Pharmaceutical company Mallinckrodt ARD LLC (formerly known as Mallinckrodt ARD, Inc. and previously Questcor Pharmaceuticals, Inc., has agreed to pay $15.4 million to resolve claims that Questcor paid illegal kickbacks to doctors from 2009 through 2013 in the form of lavish dinners and entertainment, to induce prescriptions of the company’s drug, H.P. Acthar Gel for the treatment of complications from multiple sclerosis.

The Federal Anti-Kickback Statute prohibits a pharmaceutical company from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – with the intent to induce a health care provider to prescribe a drug reimbursed by Medicare. This prohibition extends to such practices as “wining and dining” doctors to induce them to write Medicare prescriptions of a company’s products.

The government alleges that, from 2009 to 2013, twelve Questcor sales representatives marketing Acthar provided illegal remuneration to health care providers in the form of lavish meals and entertainment expenses. The company paid this remuneration, the government alleges, with the intent to induce Acthar Medicare referrals from those health care providers, resulting in a violation of the Anti-Kickback Statute and the submission of false claims to Medicare.

The allegations relevant to this settlement were originally alleged in two cases filed under the whistleblower, or qui tam, provision of the False Claims Act. The act permits private parties to sue for fraud on behalf of the United States and to share in any recovery.

The act also permits the government to intervene in such actions, as the government previously did in the two whistleblower cases, which are captioned United States of America ex rel. Strunck et al. v. Mallinckrodt ARD, Inc., No. 12-CV-0175 (E.D. Pa.), and United States of America ex rel. Clark v. Questor Pharmaceuticals, Inc., No. 13-CV-1776 (E.D. Pa.).

The government’s pursuit of these matters illustrates its emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800 HHS TIPS (800-447-8477). The whistleblowers will receive approximately $2.926 million of the settlement.

This matter is being handled by the Civil Division of the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Department of Justice’s Commercial Litigation Branch, with assistance from the U.S. Department of Health and Human Services’ Office of Inspector General, the Defense Criminal Investigative Service, the Federal Bureau of Investigation and the Office of Personnel Management.

For the United States Attorney’s Office, the matter is being handled by Assistant United States Attorney Colin Cherico and Auditor George Niedzwicki.

On October 6, 2015, Governor Jerry Brown signed Assembly Bill No. 1124 into law, which directed the DWC to adopt an evidence-based drug formulary in the California workers’ compensation system.

In 2017, the DWC adopted the new drug formulary linked to the California Medical Treatment Utilization Schedule (MTUS) to be effective on January 1, 2018. The drug formulary intends to reduce frictional costs mostly from UR and independent medical review (IMR); restrict inappropriate prescribing, especially that related to opioids; and ensure medically necessary and timely medications for injured workers.

The drug formulary includes an MTUS drug list of about 300 drug ingredients that are assigned a status of exempt or non-exempt from prospective UR.

All opioids and compounded drugs are non-exempt from prospective UR. Additionally, certain non-exempt drugs can be prescribed without prospective UR if fulfilling the requirements of special fill or peri-operative fill policies.

Drugs not listed on the MTUS drug list must obtain authorization through prospective UR prior to dispensing

Even before the implementation of the drug formulary, pharmaceutical costs in California had been declining sharply. Key drivers of the decrease include Senate Bill No. 863 reforms related to IMR and spinal surgeries, changes in the federal government upper-limit pricing levels, anti-fraud efforts and the public reaction to the national opioid epidemic.

While there was an even more significant drop in the utilization and cost of pharmaceuticals in 2018, it was not immediately clear how much of the decline was due to the formulary and how much was due to the continuation of the factors driving the prior year decreases

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) reviewed the impact of the new drug formulary on prescribing patterns and pharmaceutical costs based on pharmaceutical transaction information through the first year of implementation.

The WCIRB’s findings include:

— The share of prescriptions of drugs not subject to prospective utilization review (UR) in accordance with the formulary increased by 41 percent compared to the pre-2018 level, while that of drugs subject to UR declined by 18 percent.

— The use of opioids, compounds, physician-dispensed drugs and brand-name drugs with generic alternatives dropped sharply in 2018, the first year of the formulary.

— While a number of the aforementioned pharmaceutical components had been declining prior to the implementation of the formulary, the decline accelerated during 2018, suggestive of the effect of the drug formulary.

The Sackler family, which grew into one of the nation’s wealthiest dynasties through sales of the widely abused painkiller OxyContin, could emerge from a legal settlement under negotiation with its personal fortunes largely intact, according to an analysis reviewed by The Washington Post and people familiar with the discussions.

Under a novel plan to relinquish control of their company, Purdue Pharma, and resurrect it as a trust whose main purpose would be to combat the opioid epidemic, the Sacklers could raise most, if not all, of their personal share of the $10 billion to $12 billion agreement by selling their international drug conglomerate, Mundipharma, according to the documents and those close to the talks.

The analysis reviewed by The Post offers previously undisclosed information about the proposed settlement.

