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FDA Approves First Artificially Regenerated Knee Cartilage

The Food and Drug Administration approved Maci (autologous cultured chondrocytes on porcine collagen membrane) for the repair of symptomatic, full-thickness cartilage defects of the knee in adult patients. Maci is the first FDA-approved product that applies the process of tissue engineering to grow cells on scaffolds using healthy cartilage tissue from the patient’s own knee.

Knee problems are common, and occur in people of all ages. Cartilage defects in the knee can result from an injury, straining the knee beyond its normal motion, or can be caused by overuse, muscle weakness, and general wear and tear.  

“Different cartilage defects require different treatments, so therapy must be tailored to the patient,” said Celia Witten, Ph.D., M.D., deputy director of the FDA’s Center for Biologics Evaluation and Research. “The introduction of Maci provides surgeons with an additional option for treatment.”

Maci is composed of a patient’s own (autologous) cells that are expanded and placed onto a bio-resorbable (can be broken down by the body) porcine-derived collagen membrane that is implanted over the area where the defective or damaged tissue was removed. Administration should be performed by a surgeon specifically trained in the use of Maci.

Each Maci implant consists of a small cellular sheet containing 500,000 to 1,000,000 cells per cm2 (about 0.16 square inches). The amount of Maci administered depends on the size of the cartilage defect, and is trimmed to ensure that the damaged area is completely covered. Multiple implants may be used if there is more than one defect. During a mini-open technique, damaged and / or diseased cartilage tissue is debrided from the defect area and the MACI implant is cut and shaped to fit and adhered in place using an off-the-shelf sealant.

The safety and efficacy of Maci were shown in a two-year clinical trial designed to demonstrate reduced pain and improved function in comparison to microfracture, an alternative surgical procedure for cartilage repair. The trial included 144 patients (72 in each treatment group). A majority of the patients who completed the two-year clinical trial also participated in a three year follow-up study. Overall efficacy data support a long-term clinical benefit from the use of the Maci implant in patients with cartilage defects.  

The most common side effect reported by people who received Maci were: joint pain, common cold-like symptoms, headache and back pain.

Maci is manufactured by Vericel Corporation, headquartered in Cambridge, Massachusetts. Vericel focuses on autologous cell therapies, which its website calls “For Me, By Me” treatments. The company is currently developing a heart failure treatment called ixmyelocel-T that involves extracting bone marrow from a patient’s hip, expanding the population of cells and administering them through a catheter. The treatment recently met its primary goal in a Phase 2 study.

Nonetheless, it has been a down year for FDA approvals, with just 20 new drugs approved thus far. That’s compared to more than 40 in each of the past two years. Maci is only the fourth biotech treatment to get FDA approval this year developed by a Massachusetts-based company.

Labor Code Takes Bite of the Apple

A California-based state court granted the class certification to almost 21,000 Apple employees currently and formerly employed by the Cupertino-based company in July 2014. The lawsuit was first filed in 2011 by four Apple employees in San Diego. They alleged that the company failed to give them meal and rest breaks, and didn’t pay them in a timely manner, among other complaints.

In California, the law states that employers are required to provide lunch breaks and rest breaks to employees with the length of each break to be determined according to the employee’s number of work hours. It states that for the first five hours at work, an employee should get 30-minute lunch breaks. The next four hours at work should earn him around a 10-minute rest break. For those working on six to ten hour shifts, they should be provided with two rest breaks.

Now Apple has been ordered to cut a $2 million check for denying some of its retail workers meal breaks after the first half of the bifurcated trial.

The class action, officiated by Judge Eddie C. Sturgeon in San Diego Superior Court, is brought by plaintiffs Brandon Felcze, Ryan Goldman, Ramsey Hawkins, and Joseph Lane Carco, all former non-exempt employees of Apple. According to the suit (Fourth Amended Complaint) plaintiffs never waived their right to a meal period and every employee is required to clock-in and clock-out during each meal period – meaning that “Defendents’ meal period violations can be ascertained.”

The complaint also alleges that Apple “systematically failed to timely pay its employees upon separation of their employment.” One of the four plaintiffs says his employment was terminated January 11, 2011 but did not receive his final paycheck until February 7, 2011. Another plaintiff accuses Apple of paying an “inadequate amount of waiting time penalties.”

