Category: Daily News

The federal government saw a spike in utilization in the prescription compounding industry that led investigators to an estimated $2 billion in fraud in claims to Tricare nationally beginning in 2013 and running into last year.

Across the country compounding pharmacies were charging as much as $10,000 to $20,000 each for prescriptions and some hired marketers who used Facebook and other social media to target military families, enticing them with inclusion in research studies and telling them of creams and salves that were pain relievers, migraine headache medicines and scar reducers, said Jason Mehta, a Jacksonville-based assistant U.S. attorney for the Middle District of Florida.

The cost to actually compound these creams was often only about 5 percent of the submitted cost, according to the Department of Justice. Compounding pharmacies were making in the range of 90 percent profit on each prescription.

According to the Defense Health Agency that oversees Tricare, costs for compound drugs skyrocketed from $5 million in 2004 to $514 million in 2014. Costs topped $1 billion in the first six months of 2015. Tricare went to Congress for help so the agency could make the payments, and rules were changed to make approvals of compound prescriptions more stringent. The agency was on track to lose $2 billion in 2015 alone until the controls were put in place in May, said George Jones, chief of pharmacy operations at the agency.

And now the promise of criminal prosecutions has materialized. In Arizona, a dozen doctors, pharmacy owners and marketing pros accused of a kickback scheme that prosecutors allege involved a sham medical study used to bilk up to $102 million from the publicly-funded federal health program for military family members.

Federal prosecutors said the scheme involved prescribing “compounded” drugs such as pain, scar and migraine creams to military families covered by Tricare, the federal health insurance program for active-duty and retired military and family members.

There have been at least two other federal probes alleging pharmacies paid kickbacks to doctors who ordered expensive compounded drugs for patients. One involved a California pharmacy that billed the state’s worker’s compensation program for pricey markups. In another, a Florida doctor was indicted on a charge of taking kickbacks for sending prescriptions, which billed Tricare and Medicare for creams that cost as much as $21,000 for a one-month supply, according to a federal indictment.

The Texas case centered on a Dallas-based company called CMGRX LLC, or Compound Marketing Group. Federal prosecutors allege that the marketing group arranged kickbacks to doctors who prescribed and Tricare-insured patients who purchased drugs from four compounding pharmacies.

Tricare enrollees were paid study “grants” of $250 per month for each prescription they obtained from a partner pharmacy.

“The defendants and their co-conspirators falsely represented that the study was approved by Tricare and that it was designed to evaluate the safety and efficacy of compounded drugs,” the indictment stated. “In reality, the PSI study was not approved by Tricare, was not overseen by a qualified physician, epidemiologist or other medical professional, had no control group, and was not designed to gather any useful scientific data relating to the safety or efficacy of any drug.”

The indictment alleged that Simmons also recruited an El Paso doctor, William F. Elder-Quintana, who wrote thousands of prescriptions that cost Tricare $96 million through June 2016. Elder-Quintana and other doctors were paid $60 for each pain or scar creme prescription or $30 for each vitamin prescription, the indictment said.

The indictment also alleged that marketing group employees would contact Tricare’s pharmacy-benefits consultant, Express Scripts, to find out whether certain drugs were covered. These employees then would adjust the prescriptions to maximize payments from Tricare “without any regard for the medical necessity for the prescriptions.”

The indictment accused marketing group employees of sending prefilled prescription forms to Elder-Quintana, who it alleged would sign the prescriptions after a cursory telephone interview with the patient. Other times, marketing group employees would use a stamp with Elder-Quintana’s signature to order prescriptions, the indictment stated.

The federal court case brought by 38 former National Football League players seeking to force the NFL to recognize chronic traumatic encephalopathy (CTE) as a covered disease under workers’ compensation has been withdrawn.

Instead of pursuing their joint case, the players will file separate workers’ compensation claims in individual states, according to their lawyer.

The U.S. District Court for the Southern District of Florida in Ft. Lauderdale, Judge Beth Bloom dismissed the suit (Gaiter et al. v. National Football League) without prejudice.

The plaintiffs’ lawyers – Tim Howard and Miguel Amador of Howard & Associates in Tallahassee – voluntarily withdrew their complaint. They explained that the players have decided to proceed with filing state claims. “We are going forward aggressively state-by-state as that is the least risky approach to secure the recoveries for our clients,” Howard told Insurance Journal.

Earlier, on Dec. 5, Judge Bloom had stayed the case pending a decision on whether it should be transferred to the federal court in Pennsylvania that is handling multidistrict litigation involving concussions and the NFL.

