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Tag: 2018 News

Pfizer Increases Prices on 41 Drugs

Pfizer Inc said that it plans to hike U.S. prices on 41 of its medicines in January, after walking back its previous planned price increases this summer under pressure from President Donald Trump.

Reuters reports that the largest U.S. drugmaker said in a statement that the increases would be on around 10 percent of its medicines.

The company just reported third-quarter 2018 revenues of $13.3 billion, reflecting 2% operational growth.

Pfizer said it would raise the list price of most of the drugs by 5 percent, while prices for three will rise by 3 percent, and the price of one by 9 percent, all effective Jan. 15. The company did name the drugs in line for price hikes.

Pfizer said it does not expect the price increases to boost its revenue in the United States next year as it believes that rebates to insurance companies and pharmacy benefit managers (PBMs) will offset them.

Chief Executive Ian Read said in the statement that the company believes the best way to make drugs more affordable is by focusing on reducing out-of-pocket costs and returning rebates to consumers. This would effectively place responsibility for lowering costs with PBMs and insurers, rather than drugmakers.

The company rolled back a set of price increases in July after Trump said in a tweet that the drugmaker “should be ashamed” and that his administration would respond.

Pfizer said then that it would defer price increases until the end of the year or until the president’s drug pricing plan went into effect, whichever was sooner.

It was not immediately clear whether other drugmakers plan to follow suit. Several, including Roche, Merck & Co and Novartis, made similar pledges not to raise U.S. prices before the end of the year.

Merck and Novartis could not immediately be reached for comment, while a spokeswoman for Roche’s Genentech unit declined to comment.

Pfizer did not tip off the administration that the latest round of price increases was coming, according to a source familiar with the matter.

The hikes “illustrate the perverse incentives of America’s drug pricing system,” said Department of Health and Human Services (HHS) spokeswoman Caitlin Oakley.

Drug companies raising their prices and offsetting them with higher rebates benefits everyone but the consumer,” she said, noting that HHS and the Trump administration was committed to lowering drug prices.

Bar Owner Pleads Guilty to Premium Fraud

Salvatore Carbone, 58, pleaded no contest to insurance fraud and will serve 40 days in Monterey County Jail.

Carbone, a Sand City resident, has owned and operated Sal’s Alley Side Cafe and Carbone’s Bar in Monterey since 2007.

The Workers’ Compensation Fraud Unit at the Monterey County District Attorney’s Office received a tip in June 2017 that Carbone had presented to his workers’ compensation carrier – State Compensation Insurance Fund – that he had no employees for the insurance policy period of August 2014 through August 2015.

Investigators with the District Attorney’s Office obtained business and payroll records and interviewed Carbone, his employees and his accountant.

The District Attorney’s Office concluded the evidence showed Carbone intentionally misrepresented his payroll in order to obtain a lower insurance premium from the State Compensation Insurance Fund.

Carbone pleaded no contest to a misdemeanor Wednesday and Judge Stephen Sillman sentenced him to 40 days in county jail, three years probation and suspended a $10,000 statutory penalty, which will remain suspended if he complies with the conditions of his probation.

The District Attorney’s Office said that business owners and the public need to be aware that California law requires all employers to secure workers’ compensation insurance for their employees so there is adequate medical coverage and benefits for employees for any work-related injuries that may occur.

Making a material misrepresentation to obtain a lower workers’ compensation insurance premium has a maximum penalty of five years and a fine of up to double the amount of the fraud.

More Monsanto Glyphosate Cases Set for Trial

Thousands of California farm workers have been exposed to Monsanto glyphosate weed killer products . For decades there has been controversy over what the health effects might be. Glyphosate is the world’s most widely used weed killer. Nonetheless, there has not been much activity in terms of continuous trauma claims from this group of workers.

However, recent civil litigation by some California workers exposed to these chemicals has been successful. Dewayne Johnson, who sued Monsanto in 2016 was the first success. He has a $289 million verdict in the first glyphosate trial in San Francisco, in which a jury found Monsanto liable for causing a school groundskeeper’s cancer.