According to the California labor code, if you are fired, laid off, or otherwise involuntarily separated from your job, you are entitled to your final paycheck that day (i.e., you must be paid immediately on your last day of work.). Your employer must pay you within 72 hours if you quit your job and give less than 72 hours’ notice. If you give your employer at least 72 hours’ notice, you must be paid immediately on your last day of work. And your final paycheck must include all of your accrued, unused vacation time.

Jeffrey Hogue, one of the attorneys who represented the class action, said the $2 million verdict came down last Friday — but Apple could owe more money.The second half of the case is expected to conclude next week, Hogue told CNNMoney.

It’s unclear how much of the $2 million will go to the workers. If divided evenly, it would be just $95 per employee, but it’s likely some of the money will go toward attorney fees.

The complaint says Apple’s culture of secrecy keeps employees from talking about the company’s poor working conditions. “If [employees] so much as discuss the various labor policies, they run the risk of being fired, sued or disciplined,” the complaint reads.

Apple wins a few, loses a few…

Apple was sued in a similar lawsuit this year by two former Apple Store employees from New York and Los Angeles. In all suits, plaintiffs claimed they were owed pay for time spent in security checks having their bags searched but US District Judge William Alsup found that Apple only required employees who brought personal bags and devices to the store to undergo a check; employees could avoid the security screening by not bringing their own bags or personal devices. Amanda Frlekin, et al v. Apple, case number 3:2013cv03451.

Apple, along with other tech giants, settled an anti-poaching suit that wound up paying almost 65,000 workers affected by the poaching scheme an average $5,770 each. According to Fortune, the revised arrangement (September 2015) provides “$40,822,311.75 (or 9.8%) in attorney fees plus additional expenses to the law firms in the case.”

California Industrial Fatalities Remain Below Average in 2015

The Department of Industrial Relations reports that 388 Californians died on the job in 2015.

California experienced 13 multi-fatality incidents in 2015, accounting for a total of 48 workplace deaths. These events include the tragic shootings of public employees attending a holiday event in San Bernardino, four separate farm vehicle collisions, four different helicopter or small airplane crashes (including two separate military helicopter incidents), and 3 multi-victim workplace homicides.

This contrasts with six separate multi-fatality incidents that occurred in 2014 resulting in 17 fatalities.

“Our thoughts are with the families and coworkers of those that died,” said Christine Baker, Director of the Department of Industrial Relations (DIR). “In January, Cal/OSHA will convene an advisory committee to address workplace violence.”

A review of the past ten years indicates that workplace fatalities remain below the average rate of fatalities prior to 2008, when the last recession began. There were 388 fatal injuries on the job in California in 2015, compared to 344 in 2014, 396 in 2013 and 375 in 2012. Data comes from the Census of Fatal Occupational Injuries (CFOI) which is conducted annually in conjunction with the U.S. Bureau of Labor Statistics (BLS).

Key findings from the latest census in California include:

1) One in five (20%) of all California workplace deaths identified in 2015 were attributed to be due to violence and other injuries by persons or animals. The incidence of workplace homicides in 2015 accounts for 12% of all workplace deaths in the state.

2) Over one third (38%) of all California workplace deaths identified in 2015 occurred in transportation incidents.

3) One in five (19%) of all California workplace deaths identified in 2015 were attributed to trips, slips and falls; with more than two thirds of those deaths involving falls to a lower level.

4) Nearly half of the victims of workplace fatalities (46%) in 2015 were Latinos. This fatality rate has fluctuated over the past ten years between 37% and 49%.

The percentage of Latino deaths in the workplace continues to be an area the department is tracking closely. DIR over the past seven years has increased workplace safety outreach and education to Spanish-speaking workers, with a focus on high-hazard work.

The Census is conducted annually by DIR in conjunction with the U.S. Bureau of Labor Statistics. CFOI produces comprehensive, accurate and timely counts of fatal work injuries. This Federal-State cooperative program was implemented in all 50 states and the District of Columbia in 1992.

