Category: Daily News

Reuters Health reports that the head of the Food and Drug Administration on Thursday defended the agency’s approval of Zohydro, a powerful prescription opioid made by Zogenix Inc, saying it offers a “unique” option to treat pain despite concerns about potential abuse. The FDA’s approval of the drug has drawn a flood of criticism, including protests from the attorneys general of 28 states as well as dozens of groups representing doctors and addiction treatment specialists who are concerned that Zohydro will set off a wave of addiction similar to problems with the original form of OxyContin, another opioid. These critics have petitioned the FDA to consider pulling the drug’s marketing approval.

FDA Commissioner Margaret Hamburg, testifying at a Senate hearing, acknowledged that Zohydro is “a powerful drug” but said “…that if appropriately used, it serves an important and unique niche with respect to pain medication and it meets the standards for safety and efficacy.” Her comments to the Senate Health, Education, Labor and Pensions Committee come barely a week after Zogenix said it was making the painkiller available at “select pharmacies” following the drug’s FDA approval in October. In approving the drug, the FDA overruled its panel of outside advisers, who had recommended against approval, citing safety concerns about the potential for abuse.

Senators at the committee’s hearing echoed worries about abuse, noting the Zohydro is not made in a way to thwart crushing or chewing of such drugs to get a high. “The concern that I think a number of us have … (are) about the implications of allowing this new product on the market without these abuse deterrent properties,” said Senator Robert Casey, a Democrat from Pennsylvania on the panel. Senator Joe Manchin of West Virginia, whose state has been particularly hard-hit by prescription drug abuse, earlier this week called on U.S. Health and Human Secretary Kathleen Sebelius to overturn the FDA’s approval. “Americans are abusing, and (in) many cases dying, at an alarming rate from highly addictive pain medicine, and it is shameful that the FDA would ignore its own experts to approve this drug,” Manchin said in a statement after the hearing. He later introduced legislation that would ban Zohydro. Hamburg said unlike other approved hydrocodone drugs, Zohydro does not contain acetaminophen, which can be toxic to the liver. She also said other factors, including doctors’ prescribing practices, play a role in drug abuse.

Abuse of OxyContin became so widespread that manufacturer Purdue Pharma changed its formula in 2010 so that the drug could not be injected or snorted as easily. On Wednesday, Purdue said it was moving ahead with an abuse-resistant rival to Zohydro. Zogenix last week also said it is making progress on another version of Zohydro to deter abuse. “I would love if we had abuse-deterrent formulations that were actually meaningful and effective at deterring abuse in all instances. We are moving in that direction,” Hamburg told lawmakers. “Right now, unfortunately, the technology is poor.” She added that the FDA is working on guidelines to help manufacturers come up with more effective abuse deterrents but gave no timeline for when the guidelines would be finalized. Developing more non-opioid pain drugs could also help prevent misuse, she said.

“Acute and chronic pain needs to be treated. Opiates are very effective for acute pain, less effective for chronic pain, but we don’t have a lot of good alternatives at the present time,” she told the Senate panel. Hamburg also said more attention needs to be paid to the overdose-reversal medication called naloxone, which could save more lives if it was easier to use and more widely available.

Most medical delivery systems, including treatment in the California workers’ compensation program, have evolved to payment only for “evidence based” medicine. High quality medical science is supposed to be used to approve or disapprove UR and IMR treatment requests. Consequently, there needs to be some oversight of the medical science. Gatekeepers are needed who will scrutinize supposed medical science for foul play. As simple as that sounds, there are frustrating bureaucratic hurdles to overcome at the highest levels of federal government.

The director of the U.S. government office that monitors scientific misconduct in biomedical research has resigned after 2 years out of frustration with the “remarkably dysfunctional” federal bureaucracy. David Wright, director of the Office of Research Integrity (ORI), writes in a scathing resignation letter that the huge amount of time he spent trying to get things done made much of his time at ORI “the very worst job I have ever had.”

