Archive for the ‘Pharmaceuticals’ Category

PBMs – Goliaths of Healthcare Operating in the Shadows

Friday, July 7th, 2017

The Pharmacy Benefit Management (PBM) industry is the Goliath of healthcare. PBMs have a huge impact on prescription healthcare that is little understood outside of the pharmacy industry. According to a November 2016 report, PBMs in the United States have revenues of $423 billion, they experienced 11-16% growth between 2011 and 2016, and they employ a workforce of at least 30,000. Additionally, Congressional testimony revealed that the top PBMs nearly doubled their profits over the past five years. The breadth and depth of the role that PBMs play in the lifecycle of a prescription drug is unequaled in healthcare. PBMs touch, in one aspect or another, nearly every drug dispensed nationally.  But if you ask the average consumer who their particular PBM is, or even what a PBM does, few could answer those questions.

PBMs are middle men, “third-party administrators” that act as on behalf of private insurers to provide all of the services needed to manage a prescription benefit. PBMs provide drug plan design services, meaning that they assist insurers in designing and maintaining the formulary, which determines what medications are covered under a particular plan. PBMs also negotiate with drug manufacturers to obtain favorable drug prices and related manufacturer rebates. Once a drug program is implemented, PBMs are supposed to assist in controlling these drug costs. Through their mail order and retail pharmacy networks, PBMs determine the drug costs and dispensing fees paid by insurance companies and by beneficiaries through copays. PBMs also process and pay claims for virtually every prescription dispensed across the country every day. Companies that operate some of the largest PBMs (i.e., CVS Health and EnvisionRx), through related entities, also control huge swaths of the specialty, mail order, and retail pharmacy industry. These wholly-integrated PBMs control the entire prescription benefit process – from designing the drug programs to dispensing prescriptions.

Due to their historical involvement in commercial prescription benefit plans, PBMs play a central role in Medicare Part D, Medicaid, and other government-sponsored prescription drug programs. However, PBMs significantly impact both commercial and government-funded prescription programs, including Medicare Part D, Medicaid, prescription programs for state and federal employees, and healthcare benefits for our military, including Tricare.

Government agencies and private insurers are David to the PBM Goliaths. Identifying, quantifying, and controlling fraud, waste, and abuse in government-funded prescription drug programs, particularly as it relates to the PBM industry, is difficult at best. One of the greatest hurdles to prescription benefit oversight is the lack of transparency between the government agencies that fund drug benefits and PBMs that manage them.

Government agencies lack access to the PBM’s relationships with both drug manufacturers and their pharmacy networks, and significant related hidden income streams. One such income stream is related to the PBMs’ negotiations with drug manufactures to set drug prices paid by the PBM, as well as related volume-based rebates that are earned on specific drugs. PBMs share these rebates with drug benefit sponsors. A second income stream for PBMs results from the role PBMs play in setting drug costs and dispensing fees paid to the PBM’s network of retail, mail order and specialty pharmacies. When prescriptions are dispensed to beneficiaries, the PBM profits from the difference or “spread” between the price the PBM negotiates with drug manufactures and the price the PBM charges its network pharmacies.

The government also lacks access to the pharmacy claims data received by the PBM. It is unable to compare the pharmacy data to claims data that PBMs submit to insurance companies. In the Part D program, this same claims data is submitted to the Centers for Medicare and Medicaid Services, (“CMS”). This lack of transparency in PBM operations is an impediment to both identify and control pharmacy benefit overpayments, particularly in Medicare Part D.[1]

Although there is a recognized need for transparency between the government and the public, on one side, and the PBM industry on the other, these efforts have yet to bear fruit. For example, even before the Part D program was added to Medicare in 2006, the General Accounting Office (GAO) highlighted the need for transparency and fairness should the Medicare drug benefit be outsourced to private insurers and PBMs. Ten years later, in January of 2013, the Office of Inspector General (OIG) called for CMS to amend Part D regulations to provide its auditors with direct access to information from pharmacies and PBMs. During September of 2015 hearings before the House Judiciary Committee on the State of Competition in the Pharmacy Benefits Manager and Pharmacy Marketplaces, witnesses addressed the concentration in the PBM industry, the ownership relationships between PBMs and retail pharmacies, and the lack of transparency in PBM operations negatively impacts competition and inures to the detriment of both health insurance plans and the ultimate consumer. One witness highlighted the lack of transparency in both rebates earned by PBMs and in prices that pharmacies were paying PBMs for drugs. Representatives of the PBM industry argued that transparency with regard to drug prices would result in price fixing.