DWC Adjusts DMEPOS Fee Schedule

Pursuant to Labor Code section 5307.1(g)(2), the Administrative Director of the Division of Workers’ Compensation ordered that the Durable Medical Equipment, Prosthetics, Orthotics, Supplies portion of the Official Medical Fee Schedule contained in title 8, California Code of Regulations, section 9789.60, is adjusted to conform to changes to the Medicare payment system that were adopted by the Centers for Medicare & Medicaid Services for calendar year 2017.

The update includes changes identified in Center for Medicare and Medicaid Services Change Request (CR) number 9854.

Effective for services rendered on or after January 1, 2017, the maximum reasonable fees for Durable Medical Equipment, Prosthetics, Orthotics, Supplies shall not exceed 120% of the applicable California fees set forth in the Medicare calendar year 2017 “Durable Medical Equipment, Prosthetics/Orthotics, and Supplies (DMEPOS) Fee Schedule” revised for January 2017, contained in the electronic file “DME17-A (Updated 12/07/16) [ZIP, 2MB]

For the services on or after January 1, 2017 payment shall not exceed 120% of the fee set forth for the HCPCS code in the CA (NR) column, except the fee shall not exceed 120% of the fee set forth in the CA (R) column if the injured worker’s residence zip code appears on the DMERuralZip_Q12017_V11142017 file. Where column CA (NR) sets forth a fee for a code, but CA (R) for the code is listed as “0.00” the fee shall not exceed 120% of the CA (NR) fee, regardless of whether the injured worker’s address zip code is rural or non-rural.

The order adopting the adjustment can be found on the DWC website.

20 States Sue 6 Drugmakers For Price Fixing

Twenty states are accusing a group of generic drug makers of conspiring to keep the prices on generic medications artificially high. And the state attorneys general say the lawsuit filed in federal court in Connecticut Thursday may be just the beginning of a much larger legal action.

California is not listed as one of the 20 state plaintiffs.

The lawsuit alleges that the companies, led by New Jersey-based drug maker Heritage Pharmaceuticals, identified competitors and tried to reach agreements on how they could avoid competing for customers on price. The lawsuit was filed under seal in the U.S. District Court for the District of Connecticut. Portions of the complaint are redacted in order to avoid compromising the ongoing investigations.

The back story to this suit claims that prices for a large number of generic pharmaceutical drugs skyrocketed throughout 2013 and 2014. According to one report, “[t]he prices of more than 1,200 generic medications increased an average of 448 percent between July 2013 and July 2014.” Currently, the generic pharmaceutical industry accounts for approximately 88 percent of all prescriptions written in the United States.

A January 2014 survey of 1,000 members of the National Community Pharmacists Association (“NCPA”) found that more than 75% of the pharmacists surveyed reported higher prices on more than 25 generic drugs, with the prices sometimes spiking by 600% to 2,000% in some cases.

“While the principal architect of the conspiracies addressed in this lawsuit was Heritage Pharmaceuticals, we have evidence of widespread participation in illegal conspiracies across the generic drug industry,” Connecticut Attorney General George Jepsen said in a written press release. “We intend to pursue this and other enforcement actions aggressively.”

The other companies accused of price-fixing were Aurobindo Pharma USA, Inc., Citron Pharma, LLC, Mayne Pharma (USA), Inc., Mylan Pharmaceuticals, Inc. and Teva Pharmaceuticals USA, Inc.

The complaint describes in detail Heritage and other drug-company executives meeting at industry conferences and company-sponsored dinners where they would share information about the pricing. It also alleges that, to avoid having to lower prices, the companies would divvy up customers – such as pharmaceutical wholesalers, for example – rather than compete for the business.

The two drugs – a delayed release version of the antibiotic doxycycline hyclate and the diabetes drug glyburide – saw enormous price increases during the time of the alleged conspiracy, the legal complaint says.

The states’ lawsuit comes a day after the U.S. Justice Department filed criminal charges against Jeffrey Glazer, Heritage’s former CEO and Jason Malek, the company’s former president. It accuses the two men of conspiring with companies to manipulate drug prices.

The alleged conspiracy, outlined in court papers filed in Philadelphia, ran from as early as April 2013 to December 2015.