ORI, which is part of the Department of Health and Human Services (HHS), monitors alleged research misconduct by researchers funded by the National Institutes of Health (NIH) and other Public Health Service (PHS) agencies. It runs education programs and reviews institutions’ misconduct investigations, each year posting a dozen or so findings of misconduct, defined as fabrication, falsification, or plagiarism. It also recommends PHS sanctions, such as barring researchers from receiving grants. ORI’s visibility has grown recently along with a rise in retracted research papers, some involving misconduct.

Observers lauded Wright’s appointment in December 2011, which ended 2 years in which the office had no permanent director. Wright, a historian of science at Michigan State University in East Lansing, had served as an ORI consultant and came in with plans to beef up training programs. But last February, he fired off a fiery resignation letter to his boss, HHS Assistant Secretary for Health (ASH) Howard Koh.

In his letter, David Wright writes that working with ORI’s “remarkable scientist-investigators” was “the best job I’ve ever had.” But that was only 35% of his job; the rest of the time he spent “navigating the remarkably dysfunctional HHS bureaucracy” to run ORI. Tasks that took a couple of days as a university administrator required weeks or months, he says. He writes that ORI’s budget was micromanaged by more senior officials, and that Koh’s office had a “seriously flawed” culture, calling it “secretive, autocratic and unaccountable.” For example, he told Wanda Jones, Koh’s deputy, that he urgently needed to appoint a director for ORI’s division of education. Jones told him the position was somewhere on a secret priority list of appointments. The position has not been filled 16 months later, David Wright notes.

OASH itself suffers from the tendency of bureaucracies to “focus on perpetuating themselves,” David Wright writes. Officials spent “exorbitant amounts of time” in meetings and generating data and reports to make their divisions look productive, he writes. He asks whether OASH is the proper home for a regulatory office such as ORI, noting that Koh himself has described his office as an “intensely political environment.”

David Wright makes no mention of a recent letter to ORI from Senator Charles Grassley, who has complained that ORI was not tough enough on an AIDS researcher at Iowa State University who faked data to obtain nearly $19 million in NIH funding. ORI barred the researcher, Dong-Pyou Han, from participating in PHS-funded research for 3 years, but Grassley has asked why ORI did not make him return federal grant money or impose harsher sanctions.

Federal officials’ healthcare fraud efforts recovered a record $4.3 billion in fiscal year 2013, up from $4.2 billion in 2012. Since 1997, the program has recovered nearly $26 billion to the Medicare trust funds.

Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius released the annual Health Care Fraud and Abuse Control Program report, showing that for every dollar spent on healthcare-related fraud and abuse investigations in the last three years, the government recovered $8.10, the highest three-year average return on investment in the 17-year history of the HCFAC program. “With these extraordinary recoveries, and the record-high rate of return on investment we’ve achieved on our comprehensive healthcare fraud enforcement efforts, we’re sending a strong message to those who would take advantage of their fellow citizens, target vulnerable populations, and commit fraud on federal healthcare programs,” Holder said.  “Thanks to initiatives like HEAT, our work to combat fraud has never been more cooperative or more effective. And our unprecedented commitment to holding criminals accountable, and securing remarkable results for American taxpayers, is paying dividends.”

The Justice Department and HHS have improved their coordination through HEAT and are currently operating Medicare Fraud Strike Force teams in nine areas across the country. The strike force teams use advanced data analysis techniques to identify high-billing levels in healthcare fraud hot spots, so that interagency teams can target emerging or migrating schemes as well as chronic fraud by criminals posing as health professionals.

In FY 2013, the strike force secured records in the number of cases filed (137), individuals charged (345), guilty pleas secured (234), and jury trial convictions (46). Beyond that, the defendants who were charged and sentenced are facing significant time in prison – an average of 52 months in prison for those sentenced in FY 2013, and an average of 47 months in prison for those sentenced since 2007, officials said. Justice Department officials opened 1,013 new criminal healthcare fraud investigations involving 1,910 potential defendants in FY 2013, and a total of 718 defendants were convicted of healthcare fraud-related crimes during the year. The department also opened 1,083 new civil healthcare fraud investigations.

