Health Law

The Austin (TX) Business Journal (2/18) reports, "Michael Baker, the president and CEO of ArthroCare Corp., is departing his post immediately amid revelations that the company engaged in improper behavior in its insurance billing and healthcare compliance practices associated with its spine business unit." The company also stated "that it is now under formal investigation by the Securities and Exchange Commission and the subject of investigations by US Attorney's offices in South Carolina and Florida." In addition, ArthroCare announced "the immediate resignations of Michael Moehring, the vice president and general manager of the spine unit, and Michael Denker, the director of sales development and training."

        The Austin (TX) American-Statesman (2/19, Rockwell) adds, "The company said the audit committee of its board of directors had found evidence of "improper practices," including double-billing of insurance companies, providing inaccurate claims information on where procedures were performed and pushing doctors to use the wrong coding, which could result in higher reimbursements." Furthermore, "employees also provided doctors and their billing staffs with free merchandise and administrative services in exchange for using ArthroCare products."

Following an AP story, ModernHealthcare (2/19, Rhea) reports that a "not-for-profit watchdog group," the Project on Government Oversight (POGO), "has criticized the Food and Drug Administration's (FDA) Center for Devices and Radiological Health" (CDRH) "for relaxing its oversight of good laboratory-practice regulations," and "has issued a set of recommendations for ensuring resumption of those duties." Specifically, POGO's report, titled "The FDA's Deadly Gamble with the Safety of Medical Devices," has "criticized CDRH senior management for setting a policy of enforcement discretion, which no longer requires device makers to submit proof that their laboratory studies followed good laboratory-practice regulations."

        Writing in the Forbes (2/18) The Science Business blog, Lisa LaMotta observed, "The regulation relates to good practices for the laboratory testing of medical devices like defibrillators and replacement heart valves, according to" POGO, which "claims that scientists at the FDA are troubled by the change. Inspections of testing labs for devices fell from 31 a year in 2005 to just one in 2008." But, FDA spokeswoman Siobhan DeLancey "says the agency continues to believe that it is its job to police labs that test medical devices before they go on the market." In a statement, DeLancey said the agency "recently released regulatory guidance documents for artificial disks and drug-eluting stents that clearly indicate the importance of good regulatory practice."

        According to Government Executive (2/18, Edney), "some device firms and some consumer groups are concerned the requirements can delay a lifesaving product's path to the market and jack up the price of devices out of some patients' reach, but the worries do not justify abandoning enforcement, the report said." Now, POGO "wants the Government Accountability Office and the Health and Human Services Department inspector general to audit records related to good laboratory practices to try to determine the extent of noncompliance. It also wants FDA to start conducting enforcement, particularly through random inspections as well as for-cause inspections." Finally, "the group called for changes in one of FDA's approval methods that allows device-makers to prove their product is 'substantially equivalent' to one already on the market rather than conduct rigorous testing." Congress Daily used the Government Executive story.

The New York Times (2/19, A15, Broder) reports, "The Environmental Protection Agency is expected to act for the first time to regulate carbon dioxide and other greenhouse gases" emitted by "new coal-burning power plants" that some "scientists blame for the warming of the planet, according to top Obama administration officials." The move was the result of a Supreme Court order that caused EPA officials to reach a consensus about "whether carbon dioxide is a pollutant that endangers public health and welfare." Notably, the Bush administration "essentially ignored" the order "despite near-unanimous belief among agency experts that research points inexorably to such a finding."

        But, in the Wall Street Journal (2/18) Environmental Capital Blog, Keith Johnson wonders, "Is this a genuine, if ambitious, move by the EPA to regulate greenhouse-gas emissions throughout the entire U.S. economy? Or is the mere threat of unleashing a zealous EPA President Obama's best leverage to get Congressional Republicans and Big Business behind his cap-and-trade plan to curb emissions?" According to one analyst, "the seeming impossibility of EPA inspectors tallying and controlling more than seven billion tons a year of greenhouse-gas emissions makes the idea of executive-branch climate policy a non-starter and a toxic hot potato." AFP (2/18) also covered the story.

