not accurately determine which prescriptions were filled from the retail pharmacies’ own drug supplies and which prescriptions were filled by a “central fill.” Consequently, DEA could not determine the accuracy of the retail pharmacies’ drug records. The DEA’s administrative actions demonstrated millions of violations of this type.

In addition to the $80 million civil penalty for the above violations, Walgreens agreed to surrender the Registrants’ ability to distribute or dispense controlled substances listed in Schedules II – V for two years, ending in 2014. As part of the settlement, Walgreens admitted that it failed to uphold its obligations as a DEA registrant regarding the above-described conduct. Furthermore, Walgreens has agreed to create a Department of Pharmaceutical Integrity to ensure regulatory compliance and prevent the diversion of controlled substances. Walgreens has also agreed to enhance its training and compliance programs, and to no longer monetarily or otherwise compensate its pharmacists based on the volume of prescriptions filled.

City of Upland Moves to Keenan

The Upland City Council on Monday appointed Los Angeles-based Keenan and Associates to provide workers’ compensation claims management for the city. The Inland Valley Daily Bulletin reports that the city will spend a little more in order to achieve long-term savings on administering workers’ compensation claims.

“Although the cost of the service will increase slightly by $19,000 from what we’re currently paying, we are going to realize an overall savings from this contract because of the way administrative review of bills is conducted,” said Stephanie Mendenhall, the city’s administrative services director. “So the overall savings will be realized in current budget that we’re proposing for the next fiscal year.”

City staff received six proposals for firms, three of which were reviewed by staff members before unanimously selecting Keenan and Associates. The council in April selected the same firm as its insurance broker of record.

Councilman Brendan Brandt asked Mendenhall to report back to the council within the year on the amount saved through the contract. “I understand there’s going to be slight increase in terms of the overall contract with a promise of increased savings through a variety of different factors including monitoring bills and stuff like that – aggressive resolution of claims,” he said. “I think I can vote in favor of this with the caveat you report back within the year as to the realization of those savings if those occur.”

The firm will make online training courses available to city staff in order to keep them up to date on California Occupational Safety Health standards. “We’re hoping that through training our employees and working together as a department and staff members, we can reduce the amount of claims we receive,” Mendenhall said. “That’s the plan. We’re hoping to engage our departments at all levels – departments heads, the managers, the employees.”

Employer Immunity Applies to Injury Caused by Employee Prank

James Karty was working as a waiter at Filippi’s Pizza Grotto which was owned by Richard DePhilippis. One of Filippi’s pizza cooks, Marcos Sevilla, heated a pan in a 550-degree pizza oven before placing a pizza on the pan for Karty’s order. Because the pizza pans are generally cool, Karty picked up the pan with his uncovered hand intending to deliver it to a customer’s table. When he did so, Karty screamed and then dropped the pan. Karty suffered serious and permanent burn injuries. Shortly after the incident, Sevilla admitted he was responsible for the action, quit his job, and never returned to the restaurant.

In addition to receiving workers’ compensation benefits, Karty sued his employer, DePhilippis, and two of Karty’s coworkers asserted two causes of action: battery and intentional infliction of emotional distress. He alleged that his coworkers “deliberately and with intent to injure [him] . . . heated up a pizza pan . . . with full knowledge of the almost-certain likelihood that when [Karty] touched the heated [pan], he would be burned.” Karty sought to recover against DePhilippis based on two exceptions to workers’ compensation exclusivity rules: (1) section 3602(b)(1), which provides for employer liability if the employee’s injury is caused “by a willful physical assault by the employer” and (2) employer ratification principles.

Karty acknowledged that before his August 15 burn injury, there was substantial horseplay among the restaurant employees. Karty and the other employees routinely engaged in practical jokes and other similar activities. For example, Karty frequently placed spoons in other employees’ pockets and would throw small items at other employees, and the employees (including Karty and Lopez) would hit each other with menus and pizza boxes. Karty viewed these activities as innocent horseplay or “joking around” and did not believe these actions were hostile or improper.

After Karty completed his presentation of his case during a jury trial, DePhilippis moved for a nonsuit based on his argument that workers’ compensation was the exclusive remedy for Karty’s injuries. In response, Karty argued that his manager, Lopez, encouraged and/or directed the burn incident and thus her actions could be attributed to the employer for civil liability purposes. The court granted the nonsuit motion, finding that although Karty presented evidence sufficient to establish that Lopez ” ‘participated in a “willful physical assault” on Karty,’ ” Lopez’s involvement did not establish an exception to the workers’ compensation exclusive remedy rules. Karty appealed the dismissal of his case, and the Court of Appeals affirmed the dismissal in the unpublished case of Karty v Richard DePhilippis.