“These impressive recoveries for the American taxpayer are just one aspect of the comprehensive anti-fraud strategy we have implemented since the passage of the Affordable Care Act,” said HHS Secretary Sebelius.  “We’ve cracked down on tens of thousands health care providers suspected of Medicare fraud. New enrollment screening techniques are proving effective in preventing high risk providers from getting into the system, and the new computer analytics system that detects and stops fraudulent billing before money ever goes out the door is accomplishing positive results – all of which are adding to savings for the Medicare Trust Fund.”

Plaintiffs Mark Tanner Construction, Inc. (Tanner), and Mt. Lincoln Construction, Inc. (Mt. Lincoln), are both general contractors located in Truckee. CAP is a self-insured workers compensation program for the construction industry. Compensation Risk Managers of California, LLC (CRM) administered a self-insured workers compensation program for contractors, Contractors Access Program of California (CAP). The Department of Industrial Relations granted CAP a Certificate of Consent to Self-Insure in 2004. CRM administers CAP and contracted with Diversified to market CAP. Diversified Risk Insurance Brokers (Diversified), later acquired by defendant HUB International Insurance Services, Inc. (HUB), marketed and sold CAP to plaintiffs Mark Tanner Construction, Inc., and Mt. Lincoln Construction, Inc.

California contractors were able to fulfill their obligation to obtain workers compensation insurance by joining CAP. Membership in CAP required an agreement to be jointly and severally liable for the workers compensation liability of all other members for that year of membership. Approximately 250 employers became members of CAP. Tanner and Mt. Lincoln became a member of CAP in 2006.

On December 31, 2009, CAP was terminated. The Director of the Department revoked CAP’s certificate to self-insure and CAP was placed into conservatorship. CAP’s estimated exposure for unfunded liabilities was over $20 million. In the spring of 2010, members were sent assessments for the anticipated exposure. Tanner was assessed $150,258 and Mt. Lincoln was assessed $42,784. Later that year, CAP defaulted on payment of benefits for its workers compensation liabilities.

Tanner, Mt. Lincoln, and two other companies sued HUB and others for professional negligence and constructive fraud. The first amended complaint (FAC) alleged that CAP was marketed through insurance brokers, including Diversified, as a less expensive and more effective means of handling workers compensation insurance claims. Diversified did not disclose to Tanner or Mt. Lincoln its exclusive broker relationship with CRM. Diversified allegedly did not inform plaintiffs of the following facts concerning the financial stability of CAP: (1) beginning in 2006, CAP incurred losses of over $28 million and then over $60 million; (2) CRM was involved in a multimillion-dollar lawsuit in New York over similar self-insured insurance programs; (3) CAP’s security bond was not renewed after 2008 and plaintiffs were unprotected if claims exceeded reserves; and (4) at least five other self-insured insurance programs administered by CRM in California had failed. The FAC alleged “[t]his information provided sufficient notice that agent brokers should investigate the proverbial health” of the self-insured workers compensation programs.

While a defense motion for summary judgment was pending, plaintiffs obtained a copy of a Regional Field Consultant Agreement (Agreement) between CRM and Diversified that had not been provided to plaintiffs in discovery. Plaintiffs believed the Agreement “significantly alter[ed] the legal landscape in this action.” They argued the Agreement established that rather than acting as broker for them, Diversified instead was acting as the broker for CAP. Further, Plaintiffs argued that the Agreement revealed Diversified was part of a joint venture with CRM. These relationships had not been disclosed to plaintiffs. Plaintiffs moved for leave to file a second amended complaint to add new allegations and new causes of action arising from legal relationships revealed by the Agreement. They also moved to continue the hearing on the summary judgment motion to permit additional discovery pursuant to Code of Civil Procedure section 437c, subdivision (h). The trial court denied both motions, finding the Agreement was not the “silver bullet” that plaintiffs claimed. The trial court granted HUB’s motion for summary judgment. Plaintiffs appeal from the ensuing judgment. Plaintiffs contend the trial court abused its discretion in denying both the motion to amend the complaint and the motion to continue the summary judgment hearing.

