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Tag: 2019 News

Antibiotic Drugmaker Bankruptcies Spark Crisis

At a time when bacteria are growing more resistant to common antibiotics, many companies that are developing new versions of the drugs are hemorrhaging money and going out of business, gravely undermining efforts to contain the spread of deadly, drug-resistant bacteria.

Melinta Therapeutics, founded in 2000 as Rib-X Pharmaceuticals, is an American publicly traded biopharmaceutical firm that focuses on the design and development of novel broad-spectrum antibiotics for the treatment of antibiotic-resistant infections in hospital and community settings.

On December 27, Melinta filed for bankruptcy protection, becoming the latest casualty of a persistent cash burn in the antibiotic industry. The drugmaker, which has four antibiotics on the market, warned that it was running out of cash last month.

Melinta has entered into a Restructuring Support Agreement with the lenders. Under the Agreement, the Supporting Lenders would acquire the Company as a going concern by exchanging $140 million of secured claims arising under its senior credit facility for 100 percent of the equity to be issued by the reorganized Company pursuant to a pre-negotiated chapter 11 plan of reorganization.

The Company’s Agreement with the Supporting Lenders positions the Company to emerge from Chapter 11 on an expedited basis under new ownership and continue operating as a going concern on sound financial footing. At the same time, the Supporting Lenders’ proposal to acquire the Company remains subject to a Court-supervised competitive process, which could result in higher and better offers.

The Agreement will be filed with the Securities and Exchange Commission in a current report on Form 8-K.

Global health officials have repeatedly warned about the rise of bacteria and other microbes that are resistant to most drugs due to their overuse, prompting health agencies to push for newer versions of antibiotics.

However, antibiotics are relatively cheap and are more effective the less they are used, making profitability hard to achieve.

Most of Big Pharma shuns the antibiotic space. Larger drugmakers, including AstraZeneca Plc, Novartis and Sanofi SA, have stopped developing antibiotics.

While smaller players such as Achaogen Inc have already failed and filed for bankruptcy. Bankrupt and running out of cash after going $186 million in the red last year, Achaogen has sold off the global rights to Zemdri (plazomicin for multidrug-resistant, gram-negative pathogens) along with its lab equipment for just $16 million.

The California biotech Aradigm filed for bankruptcy after a major knockback from the FDA for its lead inhaled antibiotic product and protracted efforts to try to resurrect the program.

This is a crisis that should alarm everyone,” said Dr. Helen Boucher, an infectious disease specialist at Tufts Medical Center.

California Pharmacies Fail Drug Take-back/Disposal Study

Improper disposal of prescription medications results in pollution, antibiotic resistance, childhood poisoning, and intentional misuse. Pharmacies are in an ideal position to provide disposal information, but evidence is limited regarding the accuracy of the information they provide.

But a new study published in the Annals of Internal Medicine found that only 1 in 10 California pharmacies have programs to take back unused prescription opioids and just one in five give consumers accurate disposal information. The study suggests that drugstores could do more to help combat substance abuse.

For the “secret shopper”-style study, researchers called 898 pharmacies in California to inquire about the availability of take-back programs for leftover opioids and antibiotics, and find out how to safely dispose of these medicines at home. All of the secret shoppers in the study posed as parents of children who recently had surgery.

Callers asked pharmacies what to do with two leftover medications: the antibiotic Bactrim (sulfamethoxazole-trimethoprim), and liquid Hycet (hydrocodone-acetaminophen), a pain reliever containing an opioid compound.

The danger of unused and unwanted prescription medication is substantial – from accidental childhood poisoning to pollution to intentional misuse,” said senior study author Dr. Hillary Copp of the University of California, San Francisco.

“The FDA recommends dropping off medications at a take-back site as the best option for disposal,” Copp said by email. “However, there are specific recommendations for medication disposal at home if the consumer does not have access to a take-back site.”

Just 19% of pharmacies correctly told callers they should bring unused opioids back to a drugstore or flush unused opioids down the toilet, the study found. Only 11% of pharmacies offered to take back unused opioids at their location.

With antibiotics, 47% of pharmacies correctly advised callers to return leftovers to a drugstore or to mix unused medicines with unpalatable substances like coffee grounds or kitty litter and place in a sealed container before tossing the drugs in the trash. Only 19% of pharmacies offered to take back unused antibiotics.

Tossing leftover antibiotics in the trash helps prevent people from taking them in the future for illnesses they can’t cure, which contributes to the rise of antibiotic-resistant superbugs that can’t be treated with available medicines, Copp said. Flushing antibiotics might get them into the water supply, also contributing to antibiotic resistance.