The U.S district court in eastern Pennsylvania, under U.S. District Judge Anita B. Brody, oversaw a consolidation of concussion lawsuits against the NFL and reached a settlement valued at as much as $1 billion in potential benefits for more than 22,000 former players. Earlier this month, the U.S. Supreme Court let stand that concussion settlement, deciding against hearing complaints by some former players that the settlement is inadequate and unfairly treats current versus future brain injuries differently.

The workers’ compensation case brought in federal court did not have a great chance of succeeding, according to lawyers reached after the complaint was filed but before it was withdrawn.

“The first real hurdle here is that it is questionable as to whether a federal court is even the proper forum to determine a state workers’ compensation issue. The answer is most likely no,” Justin R. Parafinczuk, a civil trial attorney and partner with the Florida firm Koch Parafinczuk & Wolf, P.A., told Insurance Journal.

He said the complaint essentially asked the federal court to declare CTE a compensable occupational disease under workers’ compensation laws that vary by state.

“This request would basically strip the defendants’ rights to defend themselves at a traditional worker’s compensation hearing, where the plaintiff or, as referred to in worker’s compensation, the claimant would have the burden to prove these allegations to a worker’s compensation judge, and the defendants would be able to present all available defenses,” he said. This would require the federal court to do an “extensive analysis of the worker’s compensation laws of every state where a defendant resides,” something he said the court would be “highly unlikely” to undertake.

The other hurdle was the players’ Collective Bargaining Agreement, under which CTE is not recognized.

With more attention on the impact of opioid addiction and the role of overprescribing, drug companies have come under more scrutiny for suspicious and sometimes unsavory marketing practices.

A lot of the spotlight has been directed toward Purdue Pharma, the makers of OxyContin. A company that already paid $20 million in a settlement with 27 states, attorneys general across the country many years ago.

Unsealed court documents indicate that the drug manufacturer went to great lengths to stop preauthorization of OxyContin in West Virginia despite concerns from public health officials.

The warning signs of what would become a deadly opioid epidemic emerged in early 2001. That’s when officials of the state employee health plan in West Virginia noticed a surge in deaths attributed to oxycodone, the active ingredient in the painkiller OxyContin.

They quickly decided to do something about it: OxyContin prescriptions would require prior authorization. It was a way to ensure that only people who genuinely needed the painkiller could get it and that people abusing opioids could not.

But an investigation by STAT claims that Purdue Pharma, the manufacturer of OxyContin, thwarted the state’s plan by paying a middleman, known as a pharmacy benefits manager, to prevent insurers from limiting prescriptions of the drug. The financial quid pro quo between the painkiller maker and the pharmacy benefits manager, Merck Medco, came to light in West Virginia court records unsealed by a state judge at the request of STAT, and in interviews with people familiar with the arrangement.

The strategy to pay Merck Medco extended to other big pharmacy benefit managers and to many other states, according to a former Purdue official responsible for ensuring favorable treatment for OxyContin. The payments were in the form of “rebates” paid by Purdue to the companies. In return, the pharmacy benefit managers agreed to make the drug available without prior authorization and with low copayments.

“That was a national contract,” Bernadette Katsur, the former Purdue official, who negotiated contracts with pharmacy benefit managers, said in an interview. “We would negotiate a certain rebate percentage for keeping it on a certain tier related to copay or whether it has prior authorization. We like to keep prior authorization off of any drug.”

Katsur said prior authorization programs do little to eliminate inappropriate prescribing by “bad doctors” and usually just create needless paperwork for doctors working in the best interest of patients. She said some doctors simply won’t deal with the hassle of a prior authorization program, resulting in some legitimate patients not getting the medication they need.

“You don’t want to make it harder for a doctor to prescribe when they are doing the right thing,” she said.

In addition to keeping OxyContin from being subject to prior authorization, the rebates paid to pharmacy benefit managers were used to guarantee favorable status for OxyContin on their listings of approved drugs, Kastur said. PBMs commonly place drugs in different tiers on these lists, called formularies. Some tiers are more restrictive and require higher copayments. Purdue wanted OxyContin placed in the least restrictive tier – and succeeded.

The relationship with Merck Medco was so important that Purdue moved Katsur to New Jersey so she could be close to Merck’s national headquarters, she said.

It is common for drug companies to pay rebates to gain preferential treatment from companies hired by insurance plans to manage prescription drug benefits, but in this case the arrangement removed a key safeguard in the system that may have slowed the growth of OxyContin as it became a national bestseller that eventually peaked at annual sales of $3 billion.