Damages awarded to Johnson were later reduced to $78 million, and Bayer, which denies the allegations, said it would appeal the decision.

The company, which faces more than 8,700 U.S. lawsuits over glyphosate, says decades of scientific studies and real-world use have shown glyphosate to be safe for human use. It is likely that the workers’ compensation industry will end  up with some of thee claims.

There is now another California case  that has just been set for trial.

A California judge on Thursday granted an expedited trial in the case of a California couple suffering from cancer who sued Bayer AG’s Monsanto unit, alleging the company’s glyphosate-containing weed killer Roundup caused their disease.

The trial of California residents Alva and Alberta Pilliod is scheduled to begin on March 18, 2019. The couple are suffering from cancer and sued Bayer AG’s Monsanto unit, alleging the company’s glyphosate-containing weed killer Roundup caused their disease.

The Pilliods, who are in their 70s, allege their regular use of Roundup between 1975 and 2011 caused them to develop non-Hodgkin lymphoma, a cancer of the lymph system.The couple filed their lawsuit in June 2017, after being diagnosed with the cancer in 2011 and 2015 respectively. Their lawyers earlier this year asked for an expedited trial, citing the couple’s risk of a relapse and their short life expectancy.

“While we have great sympathy for the plaintiffs, we are confident that our glyphosate-based herbicides were not the cause of their injuries and we will vigorously defend them at trial,” the company said in a statement.

Glyphosate jury trials will ramp up next year. The company is scheduled to face jurors in a Missouri state court in St. Louis, where the first trial was set to begin in early February. That date, however, was vacated by a judge, Bayer said, and the trial is likely to be postponed to later in 2019.

A trial in San Francisco federal court, where federal Roundup lawsuits are consolidated, is scheduled to begin at the end of February.

San Diego Counterfeit Oxycodone Smuggler Pleads Guilty

Fernando Jesus Peraza, age 39, pleaded guilty to importing over 20,000 fentanyl pills.

Peraza was arrested at the San Ysidro Port of Entry on August 8, 2018. Peraza, a United States citizen, resided in Tijuana at the time of the offense but worked at a local trash collection service in the United States.

The San Ysidro Port of Entry is the largest land border crossing between San Diego and Tijuana, and one of the busiest land border crossings in the world with 70,000 northbound vehicles and 20,000 northbound pedestrians crossing each day, in addition to southbound traffic.

According to court records, Peraza was the driver and sole occupant of his vehicle. U.S. Customs and Border Protection (“CBP”) officers initially contacted Peraza in the pre-primary inspection area; he was referred to secondary inspection, where officers found four packages concealed in the passenger side rear quarter panel. The counterfeit pills, which were designed to resemble M30s or oxycodone, contained fentanyl.

Defendant admitted that he imported approximately 20,000 pills containing fentanyl in his vehicle and knew that his vehicle contained fentanyl, or some other prohibited drug. He faces a minimum mandatory sentence of 10 years in custody.

Counterfeit pills are especially dangerous because users often don’t know they are ingesting fentanyl,” said U.S. Attorney Adam Braverman. “With overdoses taking a life every 8 minutes, federal law enforcement agencies are prioritizing prosecution of every individual who smuggles and distributes this deadly substance. Thanks to the vigilance of CBP, these deadly pills will not see the streets of our communities.”

Defendant is scheduled for sentencing on February 1, 2019, before United States District Court Judge Gonzalo P. Curiel.

This case is being prosecuted by Assistant United States Attorney Sherri Hobson.

Insurance Fraud Has No Limits Anymore!

A Hawthorne man was arrested last week on federal charges that allege he intentionally drove his domestic partner and two severely autistic children off a pier into the ocean to collect proceeds on accidental death insurance policies he had purchased on their lives.