The proposed settlement – built on the projected value of drugs not yet on the market – offers gains for both sides if the company and more than 2,000 cities, counties, states and others that have sued Purdue and the family can craft a deal.

Purdue would produce millions of doses of badly needed anti-addiction medication and overdose antidotes for the public, free of charge; the company would also contribute hundreds of millions of dollars in cash and insurance policies that could be worth more; what’s left of the company, including its North Carolina production facility and other assets, would change hands.

Much of the benefit to the public would be funded by the continued sales of the powerful narcotic OxyContin, the abuse of which is blamed for contributing to the prescription opioid crisis that has killed more than 200,000 people since 1999.

The Stamford-Conn.-based Purdue Pharma would go into bankruptcy, and the Sacklers would be out of the drug business. They would be required to contribute $3 billion and possibly more, depending on the sale price of Mundipharma, their international drug company, over seven years.

But they would still retain much of their wealth. In fact, they might be able to keep billions of dollars that state attorneys general allege they pulled out of the company.

“No one is going to be happy after this,” said Adam J. Levitin, a Georgetown Law School professor who studies bankruptcy. “People are going to be mad that the Sacklers aren’t going to jail, that they will have money left.”

The Washington Post reviewed a detailed analysis of the settlement plan that has been valued at $10 billion to $12 billion. The plan has been at the heart of negotiations among the parties for many months. The material was confirmed by three people close to the discussions who spoke on the condition of anonymity because of the sensitivity of the negotiations.

If no deal is reached, Purdue is likely to declare bankruptcy in coming weeks, according to people familiar with the company’s strategy. A huge civil trial against Purdue and as many as two dozen drug companies is scheduled to begin in Cleveland on Oct. 21.

But the documents also indicate that if settlement talks fail and the Sacklers vote to send Purdue into Chapter 11 bankruptcy, the plaintiffs might get as little as $1.2 billion from an auction of the business’s components.

In that scenario, plaintiffs would probably have to jockey for rights to Purdue’s assets. The process could generate enormous legal bills, possibly further reducing any payout to them.

Ride-hailing companies Uber and Lyft are threatening to launch a ballot measure if they don’t get to rewrite new labor rules dictating who must be treated as an employee, officials at Lyft said Thursday.

The Sacramento Bee reports that the two companies are proposing some benefits for drivers in exchange for an exemption from proposed labor rules that would allow them to continue classifying drivers as independent contractors. The two companies plan to pour $30 million each into a fund for a ballot measure if they don’t get their way, officials at Lyft said.

Late Thursday, gig economy food-delivery service DoorDash said it would commit another $30 million to the proposed initiative.

The announcements come as the window closes to win an exemption from an existing bill that will force employers to treat independent contractors as employees. That legislation, Assembly Bill 5, would codify a California Supreme Court ruling known as Dynamex that restricts when employers can classify workers as independent contractors and deny them benefits like overtime, sick leave and minimum wage.

AB 5 author, Assemblywoman Lorena Gonzalez, D-San Diego, has made it clear she doesn’t intend to give exemptions to the ride-hailing companies through the bill.

The companies insist that their business model relies on being able to treat employees as independent contractors and that many drivers prefer the flexibility the company offers.

Lyft released a study on Thursday that suggested it would have 300,000 fewer drivers in California if Gonzalez’s bill becomes law and it is compelled to provide schedules, breaks and full employment benefits to drivers.

“We are working on a solution that provides drivers with strong protections that include an earnings guarantee, a system of worker-directed portable benefits, and first-of-its kind industry-wide sectoral bargaining, without jeopardizing the flexibility drivers tell us they value so much,” Lyft spokesman Adrian Durbin said in a statement Thursday. “We remain focused on reaching a deal, and are confident about bringing this issue to the voters if necessary.”

On Twitter, Gonzalez blasted the tech companies’ plan to challenge the proposed law.  “Billionaires who say they can’t pay minimum wages to their workers say they will spend tens of millions to avoid labor laws. Just pay your damn workers,” she wrote.

California Labor Federation Executive-Secretary Treasurer Art Pulaski added that state labor would be unified in opposing such a measure and would “meet the gig companies’ absurd political spending with a vigorous worker-led campaign.”

Lyft officials are proposing a wage guarantee that drivers would earn at least 32 percent above the local minimum wage plus reimbursement for expenses. Under the proposal, they said drivers would have no limit on their earnings, and tips would be added on top of their guaranteed wages.

The companies are also proposing a fund that could cover benefits for drivers, such as paid sick and family leave. The companies are not suggesting allowing drivers to unionize, but are instead proposing a system of “sectoral bargaining” which would let gig economy drivers negotiate industry-wide benefits.

Officials at labor union SEIU told The Bee Wednesday they are pushing to pass AB 5 without an exemption for ride-hailing companies and fighting to allow Uber and Lyft workers to unionize. They said they were in talks with Gov. Gavin Newsom’s chief of staff Ann O’Leary.