The Court of Appeal sustained the dismissal in the partially published opinion of Mark Tanner Construction v. HUB International Insurance Services.

The trial court found that HUB was entitled to summary judgment on the professional negligence claim because insurance brokers had no duty to investigate the financial condition of the insurer, and “no facts were presented demonstrating that Defendants knew or should have known of the financial condition of CAP.” As to the claim for constructive fraud, the trial court found a duty to disclose arose in an arm’s length business transaction only if there was a fiduciary relationship, and “Plaintiffs have failed to demonstrate a triable issue of material fact demonstrating that Defendants have a fiduciary relationship.” “Apparently distracted by what they perceive to be an egregious discovery violation, plaintiffs fail [on appeal] to adequately challenge either the legal bases or the factual findings of the trial court’s rulings.” The trial court denied plaintiffs’ request for a continuance. It found plaintiffs were dilatory in initiating discovery and that because the Agreement added little to the case, additional discovery based on this agreement was not necessary.

California’s sweeping SB 863 workers’ compensation reform is working for the most part, but some of the savings may not materialize thanks to pressure on the system, according to Dave Bellusci, executive vice president, chief operating officer and chief actuary at the Workers’ Compensation Rating Bureau.

According to the report in the Insurance Journal, Bellusci was speaking recently on the state’s workers’ comp system at the Golden Gate Chapter of the Chartered Property Casualty Underwriters Society during the group’s “All Industry Day.” The group held their daylong conference at the Delancey Street Conference Center. Also addressing the large group of insurance professionals at the conference was Alex Swedlow, president and chief executive officer of the California Workers’ Compensation Institute. Both men talked about the state’s workers’ comp reform law, Senate Bill 863, passed at the end of 2012 and implemented last year.

Among the host of changes the bill made was to establish an independent medical review process. IMR takes the process of reviewing cases that were elevated from utilization review away from a process that included judges and other members of the workers’ comp community and puts it in the hands of doctors. The IMR process was projected to produce a savings of $400 million related to administrative costs. However, that was assuming that between 50,000 and 60,000 disputes would make it to IMR each year. But many more cases have been going to IMR, according to Bellusci.  By WCIRB’s estimates more than 14,000 IMR cases are being brought each month, putting the system on pace for more than 170,000 cases for the year. “We think the administrative costs are probably not going to materialize if they stay at this level,” Bellusci said.

According to Swedlow, other than that, the new system seems to be working as intended. Based on the medical treatment utilization schedule or other guidelines, 75 percent of all treatment requests are being approved at the initial level without further review, according to Swedlow. Out of the one-fourth of cases that get elevated for further review, slightly more than 23 percent of the time that treatment is either modified or denied, he said. When it’s all added up, that means less than 5 percent of requests are either modified or denied, Swedlow said.

One trouble spot for Swedlow in both the new and the old systems is that pharmacy costs continue to dominate. According to Swedlow, 43 percent of utilization reviews are over pharmacy spending and more the one-third of IMRs are for pharmacy. Much of the pharmacy spending in workers’ comp comes from physicians prescribing opioids, Swedlow said. According to him, 30 percent of the pharmacy spending goes to Schedule II and Schedule II opioids. Nearly half the Schedule II opioids, like morphine and oxycodone, are being prescribed for minor injuries, Swedlow said, adding that the opioid problem has become worse across the U.S. each year. “This is truly an national epidemic,” he said.

Another epidemic that continues to impact workers’ comp is obesity, which may become a bigger problem for the system he said. Swedlow fears that a decision in June 2012 by the American Medical Association House of Delegates reclassifying obesity as “a disease state” may elevate the cases of injured workers who are obese. With obesity reclassified as a disease, medical providers may feel a greater responsibility to counsel obese patients about their weight, or if treatment for a compensable injury causes significant weight gain, Swedlow said. “We feel thanks to AMA obesity may move from being treated as a comorbidity to a compensable injury,” Swedlow said.