44 year old Ali F. Elmezayen was arrested on November 7 by special agents with the FBI after being charged with defrauding insurance companies. Elmezayen made his initial appearance on November 8, when he was ordered held without bond pending this afternoon’s detention hearing.

According to a criminal complaint, Elmezayen purchased several accidental death insurance policies providing more than $6 million in coverage on himself, his domestic partner and his children in 2012 and 2013. Elmezayen allegedly paid nearly $6,000 a year for these policies – even though he was earning less than $30,000 a year – and he called at least two of the insurance companies to confirm they would not investigate claims made two years after the policies were purchased.

On April 9, 2015 – two years and 12 days after he bought the last of his insurance policies – Elmezayen drove a car with his partner and two youngest children off a wharf at the Port of Los Angeles. Elmezayen swam out the open driver’s side window of the car. His partner, who did not know how to swim, survived when a nearby fisherman threw her a flotation device. The two children, ages 8 and 13, were unable to escape the car and drowned.

Witnesses told police they heard the tires of the vehicle screech as it accelerated toward the water. They also said Elmezayen swam quickly to one of the ladders while his partner came up screaming “My kids, my kids.”

At the time, Los Angeles police said the focus of the investigation had shifted from “homicide/suicide” to “accident.” But it appears detectives later presented a case to prosecutors. The Los Angeles County District Attorney’s Office declined to file criminal charges against Elzemayen in December 2017 due to lack of sufficient evidence, said spokesman Greg Risling.

Elmezayen made numerous claims as to why he drove off the wharf, including the parking spaces were too close to the edge, the car’s brake system was not working and an evil presence took over him and he wasn’t himself. He also lied to police and said he did not have any life insurance policies on his children, prosecutors said.

Elmezayen then collected more than $260,000 in insurance proceeds from American General Life Insurance and Mutual of Omaha Life Insurance on the accidental death insurance policies he had taken out on the children’s lives, according to the complaint. In addition to posing as his domestic partner in communications with the insurance companies without her knowledge, Elmezayen allegedly made several false statements, including stating that the cause of his children’s deaths was accidental and that he had no other insurance policies on his children.

Elmezayen also filed a wrongful death lawsuit in May 2016 against multiple defendants, including the Port of Los Angeles and Los Angeles County, but the case was ruled in favor of the defendants that October, the new federal criminal complaint says.

“This case alleges a calculated and cold-hearted scheme to profit off the deaths of two helpless children,” said United States Attorney Nick Hanna. “The alleged conduct shocks the conscience, and we will use every tool available to us to ensure that justice is done.”

“The defendant is accused of orchestrating a scheme to defraud insurance companies by taking the lives of his vulnerable young sons,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The defendant faces serious consequences as we seek justice on their behalf.”

The criminal complaint specifically charges Elmezayen with mail fraud, wire fraud and aggravated identity theft for posing as his domestic partner in calls to the insurance companies.

During last week’s court hearing, a preliminary hearing was scheduled for November 23, and Elmezayen was ordered to appear for an arraignment on November 29.

If he were to be convicted of the charges in the complaint, Elmezayen would face a statutory maximum sentence of 20 years in federal prison for each of the fraud counts. The charge of aggravated identity theft carries a mandatory consecutive sentence of two years in prison.

This case is being investigated by the Federal Bureau of Investigation and IRS Criminal Investigation. The federal investigators received substantial assistance from the Los Angeles Police Department, the Los Angeles Port Police and the Los Angeles City Attorney’s Office.

SCIF Renews $225M Comp Catastrophe Bond

A renewal of the only catastrophe bond in the market that provides its sponsor with reinsurance protection for workers compensation claims caused by earthquakes is underway, as a currently $225 million Golden State Re II Ltd. (Series 2018-1) transaction has been launched to the market.

This is now the third cat bond transaction that will benefit sponsor the California State Compensation Insurance Fund, following its 2011 Golden State Re Ltd. deal and 2014 Golden State Re II Ltd. 2014-1 transaction.