In March of 2017, Senator Ron Wyden (D-Oregon) introduced S-637, “Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act.” The bill is focused on just one aspect of PBM secrecy – the rebates paid by drug makers to PBMs. In response, the PBM industry has again argued that secrecy in rebate negotiations is essential to allow PBMs to obtain the best prices and to prevent manufacturers and pharmacies from colluding with competitors. Whether the C-THRU Act even makes it out of the Senate Finance Committee is yet to be determined.

The process to create legislation or regulations that require transparency in the PBM industry is a very long and uncertain one.  In the near term, only an industry insider can identify conduct that results in overpayments in Part D and other government-funded prescription programs. Meanwhile, PBMs continue to control the pharmacy industry, operating unchallenged and largely in secret, to create gigantic profits.

 

[1] See The American Consumer Institute’s “Pharmacy Benefit Managers: Market Power and Lack of Transparency.” http://www.theamericanconsumer.org/wp-content/uploads/2017/03/ACI-PBM-CG-Final.pdf

Sanofi Aventis Can’t Invoke the First Amendment to Escape FCA Liability

Monday, January 23rd, 2017

United States ex rel. Gohil v. Aventis, Inc. is a long-running False Claims Act suit filed in the Eastern District of Pennsylvania by an ex-sales specialist against his former employer, behemoth pharmaceutical company, Sanofi Aventis.  Relator Yoash Gohil filed this qui tam suit in 2002 alleging that his former employer engaged in a fraudulent marketing scheme to promote off-label the chemo-therapy drug, Taxotere.

The Relator alleges that Aventis trained and directed its sales force to misrepresent the safety and effectiveness of the chemotherapy agent in order to expand the market share for Taxotere beyond its FDA approval as a “second line treatment.”  A second line treatment is one that is approved for limited use only after the failure of a prior treatment.  Relator also alleges that Aventis had engaged in a kickback scheme that included sham grants, exorbitant speaking fees, and excessive preceptorship fees paid to physicians in order to incentivize them to prescribe Taxotere.

Aventis moved for a partial judgment on the pleadings and raised two grounds for dismissal.  First, Aventis argued that some of the claims (those from 1996 to 2000) were barred by the statute of limitations.  Federal District Court Judge Lawrence Stengel rejected this argument finding that the pharmaceutical company was given fair notice of the claims when the First and Second Amended Complaints were filed.  The Court accepted Relator’s argument that all of the new claims “related back” to the claims laid out in his original complaint.

Second, Aventis argued that some of Relator’s claims were precluded by the First Amendment.  This argument has been made with increasing frequency by the pharmaceutical industry in trial and appellate courts throughout the United States.  Aventis argued that First Amendment protections extend to commercial speech and that parts of Relator’s claims were based on truthful, non-misleading speech regarding Taxotere.  Judge Stengel rejected this argument as well, finding that Relator’s Complaint had asserted that the off-label promotion was false and/or misleading.  Ultimately, the dispute over the whether the speech was false or misleading is material to the outcome of the case.  Judge Stengel held that the First Amendment issue was not ripe for disposition and denied the motion for partial summary judgment.  He wrote, “This question is better answered by a jury.”

United States ex rel. Gohil v. Aventis, Inc., No. 02-2964, 2017 U.S. Dist. LEXIS 3236 (E.D. Pa. Jan. 9, 2017)

 

Major Drug Company Not Immune From FCA Liability For False Claims Submitted by Pharmacists

Monday, June 1st, 2015

On Tuesday, in United States ex rel. Nevyas v. Allergan, Inc., an Eastern District of Pennsylvania district court denied pharmaceutical giant Allergan’s motion to dismiss False Claims Act (“FCA”) allegations brought against it by Relator eye doctors in the Philadelphia area. In so doing, the Court rejected Allergan’s novel argument that, since the allegedly false claims were submitted by unknowing third-party pharmacists, Allergan could not be liable under the FCA.

Relators allege that Allergan engaged in an elaborate kickback scheme to increase prescriptions for its eye care products. Allergan would allegedly target large eye care practices and provide eye care providers with a suite of professional and financial advisory services, access to a valuable Internet site, and admittance to its Speakers Bureau – all with the explicit quid pro quo that the providers would reciprocate by writing prescriptions for Allergan’s drugs.

Among its arguments in its Motion to Dismiss, Allergan claimed that under the framework for evaluating FCA claims adopted by the Third Circuit in United States ex rel. Wilkins v. United Health Care Group, Inc., 659 F.3d 295 (3d Cir. 2011), it could not be liable for the false claims its alleged kickbacks generated because those claims were not submitted by the company but rather by pharmacists unaware of the underlying scheme. While the plain language of the FCA encompasses those who knowingly “cause” the submission of false claims, Allergan argued that the statute’s scienter requirement applied to both the individual causing the submission as well as the submitter. In rejecting this argument, the Court pointed to recent cases in several circuits holding that non-submitting entities that cause the submission of false claims can be liable under the FCA.