The AP (2/19, Anderson) reports, "Philip Morris was ordered by a jury Wednesday to pay $8 million in damages to the widow of a smoker who died of lung cancer in a case that could set a standard for some 8,000 similar Florida lawsuits." It took jurors two days of deliberation "before returning the award for Elaine Hess, 63, whose husband Stuart Hess died in 1997 at age 55 after decades as a chain smoker."

        The decision, Bloomberg News (2/19, Feeley, Lucoff) points outs, "comes nearly ten years after the first verdict in the overall case, where a Miami jury found in 1999 that cigarette makers were responsible for the death and health problems of hundreds of thousands of Florida smokers. That ruling set the stage for the record $145 billion damage award."

        As for the particulars of the current settlement, the South Florida Sun Sentinel (2/18, Alvarex) reported that Hess "should get $2 million," while her son receives "$1 million for their losses," and Philip Morris should pay the remaining "$5 million as punishment for deceiving the public about the addictive nature of nicotine and the health risks associated with smoking." Still, "Philip Morris' attorney had argued that Stuart Hess made his own choices and could have stopped smoking in time." Making a partial concession, jurors rejected Hess' original demand for $130 million, determining "that both Philip Morris and Stuart Hess bore responsibility for Hess' addiction and ultimate death, but the tobacco company carried only 42 percent of the fault." USA Today (2/18, Winter) also covered the case in its On Deadline blog, as did AFP (2/19), AHN (2/18, Genova), and several other news outlets.

In the New York Times (2/19, B7) Entrepreneurial Edge column, James Flanigan writes that despite "the global economic crisis," in Southern California "two senior biotechnology executives are starting a pharmaceutical company." In order "to help finance their start-up, Cure Pharmaceutical LLC," Edward E. Bjurstrom and Edward G. Maliski, "two former executives at Amgen, are putting in their own money while they seek grants from foundations. Their plan is to help develop drugs to combat diseases in developing countries, including HIV and AIDS, hepatitis C, and malaria." Bjurstrom "estimates that Cure will need $3 million over the next two years to develop and test drugs in developing countries." But, because "Food and Drug Administration trials in the" US "will require...more than $10 million," the company will "seek a partnership with a large pharmaceutical company or sell out to one," Bjurstrom said.

Bloomberg News (2/19, Doherty, Coppola) reports, "Roche Holding AG, the Swiss drugmaker offering $42.1 billion to buy the rest of Genentech Inc., will tighten its belt after that transaction."  According to Chief Financial Officer Erich Hunziker, "You would only see minor acquisitions in the $50 to $60 million range and definitely nothing which will be in the billions,"  Hunziker continued, "It will be a constraint for the next two to three years."

The AP (2/18) reported, "Health insurance provider Universal American Corp. reaffirmed its 2009 profit outlook Tuesday, expecting a boost on higher revenue from its Medicare programs." The insurer expects "profit between $1.47 and $1.57 per share, excluding charges, on revenue between $5.04 billion and $5.45 billion."

        New York's Journal News (2/19, Loomis) adds, "A key part of Universal American's growth has been its Medicare Part D business." Additionally, "the company's Medicare Advantage HMO health plans posted an 18.6 percent growth in membership last year to 54,300. Membership more than doubled in Oklahoma, Wisconsin, and Dallas -- markets that the company has targeted for expansion." Still, the Journal News notes that the insurer "has not escaped fallout from the global financial crisis." Universal American "disclosed last year that it had been hurt by exposure to troubled subprime mortgage investments and Lehman Brothers." In fact, the company "reported realized investment losses of $3.4 million" in the fourth quarter.

The Houston Chronicle (2/19, Dlouhy) reports, "The federal government is preparing to deliver a $1.26 billion injection into cancer research nationwide -- including funds for major studies led by the University of Texas M.D. Anderson Cancer Center." The $10 billion in funding for the NIH in the economic stimulus bill is "a shot in the arm for an agency that in 2008 had an annual budget of just $29 billion." M.D. Anderson is expected to receive a "big chunk" of the funding because it "scores more grant dollars from the National Cancer Institute than any other U.S. institution." But, while M.D. Anderson president Dr. John Mendelsohn applauded the funding, he cautioned that it "could spur immediate work...but leave researchers scrambling in three years when the stimulus money has dried up."