Flushing opioids, however, prevents them falling into the wrong hands and contributing to substance misuse, addiction and overdoses. Addicts might still take opioids they find in the trash, even mixed with dirt or kitty litter or other substances, Copp said.

The study results suggest that many pharmacies may be falling short as educators and as places for safe disposal, said Dr. Chana Sacks of Massachusetts General Hospital and Harvard Medical School in Boston.

Sutter Health Resolves Anticompetitive Class Action for $575M

The California Attorney General announced the terms of a settlement agreement reached with Sutter Health, the largest hospital system in Northern California. The Sutter network consists of some 24 acute care hospitals, 36 ambulatory surgery centers, and 16 cardiac and cancer centers. It also includes some 12,000 physicians and over 53,000 employees. In addition, Sutter negotiates contracts on behalf of the Palo Alto Medical Foundation and many affiliated physician groups.

The settlement resolves allegations by the Attorney General, the United Food and Commercial Workers International Union and Employers Benefit Trust, and class action plaintiffs, that Sutter’s anticompetitive practices led to higher healthcare costs for patients in Northern California compared to other places in the state.

As a result of the settlement, Sutter will pay $575 million in compensation and make significant changes in its operations and practices to restore competition in Northern California’s healthcare market.

This litigation against Sutter began in 2014 when the United Food and Commercial Workers International Union and Employers Benefit Trust and numerous individual plaintiffs – later consolidated into a class action – filed their lawsuit challenging Sutter’s practices in rendering services and setting prices.

They sought compensation for what they alleged were unlawful, anticompetitive business practices, which caused them to pay more than necessary for healthcare services and products.

In March of 2018, the California Attorney General filed a similar lawsuit against Sutter on behalf of the people of California principally seeking injunctive relief to compel Sutter to correct its anticompetitive business practices moving forward. The separate lawsuits were combined by the court into one case.

In October of 2019, on the eve of trial, the parties reached an agreement to settle the lawsuits. The settlement must be approved by the court. The court has set a hearing on the settlement for February 25, 2020.

Under the terms of the 122 page settlement agreement, Sutter will be required to pay $575 million to compensate employers, unions, and others covered under the class action and to cover costs and fees associated with the legal efforts.  And limit what it charges patients for out-of-network services, helping ensure that patients visiting an out-of-network hospital do not face outsized, surprise medical bills.  And increase transparency by permitting insurers, employers and self-funded payers to provide plan members with access to pricing, quality, and cost information, which helps patients make better care decisions.

Sutter has also agreed to cease anticompetitive bundling of services and products which forced insurers, employers, and self-funded payers to purchase for their plan offerings more services or products from Sutter than were needed. Sutter must now offer a stand-alone price that must be lower than any bundled package price to give insurers, employers, and self-funded payers more choice

FDA Issues Nerve Pain Meds Safety Warning

The U.S. Food and Drug Administration is warning that serious breathing difficulties may occur in patients using gabapentin (Neurontin, Gralise, Horizant) or pregabalin (Lyrica, Lyrica CR) who have respiratory risk factors.

These include the use of opioid pain medicines and other drugs that depress the central nervous system, and conditions such as chronic obstructive pulmonary disease (COPD) that reduce lung function. The elderly are also at higher risk.

Gabapentin and pregabalin are FDA-approved for a variety of conditions, including seizures, nerve pain, and restless legs syndrome. The FDA evaluation of respiratory depression with the gabapentinoids provides some evidence contrary to the widely held belief that gabapentinoids lack drug interactions and have wide therapeutic indices. Published studies demonstrate these drugs can behave in an additive way to potentiate central nervous system (CNS) and respiratory depression.

The FDA evaluation shows that the use of these medicines, often referred to as gabapentinoids, has been growing for prescribed medical use, as well as misuse and abuse.

Gabapentinoids are often being combined with CNS depressants, which increases the risk of respiratory depression. CNS depressants include opioids, anti-anxiety medicines, antidepressants, and antihistamines. There is less evidence supporting the risk of serious breathing difficulties in healthy individuals taking gabapentinoids alone.

Health care professionals should start gabapentinoids at the lowest dose and monitor patients for symptoms of respiratory depression and sedation when co-prescribing gabapentinoids with an opioid or other central nervous system (CNS) depressant such as a benzodiazepine. Patients with underlying respiratory disease and elderly patients are also at increased risk and should be managed similarly.

Shifting treatment from one CNS depressant to another may pose similar risks. Be aware of the potential additive effects of all these CNS depressants and plan accordingly, by starting with low doses, titrating carefully, and informing patients of the potential for CNS and respiratory depression and their symptoms.