PharMerica Agrees to Pay $31.5M Over False Claims Act Violations

Thursday, May 28th, 2015

On May 14, 2015, PharMerica Corp. agreed to pay $31.5 million to resolve a False Claims Act and Controlled Substances Act lawsuit alleging that the company had dispensed Schedule II controlled drugs without valid prescriptions and then billed Medicare for the improperly dispensed drugs.

PharMerica, a long-term care pharmacy that dispenses medications to residents of long-term care facilities, often fills prescriptions for controlled substances listed in Schedule II under the Controlled Substances Act. The lawsuit alleged that PharMercia pharmacies throughout the country routinely dispensed these Schedule II controlled drugs in non-emergency situations without first obtaining a written prescription. According to the complaint, PharMerica violated the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense them, without confirming that a physician had determined whether the narcotics were medically necessary. PharMerica agreed to pay $8 million to resolve those allegations.

The lawsuit also alleged that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs, including oxycodone and fentanyl. PharMerica agreed to pay $23.5 million to resolve those allegations. The whistleblower who brought these allegations to the attention of the government, Jennifer Buth, will receive $4.3 million for her efforts. As part of the settlement, PharMerica also agreed to enter into a corporate integrity agreement with the HHS-OIG, which obligates the company to undertake substantial internal compliance reforms and to submit federal health care program claims for an independent review for the next five years.

PharMerica to Pay $31.5 Million to Settle False Claims Act and Controlled Substances Act Lawsuit

Tuesday, May 26th, 2015

The United States Department of Justice (“DOJ”) recently announced that PharMerica Corp. will pay $31.5 million, including more than $4 million to a whistleblower, to settle alleged violations of the Controlled Substances Act (“CSA”) and False Claims Act (“FCA”) related to the company’s improper dispensing of narcotics and submission of false claims to Medicare Part D.

PharMerica is a long-term care pharmacy that dispenses drugs to residents in nursing homes and other long-term care facilities.  The government alleged that PharMerica dispensed controlled substances listed in Schedule II of the CSA, including oxycodone and morphine, in non-emergency situations based solely on requests from the long-term facility rather than a valid prescription from a practitioner.  Schedule II narcotics were thus allegedly dispensed without physician confirmation that they were necessary and should be administered to the resident.  Under the settlement, PharMerica has agreed to pay $8 million to resolve these allegations.

The complaint also alleged that PharMerica violated the FCA by knowingly causing the submission of false claims to Medicare Part D for these improperly dispensed Schedule II drugs.  The FCA imposes treble damages and penalties for the knowing submission of false claims for federal funds.  PharMerica has agreed to pay $23.5 million to resolve its alleged FCA violations.

The FCA claims resolved by Thursday’s settlement were originally brought by Jennifer Denk, a pharmacist formerly employed by PharMerica, under the whistleblower provisions of the act, which authorize private parties to sue on behalf of the United States and to receive a portion of any recovery.  The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Ms. Denk’s allegations.  Ms. Denk will receive $4.3 million as her share of the settlement.

PharMerica’s agreement with the United States includes not only a settlement with DOJ but a five-year Corporate Integrity Agreement with the Department of Health and Human Services – Office of the Inspector General as well.  The Corporate Integrity Agreement calls for the appointment of an official compliance officer, the establishment of a compliance committee, and the submission of federal health care program claims for independent review for the next five years, among other reforms.

Prescriptions for Controlled Substances to Medicare Patients is on the Rise

Tuesday, January 6th, 2015

Even as the abuse of prescription drugs has escalated and the national crackdown on it has occurred, new data suggests that doctors are prescribing even larger numbers of prescriptions for the most potent controlled substances to Medicare patients.

And, along with the increase in the number of prescriptions written, physicians are under increased scrutiny, as well as facing disciplinary action. Twelve of Medicare’s top 20 prescribers of Schedule 2 drugs (those that include powerful narcotic painkillers and stimulants with the highest potential for abuse and dependence) have faced disciplinary actions by their state medical boards or criminal charges related to their medical practices.

The most recent year for which data is available, 2012, Medicare covered nearly 27 million prescriptions for Schedule 2 controlled substances. Within the past year, Medicare has started to use prescribing data to identify potentially problematic doctors, as have some state medical boards as well. Beginning in mid-2015, Medicare will have the authority to kick doctors out of the program if they prescribe in abusive ways.

Whistleblower Suit Against Abbott Laboratories Survives Motion To Dismiss

Wednesday, February 5th, 2014

A whistleblower lawsuit against Abbott Laboratories was given the green light to continue in federal court, surging Abbott’s motion to dismiss in the Eastern District of Pennsylvania.