The former Merck Medco was purchased by Express Scripts in 2012. A spokesman for Express Scripts said no one currently at the company had knowledge of the West Virginia contract. A spokesman for Purdue Pharma said the company had no comment.

In McDowell County, where the court records from a state lawsuit against Purdue were unsealed, the local sheriff said prescription pill abuse is so rampant that the county plans to file a new lawsuit against painkiller makers.

A new study published in the American Journal of Epidemiology and summarized in Ruters Health says that regular use of pain relievers over many years may increase the risk of hearing loss.

Researchers analyzed long-term data on almost 56,000 U.S. women and found using non-steroidal anti-inflammatories (NSAIDS) like naproxen (Aleve) and ibuprofen (Motrin) as well as acetaminophen (Tylenol) for six years or more was tied to a greater risk of hearing problems than taking these drugs for a year or less.

“Hearing loss is extremely common in the United States and can have a profound impact on quality of life,” said senior study author Dr. Gary Curhan, a researcher at Harvard University and Brigham and Women’s Hospital in Boston.

Risks of the painkillers in the study go beyond hearing loss and patients should do their best to avoid long-term use, Curhan added by email.

“Even though these medications are sold without requiring a prescription, they do have potential side effects, one of which is a higher risk of hearing loss; they have also been shown to be associated with a higher risk of hypertension (high blood pressure) and other important medical conditions,” Curhan said.

“They are generally safe when taken in usual doses for short periods of time,” Curhan noted. “However, there should be strong justification for long-term use.”

Women in the study who used NSAIDs at least twice a week for six years or more were 10 percent more likely to report hearing loss than participants who used these drugs for less than one year.

With acetaminophen, regular users for at least six years were 9 percent more likely to report defective hearing than short-term users, researchers report in the American Journal of Epidemiology.

Researchers did not find a statistically meaningful association between hearing loss and the duration of aspirin use.

Aspirin has been linked to ringing in the ears in the past, and Vicodin, a painkiller that contains acetaminophen, has been tied to hearing loss with overuse, noted Dr. Jennifer Derebery of the House Ear Clinic and the University of California, Los Angeles.

Ibuprofen is less commonly recognized by the public as a potential cause of hearing damage, Derebery, who wasn’t involved in the study, said by email.

Previous research has found a similar link between painkillers and hearing loss in men, though studies to date have yet to explain how the drugs might impact hearing, said Dr. Wilko Grolman, a researcher at the University of Utrecht in the Netherlands who wasn’t involved in the study.

However, the study is observational and doesn’t prove these painkillers cause hearing impairment.

“The hearing loss was self-reported and not measured objectively with hearing tests,” Dr. David Haynes, a researcher at Vanderbilt University Medical Center in Nashville who wasn’t involved in the study, said by email.

A drug distributor owned by Cardinal Health Inc has agreed to pay $10 million to resolve claims it failed to alert the U.S. Drug Enforcement Administration to suspiciously large orders of addictive painkillers by New York-area pharmacies.

The settlement with Kinray LLC, a New York City-based pharmaceutical distributor, disclosed in papers filed late Thursday in federal court in Manhattan, comes amid efforts by U.S. authorities to combat the nation’s opioid drug epidemic.

The settlement was secured by the office of Preet Bharara, the U.S. Attorney for the Southern District of New York, who has increasingly turned his sights toward the growing opioid drug epidemic.

The Kinray settlement came after a DEA investigation of pharmacies in New York and elsewhere that had ordered unusually large and frequent shipments of oxycodone or hydrocodone, according to a lawsuit filed earlier this week.

From January 2011 and May 2012, Kinray shipped the drugs to more than 20 New York pharmacy locations in amounts that were many times greater than the distributor’s average sales of controlled substances to all of its customers, the lawsuit said.

Kinray ignored numerous “red flags” and did not report any suspicious orders to the DEA despite requirements that it do so for such highly regulated drugs, the lawsuit said.

The latest agreement stemmed from a 2012 settlement with the DEA in which its facility in Lakeland, Florida, was suspended from selling painkillers and other drugs for two years, according to Cardinal.

The 2012 deal only resolved administrative aspects of the case, not potential fines Cardinal Health faced in Florida or elsewhere. The Dublin, Ohio-based company has set aside $44 million to cover those potential liabilities.

Cardinal Health, which announced its $1.3 billion acquisition of Kinray in 2010, said on Friday it continues to work with the U.S. Justice Department to resolve the matter.

As part of the settlement, Kinray admitted and accepted responsibility for failing to report suspicious orders to the DEA, according to court papers.

The case is U.S. v. Kinray LLC, U.S. District Court, Southern District of New York, No. 16-cv-09767.