“By entering into unlawful agreements to fix prices and allocate consumers, these two executives sought to enrich themselves at the expense of sick and vulnerable individuals who rely upon access to generic pharmaceuticals as a more affordable alternative to brand-name medicines,” Deputy Assistant Attorney General Brent Snyder said.

San Diego Capper Admits $5 Million Kickback Scheme

An investigation into what is being billed as one of the largest workers’ compensation insurance fraud schemes uncovered in the county’of San Diego’s history has swept up medical professionals throughout Southern California and now consequences for Fermin Iglesias, one of the involved cappers.

According to prosecutors, a group of recruiters would entice workers – many of them seasonal workers who lived abroad at times – to file workers’ compensation claims. The alleged recruiters were identified as Fermin Iglesias and Carlos Arguello, who operated Providence Scheduling, Medex Solutions, Prime Holdings International and Meridian Rehab Care, and administrator Miguel Morales.

They would allegedly advertise in the U.S. and Central America via flyers or cards stuck on windshields to contact a call center if a worker has been injured on the job and needs help filing a claim, said Assistant U.S. Attorney Alana Robinson.

The recruiters would then allegedly refer the patients to specific doctors in Southern California, who would in turn prescribe certain medical tests and treatment – such as chiropractic, MRIs, pain management, echo cardiograms and even sleep studies – to companies in return for kickbacks, she said. The bribes were usually $50 to $100 per patient, court records show. The bribes were done without the patients’ knowledge.

The treatment was then billed to various insurance companies, including Liberty Mutual and Hartford.

Chiropractors would be required to fill a monthly quota of referrals or their patient pipeline and bribes would be cut off, authorities said. In one instance, San Diego chiropractor Steven Rigler was warned that he’d fallen $60,000 behind in referrals for procedures and he’d be cut out of the operation unless he wrote the organization a $20,000 to $30,000 check, according to the latest federal indictment.

Rigler has already pleaded guilty, as well as San Diego workers’ compensation attorney Sean O’Keefe.

One of the clinics implicated is Crosby Square Chiropractic, where Rigler worked, which has offices in San Diego, Escondido and Calexico, prosecutors said. Other medical professionals indicted are chiropractors Amir Khan of Orange and David C. Nguyen of Huntington Beach, and pain management Dr. Phong H. Tran of Irvine. Dr. Ronald Grusd of Los Angeles, who was charged federally last year, and was also included in a new state indictment.

And according to the Deferred Prosecution Agreement filed on December 8 in federal court, Fermin Iglesias admitted the allegations of the indictment against him, that he recruited and/or facilitated the recruitment of Workers’ Compensation applicants for legal and medical services .He controlled and operated multiple entities, including, Providence Scheduling Inc., Medex Solutions, Inc., Meridian Medical Resources, Inc., d. b. a. Meridian Rehab Care, and Prime Holdings Int. Inc.

Iglesias further admitted that a “purpose of the conspiracy was to fraudulently obtain money from …insurers by submitting claims for medical goods and services that were secured through an unlawful cross-referral scheme in which defendants supplied patients to doctors and required the doctors to refer those patients to certain providers of ancillary medical goods and services, and the defendants received money from the providers or from health care insurers as part of the scheme, in violation of the doctors’ fiduciary duty to their patients, and concealing from insurers and patients the bribes and kickbacks that rendered the claims unpayable under California law.”

And Iglesias admitted that “It was a part of the conspiracy that Defendants Iglesias, MedEx, Prime Holdings International, Inc., as well as Carlos Arguello and Miguel Morales, received kickbacks and bribes from providers of diagnostic imaging services, including Dr. Ronald Grusd (charged elsewhere) and others” and that “co-conspirator Dr. Grusd and others, concealed from insurers and patients the material fact that referrals were made because of bribes and kickbacks specifically prohibited by California law”.

Iglesias and his coconspirators “further admit that their scheme involved multiple doctors..” and that the “total criminal conduct exceeded $9.5 million in claims to healthcare insurance providers. Iglesias, MedEx, Prime Holdings International, Inc., and Meridian further agree that the gross income derived from this corrupt crossreferral scheme exceeded $5 million.”