The mechanics of the catastrophe bond are extremely similar, being a modelled loss triggered bond that pays out based on how a qualifying earthquake event is modelled to impact a portfolio of workers compensation insurance risk.

This still unique transaction in the cat bond market therefore links earthquake severity to workers compensation loss amounts, a paradigm that could be applied to other types of risks that could then be securitised and transferred to the capital markets.

Given the exposure to earthquake risk in the state of California, it makes sense to look to the capital markets for a source of reinsurance coverage that responds to earthquake occurrence and severity.

This cat bond marks the second time that this Golden State Re II Ltd. special purpose insurer, which is incorporated in Bermuda, has been used by the SCIF following the 2014 deal.

The Golden State Re II 2018 cat bond issuance will result in a single tranche of Series 2018-1 notes, currently sized at $225 million, being marketed and sold to investors, with the capital raised from the sale of the notes set to collateralize reinsurance agreements between the SPI and the sponsor SCIF.

The deal is expected to be sized at $225m or over, depending on ILS investor appetite for the transaction.

This cat bond will provide the California State Compensation Insurance Fund (SCIF) with a 4 year source of reinsurance protection, covering losses to its workers compensation insurance portfolio that are caused by earthquake events.

The reinsurance protection will be afforded on a per-occurrence basis and using a modelled loss trigger, designed and calculated by catastrophe risk modelling specialists RMS, in the same fashion as the previous Golden State cat bond issues.

The covered area is for earthquake events that strike anywhere across the entire U.S., but as with the previous cat bonds more than 95% of the SCIF’s insurance portfolio is focused on California, as its name gives away. Hence the risk associated with this cat bond is primarily focused on California or neighbouring area earthquake loss events.

The modelled loss trigger uses a variety of inputs and a calculation process to derive whether an event has triggered the cat bond.

The trigger is of similar construct to the previous Golden State cat bond deals, using the exposures of a notional portfolio of workers compensation risks in the SCIF’s portfolio, earthquake severity factors (ground motion etc), geographic distribution of the covered portfolio, types of buildings covered, time of day and the day of week an event occurs, as some of the weighting factors that will be used to determine whether the cat bond is triggered and a payout due.

After a qualifying event, which has to be an earthquake of magnitude 5.5 or greater, losses will be modelled deterministically, so not related to actual injuries and fatalities, using the earthquake event parameters and this will in turn be modelled against the notional portfolio using day/time weighting to determine an index value and notional modelled loss or payout amount.

The reason day/time is a factor is to ensure that the cat bond responds to quake events during standard working hours, when workplaces are at their fullest. The calculation process that runs after a qualifying earthquake event occurs will derive an index value that will be compared against the transactions attachment point.

The attachment point for this cat bond is at an index value of 1,000, and the exhaustion at 4,323.5, which is a larger layer of the SCIF’s reinsurance programme than the previous deals it appears.

This suggests the SCIF is using the cat bond to sit alongside its traditional protection, so paying a percentage of its losses for major quake events, which is a shrewd move as the fixed cost and pricing of a cat bond can sit there across the four-year term allowing the Fund to measure the cost-effectiveness of its traditional reinsurance protection against it.

The initial attachment probability for the notes will be 0.49% which is almost the same as the 2014 deal’s 0.5%, while the initial exhaustion probability will be 0.03% (lower than the previous deal’s 0.11% due to the much larger layer covered) and initial expected loss is 0.14% (roughly half the 0.25% EL of the 2014 Golden State Re cat bond).

WCRI Studies Comp Medical Costs in 18 States

Medical payments per workers’ compensation claim with more than seven days of lost time in Massachusetts were the lowest of 18 states studied. This reflects both lower prices paid and utilization of services based on 2014 to 2016 claims evaluated as of 2017, according to a recent study by the Workers Compensation Research Institute (WCRI).

“Massachusetts’ lower-than-typical medical payments per claim are primarily a result of fee schedules for professional and hospital services and utilization control,” said Ramona Tanabe, WCRI’s executive vice president and counsel.