Incorporating one or more medications with non-drug therapies is the prevailing approach for optimizing analgesia. However, pairing an opioid with any CNS depressant – a gabapentinoid, benzodiazepine, sedating antidepressant, sedating antipsychotic, antihistamine, or other product – will increase the risk of respiratory depression.

The gabapentinoid prescribing information already includes guidance for health care professionals to caution patients about dizziness, somnolence, and the potential for impaired ability to operate a car or complex machinery.

The FDA will continue to monitor these medicines as part of our routine monitoring of all FDA-approved drugs.

Attorney Lee Mathis Pleaded Guilty – Sentenced to Lompoc

San Diego chiropractor, George Reese was indicted in 2014 for referring patients to a Los Angeles area medical service provider. Foremost Shockwave Solutions in return for bribes. The bribes were $100 per patient and paid through an intermediary. After taking a cut amounting to $25 per patient, the intermediary would pay the remaining $75 per patient to Reese.

Foremost Shockwave Solutions was allegedly controlled by attorney Lee Mathis and Fernando Valdes its president. Both were also indicted. Although disguised as “office rent” payments, the illegal bribes were allegedly paid in cash during clandestine exchanges in restaurants and parking lots.

According to the indictment, Reese and his codefendants generated and submitted bills to insurers totaling in the tens of millions of dollars. Most of these treatments involved the providing of “Shockwave therapy,” which uses low energy sound waves to initiate tissue repair. Proceeds from the insurance claims generated through this scheme were paid to Mathis and Valdes.

Reese pleaded guilty in June 2016. and began serving a one year one day sentence. His plea agreement remains sealed. Valdez entered into a plea agreement in July 2017. His plea agreement also remains sealed.

In 2018 attorneys claimed that Mathis has been interviewed and administered standardized psychological and neuropsychological, memory, malingering and motivation and he has been interviewed regarding competency factors for a total of 16 hours between February and July 2018. Dr Veronica Thomas concluded Mathis was unable to assist counsel at trial.

The Government engaged Dr. Matthew Carroll to evaluate Mr. Mathis’ competency to stand trial. In his interviews with Dr. Carroll, Mr. Mathis was able to provide a detailed personal and professional history. They discussed the pending charges and Mr. Mathis provided a summary of the Workers’ Compensation system, his role in the system and he discussed the Government’s case. Mr. Mathis demonstrated a reasonable appreciation of the charges against him. He described “his side of the story in a coherent and logical manner.”

It was Dr. Carroll’s opinion that Mathis understands the nature and consequences of the proceedings against him and can assist properly in his defense and testify on his own behalf. Thus, in March 2019 Mathis was found competent to stand trial.

Mathis subsequently pleaded guilty on September 12, 2019 to count two of the nine count indictment, Honest Services Mail Fraud. He was sentenced to 14 month is federal prison and is scheduled to surrender on January 21, 2020. He will be on 3 years supervised release thereafter.

Canadian Drug Suppliers Decline to Sell to U.S.

Many of Canada’s drug suppliers cannot, or will not, agree to ship cheaper prescription medicines into the United States, a new challenge to the Trump administration’s push to reduce drug prices, companies and industry officials told Reuters.

The administration on Wednesday proposed new regulations that would allow states to import prescription drugs from Canada. They would require a state such as Florida to partner with a wholesaler licensed by Health Canada, which regulates drugs.

Florida and other states have said they are eager to start importation programs, and the proposal took the federal government one step closer to approving that plan. But there are practical barriers to actually bringing in drugs.

Two drug distributors and two Canadian industry groups that between them represent all of the potential suppliers named in a proposal published by Florida in August said they are not interested in participating.

“We have not been contacted and we are not planning to participate,” said Loblaw Companies Ltd (L.TO), which owns Canada’s largest pharmacy chain Shoppers Drug Mart. “Canadian patients currently face product and drug shortages and we are concerned this initiative may exacerbate what is already a critical issue.”

Daniel Chiasson, president of the Canadian Association for Pharmacy Distribution Management (CAPDM), said none of its members would participate because their first priority was ensuring a safe and stable supply of medication for Canadians.

Mary Mayhew, secretary of the Florida Agency for Health Care Administration, said she was “excited and enthusiastic” about Wednesday’s announcement.  “We are optimistic that Canadian suppliers will be interested, as the rule is understood, as there is more dialogue around this new and historic federal action,” she said.

Chiasson said agreements between manufacturers and distributors prevent the export of products made for the Canadian market, creating a commercial risk and deterrent to exporting.

“These are issues we continue to consider and are committed to exploring how we might overcome any challenges and issues as we advance the proposed rule,” U.S. Food and Drug Administration spokesman Michael Felberbaum said in a statement.