Charges against Ronald Grusd M.D. are still pending in federal court, case 15-cr-2821-BAS. The trial date was set for January 24, 2017, but was vacated. According to court records, the “discovery produced by the United States to date consists of multiple gigabytes of data, including reports, emails, medical claim files, audio recordings and video recordings.” The criminal defendants “retained new counsel, who made his first court appearance on October 11, 2016” and needed more time to prepare.

The California Medical Board reports that the Superior Court has issued an order effective March 14, 2016 that Grusd no longer practice medicine pending the outcome of criminal charges in state court pending against him.

AB 1244 will adversely affect the ability of the medical providers who may have filed liens for the collection of fees from recovering additional funds after January 1.

DWC Reduces Mileage Reimbursement Rate

The Division of Workers’ Compensation (DWC) announced the decrease of the mileage rate for medical and medical-legal travel expenses by one-half cent to 53.5 cents per mile effective January 1, 2017.

This rate must be paid for travel on or after January 1, 2017 regardless of the date of injury.

Labor Code section 4600, in conjunction with Government Code section 19820 and the Department of Personnel Administration regulations, establishes the rate payable for mileage reimbursement for medical and medical-legal expenses and ties it to the Internal Revenue Service (IRS).

The Internal Revenue Service issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. IRS Bulletin Number IR-2016-169 dated December 13, 2016 announced the rate decrease.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

There has been a steady decrease in mileage reimbursement rates since the 2015 rates which were 57.5 cents/mile. The decreases are largely the result of lower fuel costs nationwide.

The updated mileage reimbursement form is posted on the DWC website.

DWC to File Provider Suspension Procedure Regulations

The Division of Workers’ Compensation issued its Notice of Emergency Regulatory Action to implement the provider suspension process required under Assembly Bill 1244.

AB 1244 adds Labor Code section 139.21 which requires the Administrative Director to promptly suspend any physician, practitioner, or provider from participating in the workers’ compensation system if that individual has been convicted of any felony or misdemeanor involving fraud or abuse of the Medi-Cal program, Medicare program, or workers’ compensation system, if that individual’s license, certificate, or approval to provide health care has been surrendered or revoked, or if that individual has been suspended for fraud or abuse from participation in the Medicare or Medicaid programs.

AB 1244 requires the Administrative Director to provide notice of the suspension, which becomes effective after thirty (30) days from the date the written notice is sent, unless the physician, practitioner, or provider stays the suspension by requesting a hearing within ten (10) days from the date the written notice is sent.

AB 1244 mandates the adoption of regulations for suspending a physician, practitioner, or provider from participating in the workers’ compensation system if that individual meets the criteria specified above.

The documentation filed by the DWC in support of their request for emergency regulations claims that “High-profile workers’ compensation fraud prosecutions have revealed that many of these physicians, practitioners, or providers who have been indicted or convicted of fraud are involved in questionable patient care that is harming California’s injured workers. Capping schemes, kickbacks, and illegal patient referrals have resulted in injured workers who have been received unneeded or harmful treatment, been maimed for life, needed additional surgeries to repair incompetent work, and sadly, death of an injured worker’s infant due to failure to provide proper patient care, all driven by these fraudulent schemes rather than their medical needs.”

The emergency regulations will be filed with the state’s Office of Administrative Law (OAL) on December 21, 2016. The regulations to be filed with OAL can be found on the DWC website.

OAL has up to 10 days to consider the rules, but may approve them before the 10 days have elapsed.

Upon OAL approval and filing with the Secretary of State, the regulations are effective for 180 days while the Division initiates formal rulemaking procedures to adopt permanent regulations.

For information on the OAL procedure, and to learn how you may comment on the emergency regulations, go to the OAL’s website.

A notice will be posted at the DWC website when the emergency regulations become effective.

Drug Pricing Inflation “Restrained” in 2017

Express Scripts Holding Co, the largest pharmacy benefit manager in the United States, said drug price inflation would likely be restrained going into 2017 and that scrutiny into pricing strategies was here to stay.

Express Scripts’ comments come at a time when drug pricing is a hot political topic in the United States.

Prescription benefit managers (PBMs) negotiate drug benefits for health plans and employers, and have in recent years taken an increasingly aggressive stance in price negotiations with drugmakers.