        Subsidy in stimulus improves Cobra coverage. The Wall Street Journal (2/19, McQueen) reports, "Congress has just given a big assist to millions of jobless Americans facing a tough decision" about whether to continue health coverage with their former employer under Cobra. The "nine-month subsidy covering 65 percent of the Cobra premium" in the economic stimulus package "should make it easier for people to protect themselves not only from ruinous medical bills, but also from the inability to get new insurance due to a pre-existing medical condition." The stimulus also contains "a provision allowing laid-off workers to switch to cheaper health-care plans in Cobra, if their employers offer them, without having to wait for an open-enrollment period. That might also help some people who chose the more-expensive health-care plans offered by their employers when they had their jobs."

Bloomberg News (2/19, Rosenblatt) reports, "Three staff members of a California nursing home were charged with abusing elderly residents by forcibly administering medications that the state said may have caused the deaths of three patients." Bloomberg notes that "a former director of nursing, a former pharmacist, and a staff physician at the Kern Valley Healthcare District in Lake Isabella, California, about 40 miles east of Bakersfield, were charged with elder abuse in a criminal complaint." The charge followed "a state Public Health Department investigation" which "revealed that 22 patients at Kern Valley, some diagnosed with Alzheimer's disease, were being given high doses of psychotropic medication 'not for therapeutic reasons, but simply to control and quiet them for the convenience of the staff,' California Attorney General Jerry Brown said...in a statement."

The Wall Street Journal (2/19, Bray) reports, "New York Attorney General Andrew Cuomo said Wednesday that WellPoint Inc., the nation's largest health insurer, will pay $10 million to help establish a new independent database to determine the rate it pays doctors and hospitals out of its network."  In doing so, WellPoint "becomes the sixth insurer to help fund the new database."  Cuomo has reached similar agreements with UnitedHealth, Aetna Inc., and Cigna Corp.  WellPoint also "agreed to no longer use a controversial database maintained by UnitedHealth Group Inc.'s Ingenix unit to determine the 'usual and customary' rate for out-of-network insurance reimbursements."  Cuomo previously "alleged that the Ingenix database skewed downward the 'usual and customary' rates through faulty data collection, poor pooling procedures and lack of audits, thus forcing consumers to pay more out of their own pockets for healthcare."

        "According to Cuomo, the out-of-network cost to consumers dropped about 20 percent once Ingenix was removed from the mix," the New York Daily News (2/19, McShane) notes.  WellPoint Executive Vice President and Chief Executive Officer Ken Goulet stated that "the company 'acknowledges the conflicts of interest in the Ingenix database.'"  He added that the company supports Cuomo's "efforts to increase the transparency of healthcare costs," Modern Healthcare (2/19, Blesch) points out.

        MedPage Today (2/18, Neale), the Hartford Courant (2/19, Levick), New York's Newsday (2/19, Amon), and the St. Louis Business Journal (2/19), the Indianapolis Star (2/19, Russell) also cover the story.

Life Sciences Law

The Washington Post (2/19, A2, Stein) reports, "At the National Institutes of Health, officials have started drafting guidelines they will need to start funding human embryonic stem cell research that has been off-limits for nearly eight years." And scientists at the University of California at San Francisco and the Harvard Stem Cell Institute are also waiting to proceed, but "the moment they have been awaiting has not come, prompting some to ask: When will President Obama deliver on his campaign promise to lift one of the most contentious policies imposed by his predecessor?" Obama adviser David Axelrod on Fox News Sunday said Obama "is 'considering' an executive order and will act soon," yet "the delay and the vague language are making proponents nervous." Later in the article the Post proceeds to explain the NIH's work on the guidelines and quotes National Institute of Neurological Disorders and Stroke director Story Landis saying, "We want to be able to move as quickly as possible. ... The science is waiting." Landis added, "We are assuming that what we will be asked to do is develop guidelines for stem cell lines derived from embryos produced for reproductive purposes in excess of need."