Some of Canada’s major distributors are subsidiaries of U.S. companies, who are unlikely to participate in a program to lower prices, since their revenue reflects a cut of the value of the drugs they provide to pharmacies in the much larger U.S. market.

AmerisourceBergen said that protecting bottom lines was not the issue, because importation implied that distributors could buy low-cost drugs and sell them in high-cost markets.  “The reality is that legal and contractual barriers, as well as significant threat to the integrity of the supply chain, all stand in the way of importation being a viable solution,” it said in a statement.

Mid-Wilshire Doctor to Pay $3.4M to Resolve Fraud Claim

The Department of Justice announced that Nassir Medical Corp. and its owner, Dr. Youram Nassir, have agreed to pay the United States and California $3,356,565 to settle False Claims Act allegations that they defrauded public health care programs by billing for oncology drugs and services that were not actually provided to patients.

Nassir Medical Corp., which does business as Cancer Care Institute, is a hematology and oncology practice based in in the Mid-Wilshire area of the City of Los Angeles. This medical office specializes in treating cancer patients and such treatment often requires physicians to prescribe, dispense, infuse, and administer a variety of oncology drugs. Medicare and Medi-Cal reimburse physicians both for the cost of drugs themselves and for the cost of infusing and administering those drugs to patients.

Between January 2010 and December 2013, Nassir Medical Corp. and Nassir allegedly violated the False Claims Act by submitting bogus claims to Medicare and Medi-Cal, according to this case’s settlement agreement. The defendants allegedly billed public health programs for drugs that were not actually purchased, dispensed, or administered, and for infusion services that were not actually provided.

The defendants have agreed to pay $2,377,675.51 to the United States and $978,907.49 to California. Nassir Medical Corp. and Nassir also have entered into an integrity agreement with the United States Department of Health and Human Services, Office of Inspector General.

This settlement resolves allegations originally brought in a lawsuit filed in 2016 by Kenneth Bryan, a retired health care consultant and administrator, under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions permit private parties to sue on behalf of the government for false claims for government funds and to share in any recovery. Mr. Bryan will receive more than $475,000 from the federal government as his share of the settlement amount.

Assistant United States Attorney Ross M. Cuff of the Civil Fraud Section represented the United States in this matter, which was investigated by agents from the United States Department of Health and Human Services, Office of Inspector General.

The lawsuit is captioned United States, et al., ex rel. Bryan v. Nassir Medical Corp., et al., 16-cv-2289-JAK (C.D. Cal.). The claims resolved by the settlement are allegations only. There has been no determination of liability.

Fake Doctor in Fake Long Beach Clinic Sentenced

James Wilson, 56, was sentenced by United States District Judge Terry J. Hatter Jr.  At the conclusion of a bench trial in March, Judge Hatter found Wilson guilty of two counts of illegally distributing oxycodone.

The evidence presented at trial showed that Wilson, during two different transactions in early 2016, sold a total of four prescriptions to an undercover operative working with the Drug Enforcement Administration. Each of the four prescriptions were for 120 30-milligram oxycodone pills, which is the maximum strength of the opioid sold through pharmacies.

Wilson, who is neither a doctor nor a pharmacist, owned and operated what prosecutors called a “sham medical clinic.” The illegal prescription sales took place in the parking lot of Wilson’s clinic, where he charged $200 for each of the illegal prescriptions.

Wilson was arrested in this case in August 2017, at which time investigators found 160 blank prescriptions in his vehicle.

Wilson’s “scheme involved the diversion of oxycodone, a powerful and deadly opioid at the center of the nation’s opioid crisis,” prosecutors wrote in a sentencing memorandum.

This case was investigated by the DEA and was conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF). This matter was prosecuted by Assistant United States Attorneys Marina A. Torres and Brittney M. Harris of the International Narcotics, Money Laundering, and Racketeering Section.

More Lawsuits and Layoffs Follow Passage of AB-5 Employment Law

The American Society of Journalists and Authors (ASJA) is the nation’s largest professional organization of independent nonfiction writers. Its membership consists of freelance writers of magazine articles, trade books, and many other forms of nonfiction writing. The ASJA was founded in 1948 as the Society of Magazine Writers. Its membership consists of more than 1,100 freelance writers.

The National Press Photographers Association (NPPA) is an American professional association made up of still photographers, television videographers, editors, and students in the journalism field. It was founded in 1946. As of 2017, NPPA had total membership at just over 6,000.