They often extract discounts as well as after-market rebates from drugmakers in exchange for including their medicines in their formularies with low co-payments.

Drug price inflation will unlikely represent a “significant headwind” in 2017, Chief Executive Tim Wentworth said on a call with analysts, noting that the company has not seen the value of rebates change recently.

“You’re probably going to see some restraint compared to what we have maybe seen in the last couple of years.”

“We don’t accept where drug prices are today. We believe they can and should be lower,” Wentworth told Reuters in an email on Wednesday.

Fitch Ratings’ outlook on the healthcare sector is stable, as the sector faces a low risk of deteriorating fundamentals but high levels of event risk due to regulatory and political uncertainty.

The rating agency also noted the issues involved in the drug pricing debate. Fitch said some drug manufacturers’ practice of taking advantage of supply dislocations to increase prices on established products is “not a defensible business model in the long term.” Fitch said companies that launch truly innovative new drugs will continue to command pricing power.

While most U.S. stocks rallied over the post election weeks, shares of biotechnology and pharmaceutical companies retreated after President-elect Donald Trump vowed in a magazine article to crack down on drug prices. Drug stocks fell after Mr. Trump was quoted in a Time Person of the Year article as saying: “I’m going to bring down drug prices.”

Last week, Allergan Chief Executive Brent Saunders touched on the delicate politics of drug-pricing a health-care industry conference in New York City.

“I worry today that the pharma industry has a very false sense of relief or security because of a Trump administration and a Republican-controlled Congress,” Mr. Saunders said. “I think we should recognize the drug-pricing issue is a populist issue. – To think President Trump isn’t a populist, that he won’t jump on the next EpiPen scandal and won’t Tweet against any company that does something like that, you’re fooling yourself.”

Supreme Court Clears Way for $1 Billion NFL Settlement

The U.S. Supreme Court on Monday cleared the way for the National Football League’s estimated $1 billion settlement of concussion-related lawsuits with thousands of retired players to take effect, rejecting a challenge brought by a small group of dissenters.

Reuters reports that the eight justices refused to hear an appeal of a lower court ruling in April upholding the settlement, which resolved litigation brought by players who accused the NFL of covering up information that tied head trauma like that suffered playing football to permanent brain damage.

The settlement enables the NFL, the most popular U.S. sports league with billions of dollars in annual revenue, to avoid litigation that could have led to huge sums in damages and provided embarrassing details about how it has dealt with the dangers posed by head trauma in the violent sport.

League officials also have taken steps to outlaw some of the game’s most brutal hits and changed how they deal with players who suffer concussions during games amid growing evidence linking such brain trauma to lasting neurocognitive damage.

The settlement calls for payments of up to $5 million each to former players diagnosed with certain neurological disorders, but it does not address chronic traumatic encephalopathy (CTE), a condition that has been linked to concussions.

Christopher Seeger, a lawyer who helped negotiate the settlement for the retired players, said they will now receive “much-needed care and support for the serious neurocognitive injuries they are facing” under the terms of the settlement.

Brian McCarthy, an NFL spokesman, said the league is “pleased that the Supreme Court has decided not to review the unanimous and well-reasoned decisions” of the lower courts that approved the deal.

The NFL will now work with lawyers for the players and the judge overseeing the settlement to “provide the important benefits that our retired players and their families have been waiting to receive,” McCarthy added.

“This settlement will leave most NFL players on the sidelines, even those most affected by the long-term effects of concussions. Under the terms of the deal, many players diagnosed with CTE will get nothing,” said Deepak Gupta, one of the lawyers representing the dozens of retired players challenging a deal they considered flawed.

In upholding the settlement in April, the 3rd U.S. Circuit Court of Appeals in Philadelphia wrote that those challenging it “risk making the perfect the enemy of the good.” Under the settlement, the NFL does not admit guilt.

A smaller group of retired players objected to the agreement, saying it did not account for CTE. They also argued the deal unfairly favored currently injured retirees and left thousands of former players who have not yet been diagnosed with neurological diseases without a remedy.

The objectors included Scott Gilchrist, the son of retired player Carlton Chester “Cookie” Gilchrist, a Buffalo Bills running back in the 1960s whose lawyers say died from CTE at age 75 in 2011.