The study, CompScope Medical Benchmarks for Massachusetts, 19th Edition, can help policymakers and other stakeholders in the system identify current cost drivers and emerging trends in payments, prices, and utilization of medical services among non hospital and hospital providers. The report also examined how these metrics of medical payments in Massachusetts compared with 17 other states. For the study, WCRI analyzed workers’ compensation claims with experience through 2017 for injuries up to and including 2016.

The main reason for stability in prices paid in Massachusetts was the lack of updates in fee schedule rates for professional services since 2009. In addition, there were no other major changes in the system that would affect the trends in medical payments per claim in a material way.

“Massachusetts is different than most study states,” said Tanabe. “Not only were many services provided by hospital-affiliated practices, but also major surgery occurred less often than in the other states.”

The following are among the study’s other findings:

– Between 2011 and 2016 (claims with an average maturity of 12 months), medical payments per claim grew little or increased moderately for some provider types. The trends in Massachusetts were similar to other study states.
– A higher-than-typical percentage of claims received services billed by hospitals in Massachusetts, related to hospital-affiliated practices. However, hospital outpatient payments per claim and hospital payments per inpatient episode were lower than in oth er states.
– Massachusetts had lower-than-typical fee schedule rates for many professional services. Prices paid were lower than in other states for frequently used services such as evaluation and management and physical medicine. However, prices paid were typical to higher for expensive services such as major surgery, major radiology, pain management injections, and neurological/neuromuscular testing.
– Massachusetts had lower-than-typical surgery-related facility payments per claim, except for professional payments to surgeons. The percentage of claims with major surgery in Massachusetts was the lowest of the study states at all claim maturities.

To learn more about this study or to purchase a copy, visit the WCRI website .

Couple to Serve 3 Years for EDD Scam

Raul Oropeza Lopez, 51, and Ana Maria Oropeza, 45, both of Delano, were sentenced today by Chief U.S. District Judge Lawrence J. O’Neill. Raul Oropeza Lopez was ordered to serve three years and one month in prison and to pay $1,283,160 in restitution.

Ana Maria Oropeza was sentenced to three years of probation, and ordered to serve eight months on house arrest. The defendants were also ordered to forfeit over $167,00 in seized cash.

According to court documents, Raul Oropeza Lopez obtained social security numbers, names, and other personal identifying information of U.S. citizens and legal residents and then fraudulently used such information to provide undocumented workers with false identities required to work in the United States as farm laborers.

Then, when the undocumented workers were laid off at the end of the growing season, Raul Oropeza Lopez and his wife filed fraudulent unemployment insurance claims in the names of the assumed identities, relying on the work performed by the undocumented workers to fraudulently claim unemployment insurance benefits.

Over a period of six years, the couple submitted more than 520 fraudulent unemployment insurance claims on behalf of over 70 individuals.

This case was the product of an investigation by the U.S. Department of Labor Office of Inspector General; Homeland Security Investigations; Social Security Administration Office of the Inspector General; the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Postal Inspection Service; and the California Employment Development Department, Criminal Investigations Division.

Assistant United States Attorney Mark J. McKeon prosecuted the case.

Walmart and Home Depot Join Employer Drug Cost Battle

Reuters reports that Walmart and Home Depot, two of the top 10 U.S. employers, have embraced a health insurance strategy that punishes drugmakers for using discount cards to keep patients from switching or stopping their medications.

Large U.S. companies have started tightly managing how employees and their family members use these popular discount, or copay, cards for everything from multiple sclerosis treatments to widely-used rheumatoid arthritis medications sold through a specialty pharmacy.

The move reflects their frustration that the coupons, which lower patient out-of-pocket spending, can be a disincentive to seeking less expensive treatments and drive up health plan costs.

For certain therapies, the insurance programs extract more money from the drugmaker or redirect the employee to a cheaper medicine, according to benefits experts.