Both the American Society of Journalists and Authors, Inc., and National Press Photographers Association as plaintiffs have just filed a lawsuit federal court against California, over the state’s controversial Assembly Bill 5 (AB 5), saying the law forces their independent contractors to “become employees of their clients,” whether or not this is preferable or even feasible.

“We have no choice but to go to court to protect the rights of independent writers and freelance journalists as a whole,” said Milton C. Toby, JD, president of ASJA. “The stakes are too high, and we cannot stand by as our members and our colleagues face ill-conceived and potentially career-ending legislation.”

“Under the law, a freelancer like me can write 200-plus press releases in a year for a marketing firm, and it’s no problem. But if a newspaper wants me to write a weekly column about local politics, it must put me on staff – a very unlikely prospect – or violate the law. Otherwise I am silenced,” said San Diego freelance writer Randy Dotinga, a board member and former president of ASJA.

The lawsuit asserts that the law violates the U.S. Constitution because it penalizes some freelancers while allowing other visual artists (including marketing photographers, fine artists, and graphic artists) to continue to perform as independent contractors, unencumbered by limits on the number of assignments they do.

Additionally, AB5 forbids any freelancing by visual journalists who shoot video, a provision that is challenged in the lawsuit as a content-based restriction on speech. For still photojournalists, the bill imposes a limit of 35 “submissions” or assignments per year for any single client, another content-based First Amendment violation. Similar limits are imposed on freelance writers, editors, and newspaper cartoonists.

And and an article in Forbes just announced that Vox Media, a large digital media company with an array of niche sites, abruptly terminated hundreds of freelance writers in the state of California. The company will cancel its agreements with about 200 contractors to comply with a new law that goes into effect on January 1, 2020.

The cuts target writers for the SB Nation blog, which covers sports in California. Vox intends to replace the freelance writers with roughly 20 new part-time and full-time staffers.

WCIRB Quarterly Report Shows Escalating Premium Decreases

WCIRB insurer experience summaries are released approximately three to five months after the end of the quarter. These reports contain information such as written premium, average cost of a claim, accident year combined loss and expense ratios, etc. It has just published its Quarterly Experience Report as of September 30, 2019. Here are some of the highlights.

Written premium for the first 9 months of 2019 is 7% below the same period for 2018, suggesting that premium decreases are escalating in 2019. Written premium for 2018 is 4% below that for 2017 and 6% below that for 2016. The decreases since 2016 are primarily driven by decreases in insurer charged rates more than offsetting increases in employer payroll.

The Average charged rate for the first 9 months of 2019 is 11% below that for 2018 and 32% below the peak in 2014. The January 1, 2020 approved advisory pure premium rates are on average 47% below those for January 1, 2015.

The projected loss ratio for 2018 is 3 points above that for 2017, driven by higher severities for 2018 and lower premium rates. These ultimate projections as of September 30, 2019 are generally consistent with those as of June 30, 2019 and March 31, 2019 as recent trends in downward loss development are moderating.

The projected combined ratio for 2018 is 5 points higher than 2017 as premium levels have lowered while average claim severities increased moderately. Despite the recent increase, combined ratios for the last six years remain below 100% and are the lowest since the 2003 through 2007 period.

Indemnity claims have settled quicker over the last several years, largely driven by SB 863 and SB 1160 reforms. The ratio for 2019 is only modestly higher than 2018, which is driven by more recent accident years, suggesting claim settlement rates may be plateauing.

Claim frequency increased by 11% from 2009 to 2014, but has decreased by 6% from 2014 through the first 9 months of 2019. The recent declining frequency is more consistent with patterns in other states though more modest compared to decreases in other states as well as the long-term trend in California.

Cumulative trauma (CT) claim rates continue to increase in 2017 and the ratio of CT claims to all indemnity claims has increased by over 80% since 2005. The sharp increase in CT claims since 2012 is in the Los Angeles and San Diego areas, as CT claims in other regions of CA have generally decreased.

Projected claim severity for 2018 is 5% higher than that for 2017, following several years of modest declines in claim severities. 2018 is projected from claims valued at 21 months and while the growth may still moderate as the year matures, the growth rate as of September 30, 2019 is consistent with that of the prior quarterly evaluation.

Pharmaceutical costs per claim decreased more than 80% from 2012 through the first half of 2019. These reductions have been driven by SB 863’s IMR & IBR, reduced utilization of opioids, changes to Medi-Cal reimbursement rates, efforts to combat fraud, and the new drug formulary. Pharmaceutical utilization continued to decrease significantly in 2018 and 2019, the first periods in which the new drug formulary is in effect.

The number of liens filed in the first three quarters of 2019 are more than 60% below pre-SB 1160 and AB 1244 levels.