The AP (2/18, Wetzel) reported, "A measure approved by the North Dakota House gives a fertilized human egg the legal rights of a human being, a step that would essentially ban abortion in the state." The bill was approved in the House by a vote of 51-41 Tuesday, and "it now moves to the North Dakota Senate for its review." Under the proposed legislation, "'any organism with the genome of homo sapiens' is a person protected by rights granted by the North Dakota Constitution and state laws." The bill's sponsor, Rep. Dan Ruby (R), argues that it "did not automatically ban abortion." Rather, the bill "is very simply defining when life begins." Meanwhile, critics contend that "it will cost millions of dollars to defend" the measure.

In the Wall Street Journal (2/18) Health Blog, Sarah Rubenstein wrote that "Merck and Israeli generics maker Teva have a date set for Monday in federal court in Trenton, N.J., over the patent protecting the allergy and asthma drug Singulair [Montelukast Sodium]."  According to Dow Jones Newswires, "Teva is challenging the validity of Singulair's patent, which expires in 2012."

In an article published on the websites of at least 75 media outlets, the AP (2/19) reports, "CVS Caremark Corp. will pay $2.25 million to end government investigations into reports that its pharmacy workers didn't properly dispose of pill bottle labels and other items containing personal information about patients." After probes by the FTC and HHS, "HHS will monitor CVS for the next three years to make sure patient information is protected, and employees are properly trained, with sanctions in place for workers who do not follow the disposal rules."

        The Wall Street Journal (2/19, Pereira) reports, "The amount CVS is paying to settle the matter is the largest yet among data-privacy cases investigated by the federal health agency, said Robinsue Frohboese, the acting director of the HHS office for civil rights. In the past five years, the agency has investigated and forced corrective action in approximately 8,000 cases involving data privacy laws, she said." The investigations "were triggered by a local television report in Indianapolis, but the investigations uncovered 'systemic problems in CVS's trash-disposal procedures throughout the country,' Ms. Frohboese said. 'From both scope and a monetary settlement standpoint this is the biggest case we've had,'" she pointed out.

        On its website WCVB-TV Boston (2/19, Quan) reports FTC chairman William Kovacic said, "This is a case that will restore appropriate privacy protections to tens of millions of people across the country." The Federal agencies "worked together to reach a settlement agreement with the pharmacy." Modern Healthcare (2/19) reports similar details.

The Wall Street Journal (2/19, Wang) reports, "Most testing for the US drug industry's late-stage human trials is now done at sites outside the country, where results often can be obtained cheaper and faster, according to a study" published in the New England Journal of Medicine. What "make overseas trials cheaper and faster, [is that] patients in developing countries are often more willing to enroll in studies because of lack of alternative treatment options, and often they aren't taking other medicines. Such 'drug-naïve' patients can be sought after because it is easier to show that experimental treatments are better than placebos, rather than trying to show an improvement over currently available drugs."

        According to the New York Times (2/19, B7, Singer), the study "raises questions about the ethics and the science of increasingly conducting studies outside the United States -- when the studies are meant to gather evidence for new drugs to gain approval in this country." The study conducted "by several Duke University researchers, suggests an ethical quagmire when drugs intended for wealthy nations are tested on people in developing countries." The researchers "suggest that human volunteers in foreign countries may be unduly influenced with the promise of financial compensation or free medical care to participate in clinical trials. The report, 'Ethical and Scientific Implications of the Globalization of Clinical Research,' also asks whether drug research conducted in developing countries is relevant to the treatment of American patients." Individuals of East Asian origin, for example, have a genetic variance that may reduce the effects of nitroglycerin treatment.

        The researchers' "review of a US government clinical trials registry and of 300 published reports in major medical journals revealed this: A third (157 of 509) of Phase III trials -- typically the largest and most significant trial in the development of a drug -- led by major US pharmaceutical companies were being conducted entirely outside the United States," HealthDay (2/18, Gardner) reported. "In addition, half of the study sites (13,521 of 24,206) used in these trials were located overseas, with many in Eastern Europe and Asia."

        On its website, CNN (2/19, Watkins) adds that the researchers "reported one study that found only 56 percent of 670 researchers surveyed in developing countries said their work had been reviewed by a local institutional review board or a health ministry. Another study reported that 18 percent of published trials carried out in China in 2004 adequately discussed informed consent for subjects considering participating in research."

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