Home Depot’s program, run by CVS Health, has a particular focus on therapies for cystic fibrosis, hepatitis C, cancer, HIV, psoriasis, pulmonary arterial hypertension and hyperlipidemia, or extremely high cholesterol, according to health plan documents provided to Reuters. The company, which has 400,000 employees, said the program affects fewer than 1 percent of its plan members. Yet those participants can have an outsized impact on spending because of how costly it is to treat their conditions.

Specialty drugs can account for more than half of a corporate health plan’s spending on medicines. Employers who use the most comprehensive program at CVS can save up to 7 percent on their total specialty medication costs, CVS told Reuters.

The programs, known as copay “accumulators” and copay “maximizers,” are expected to expand in the next two years, from about 25 percent of U.S. employers to as much as 50 percent, according to the National Business Group on Health.

Drugmakers “are concerned about it because the bottom line is that it will cost them more money,” said Brian Marcotte, the group’s chief executive.  Drugmakers are worried about the hit to profits if many more employers sign on. They are also concerned because they cannot easily track when the programs are being used.

Eli Lilly & Co executives said last week that copay accumulator programs were having an impact on its Taltz psoriasis drug and Forteo for osteoporosis, but that it did not feel there was “significant exposure.”

Pfizer and AstraZeneca executives said in recent interviews with Reuters that they are monitoring the effect of these programs.

AbbVie, maker of top-selling arthritis treatment Humira, said in April it expects moderately higher spending on copay assistance this year.

Pharmaceutical industry spending on copay cards has more than doubled to $7 billion over the past five years, mostly due to coupons offered on higher-cost specialty drugs.

A copay “accumulator” recognizes when an employee uses a drugmaker discount card and makes sure that money does not apply toward their annual out-of-pocket spending requirement.  When the copay card runs out of money, a patient must either cover the full copay cost, get a new discount card, or stop filling the prescription. The program can apply to almost any drug coupon used at a pharmacy working with the pharmacy benefit manager.  A copay “maximizer” is more limited in scope, but potentially as costly to the drugmaker.

Express Scripts Creates New Competitive Dynamic

Express Scripts announced it is introducing a novel formulary to provide employers and health plans a better opportunity to leverage changing dynamics to help lower their members’ out-of-pocket costs.

The Express Scripts’ National Preferred Flex Formulary provides a way for plans to cover lower list price products, such as new authorized alternatives that drug makers are bringing to the market, and reduce reliance on rebated brand products.

Drug makers set drug prices, and can lower them at any time. However, immediate list price decreases for products already on the market can pose challenges for employers and health plans that already have underwritten plan offerings and benefit designs for upcoming years based on existing economics.

By introducing authorized alternative products, through a new or additional National Drug Code (NDC) with a lower list price, we can create a competitive dynamic more similar to a generic coming to market. Cash-paying patients can have immediate access to the lower-priced medication. Meanwhile, employers and health plans can choose which product to cover that is best for their plan and their members: the lower-priced option or the original brand, which may have a rebate.

Over time, plans, pharmacies and others in the supply chain can transition to a new pricing model and the drug maker could ultimately retire their high list price product.

The National Preferred Flex Formulary is a comprehensive formulary that will mirror our industry leading National Preferred Formulary — covering more than 3,800 brand and generic medications — and will follow Express Scripts’clinical-first formulary decision process for all new therapies that come to market.

When a manufacturer launches a lower-cost authorized alternative to a branded medication currently on the market, Express Scripts will evaluate the product for placement on the National Preferred Flex Formulary.

If appropriate, the authorized alternative product will be added to the Flex formulary with preferred or possibly non-preferred status. The innovator brand-name product, and potentially other products in the therapy class, then will be excluded from coverage.

Members enrolled in the Flex formulary who have a high-deductible or co-insurance plan design can have immediate access to the lower-priced authorized alternative medication.

Branded innovator products will remain preferred or non-preferred on other formularies, including Express Scripts’ National Preferred Formulary, while the authorized alternative product may be excluded.