Generally, an employee suffering an injury during the course and scope of his or her employment is limited to recovery provided by the workers’ compensation system. Courts broadly construe the exclusivity provisions and narrowly interpret exceptions to those provisions. Section 3602(b)(1) creates an express exception to the workers’ compensation exclusivity rules “[w]here the employee’s injury or death is proximately caused by a willful physical assault by the employer.” (Italics added.) Under the undisputed facts, DePhilippis was Karty’s employer as defined in the Labor Code. Karty presented no evidence that DePhilippis committed a physical assault or had any involvement or knowledge of the burn incident, or that anyone else was acting on his behalf in committing the claimed assault.

Suit Alleges IRS Seizes Millions of California Medical Records

Amid a firestorm about the Internal Revenue Service’s targeting conservative groups and wide concern that the tax service will be administering Obamacare, the IRS is also the subject of a California class action lawsuit alleging that 15 of its agents improperly seized 10 million Americans’ medical records from a California health care organization.

Malibu attorney Robert Barnes filed the lawsuit in California Superior Court,in mid-March on behalf of a John Doe Company and individuals whose records were seized according to a report from the Courthouse News Service.

“This is an action involving the corruption and abuse of power by several Internal Revenue Service (‘IRS’) agents (collectively referred to as ‘Defendants’ herein) during a raid of John Doe Company, in the southern district of California, on March 11, 2011,” the complaint, quoted by Courthouse News, reads. “In a case involving solely a tax matter involving a former employee of the company, these agents stole more than 60,000,000 medical records of more than 10,000,000 Americans, including at least 1,000,000 Californians.”

The complaint explains there was no warrant authorizing the seizure of the medical records and the records were not germane to the IRS search. The complaint alleges that the seizure violated the 4th Amendment, according to the extensive quotes from the complaint complied by Courthouse News.

“These medical records contained intimate and private information of more than 10,000,000 Americans, information that by its nature includes information about treatment for any kind of medical concern, including psychological counseling, gynecological counseling, sexual or drug treatment, and a wide range of medical matters covering the most intimate and private of concerns,” the complaint reads.

Republican members of the House Energy and Commerce Committee are looking into the allegations of this lawsuit. “(T)he Committee on Energy and Commerce is investigating allegations that the Internal Revenue Service (IRS), in the course of executing a search warrant at a California health care provider’s corporate headquarters in March 2011, improperly seized the personal medical records of millions of American citizens in possible violation of the Fourth Amendment to the United States Constitution,” members of the committee wrote in a letter to Acting IRS Commissioner Daniel Werfel.

DWC Announces QME Panel Request Changes

The Division of Workers’ Compensation’s Medical Unit has made changes to the Qualified Medical Evaluator (QME) panel request process as a result of Senate Bill 863. Emergency QME regulations introduce the following new requirements for QME panel requests: The QME forms for both the unrepresented and represented requests have been updated. QME Form 105a applies to the unrepresented cases and must be used for dates of injury on and after Jan. 1, 2013. Likewise,QME Form 106a applies to represented cases and must be used for dates of injury on and after Jan. 1, 2013. Both forms will be formally adopted after they are approved by the Office of Administrative Law, at which time the form numbers will be renamed to QME Form 105 and QME Form 106, respectively, with the latest revision date and will apply to all dates of injury. Agreed Medical Evaluator (AME) offer letter is no longer required prior to panel request (Labor Code § 4062.2)

Disputes from utilization review (UR) determinations that delay, modify or deny medical treatment must be resolved through the independent medical review process for dates of injury on or after Jan. 1, 2013 and for all dates of injury for which UR determinations that delay, modify or deny medical treatment are issued on or after July 1, 2013 (Labor Code §§ 4062(b), 4610.5.)

For disputes over the existence or extent of permanent impairment and limitations or the need for future medical care; or concerning any medical issues not over covered by section 4060 or 4061 and not subject to section 4610: a QME panel request must include a written objection that identifies (Regulation 30(b)):

  • The name of the primary treating physician (PTP)
  • The date of the PTP’s report that is the subject of the objection
  • A description of the medical dispute requiring a comprehensive medical legal exam is necessary

For disputes over the compensability of any injury under Labor Code section 4060: a QME panel request must include a written objection that specifies that a compensability examination is required (Regulation 30(b)).

QME panel requests for disputes contained in Labor Code § 4062.2(b) cannot be submitted until 10 days after the objection letter has been sent. That period is extended by five days if the objection was made by mail within California. Substantive objections under Labor Code §§ 4060, 4061 and 4062 may be resolved using the process under Labor Code section 4062.2.

Requests submitted that do not contain all these components will be considered incomplete and will be rejected. When resubmitting a complete represented panel request please attach a copy of the rejection letter.

More helpful tips to ensure valid panel requests will be coming soon to the DWC Medical Unit website.