According to the lawsuit, which was brought under the qui tam provisions of the False Claims Act in 2009 by former Abbott sales representative Amy Bergman, Abbott unlawfully marketed its cholesterol drug TriCor for the off-label treatment of diabetic patients.

Abbott Laboratories filed a motion to dismiss alleging that Bergman’s suit failed to plead the alleged off-label marketing scheme with particularity as required by Rule 9(b). Judge C. Darnell Jones rejected the motion, finding that Bergman’s complaint contained “myriad details” of Abbott’s off-label marketing statements that contradicted its FDA approved label.

Judge Jones’ opinion in Bergman v. Abbott is the latest in a line of cases in several circuits, including the Third Circuit, that allows a more relaxed pleading standard for off-label marketing claims under 9(b). Robert Nicholson of Nicholson & Eastin in Florida and Marc S. Raspanti of Pietragallo Gordon Alfano Bosick & Raspanti are the attorneys for Relator Bergman.

For more information see: http://tiny.cc/k3btax.

Allergan Faces Whistleblower Lawsuit Alleging Payment Of Kickbacks To Induce Prescriptions For Lucrative Eye Care Drugs

Tuesday, January 7th, 2014

Allergan Inc. paid kickbacks to induce prescriptions of the pharmaceutical company’s eye care drugs, according to allegations raised in a lawsuit unsealed on December 17, 2013 in federal court in Philadelphia. The lawsuit alleges that Allergan provided illegal inducements to eye care professionals throughout the United States, including business consulting services through its team of Eye Care Business Advisors, and that Allergan explicitly requested that in exchange for those benefits, eye doctors and optometrists prescribe Allergan’s drugs.

According to the complaint, Allergan touted that its free consulting services would boost the profitability of eye care professionals’ practices by, among other things, advising practices on how to target patients with “dry eye” and prescribe Allergan’s blockbuster drug RESTASIS®, as opposed to significantly less expensive treatment alternatives. According to the complaint, the Eye Care Business Advisors were part of an array of valuable services that Allergan provided to eye care professionals in order to persuade them to prescribe a host of eye care products. These products were paid for by the Medicare and Medicaid health insurance programs.

The complaint was filed under the qui tam, or whistleblower provisions of the False Claims Act. This Act encourages private citizens to come forward and report fraud against the government by allowing them to sue on behalf of the government and receive a share of any government recovery. Under the law, 70 percent of any recovery goes back to federal and state treasuries.

“Patients deserve to know that their medical professional is making decisions based on their best interests and not because a drug company is offering incentives to steer patients to specific drugs,” said Pietragallo Gordon attorney Marc S. Raspanti. “We look forward to prosecuting this case to a successful conclusion for federal and state taxpayers and for all of us who are concerned about the integrity of medical decision-making in this country,” said David Chizewer of Goldberg Kohn. “It is rare for successful, well-respected physicians to blow the whistle on the health care industry,” says Raspanti’s partner, Michael Morse.

“We are proud to represent our clients who not only run one of the most prestigious eye care practices in the Philadelphia area, but had the rare courage and integrity to come forward and report Allergan’s practices,” said Pietragallo Gordon’s Pamela Brecht. “The False Claims Act provides private law firms with the unique opportunity to litigate and vindicate the interests of federal and state governments, and we intend to do just that,” commented Chizewer’s partner, Matthew Organ.

The lawsuit is captioned United States ex rel. Nevyas, et al. v. Allergan, Inc., No. 09-0432 (E.D. Pa.). The claims asserted against the defendants are allegations only; there has been no determination of liability.

J & J Settlement Pays Off For Nation’s Capital

Monday, November 18th, 2013

The government’s recent massive settlement with Johnson & Johnson is paying dividends for the residents of Washington, D.C.

The District of Columbia’s Medicaid program will receive more than $3 million out of the $1.2 billion settlement, which resolved four qui tam cases filed in federal court in the Eastern District of Pennsylvania. 

The suits contended that Johnson & Johnson and subsidiary Janssen Pharmaceuticals, Inc., engaged in off-label promotion of antipsychotic drugs Risperdal and Invega.

Pharmacist Hits Big—Again—With J&J Settlement

Monday, November 18th, 2013

Score another one for Bernard Lisitza.

The Chicago-area man had already collected millions as a relator who exposed fraud by Walgreens, CVS and Omnicare.  Now he will also share in the proceeds of a recent settlement with Johnson & Johnson.

All told, Lisitza has received more than $31 million for his role in ferreting out fraud.

In the most recent settlement, J & J agreed to pay $149 million to settle allegations that it paid kickbacks to Omnicare to get Omnicare to make unauthorized prescription substitutions.