On August 3, an federal appeals court ruled that 340B hospitals will now be subject to Medicare cuts in outpatient drug payments by nearly 30%, reversing an earlier ruling calling those cuts illegal. The 2-1 decision by the U.S Court of Appeals for the District of Columbia Circuit essentially gives the Trump Administration and the Department of Health and Human Services the legal authority to reduce payment for Medicare Part B drugs to 340B hospitals.
HHS Secretary Alex Azar said the action means patients – particularly those who live in vulnerable areas – will pay less out-of-pocket for drugs in the Medicare Part B program. But providers, including the American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals, said the 340B decision will hurt hospitals and patients in these vulnerable areas.
Hospitals that serve large numbers of Medicaid, Medicare and uninsured patients were getting the drugs for a discounted price, but, getting reimbursed at the higher price, HHS pays all hospitals for Medicare Part B drugs. The hospitals, many of which are in the red or operating on thin margins, were using the pay gap in the price difference to cover operational expenses. HHS deemed it inappropriate that these facilities would use Medicare to subsidize other activities and initiatives, and the appeals court agreed.
As per the original 340B legislation, discounts on drugs can range from 13% to 32% off the average retail price for participating providers, but Medicare Part D sets reimbursement in an entirely different way, leading to the significant reimbursement discrepancies – until the ruling, which furthered HHS’ push to narrow the spread between acquisition price and reimbursement.
“The opportunity to exploit this buy/sell differential probably has something to do with the explosive growth there’s been in the number of participating institutions in 340B,” said Michael Abrams, cofounder and managing partner of Numerof and Associates. “According to the data I came across, discounted 340B purchases grew 23% from 2018 to 2019, and currently make up about 8% of the total of the U.S. drug market. So from my perspective this looks like a loophole that’s been used by a small number of large institutions, who in many cases don’t serve that many disadvantaged patients, but nonetheless serve enough to qualify for the 340B program and to purchase the drugs they buy at the discounted rate.”
Groups representing U.S. hospitals would disagree with that assessment, and, in fact, when the appeals court handed its ruling, the AHA, AAMC and America’s Essential Hospitals said 340B hospitals and their patients would “suffer lasting consequences.”
“The decision conflicts with Congress’ clear intent and defers to the government’s inaccurate interpretation of the law, a point that was articulated by the judge who dissented from the opinion,” the groups wrote in a statement. “For more than 25 years, the 340B program has helped hospitals stretch scarce federal resources to reach more patients and provide more comprehensive services. Hospitals that rely on the savings from the 340B drug pricing program are also on the front-lines of the COVID-19 pandemic, and today’s decision will result in the continued loss of resources at the worst possible time.”
President and CEO of 340B Health Maureen Testoni also lamented the appeals court’s decision, calling the cuts “discriminatory.”
“These cuts of nearly 30% have caused real and lasting pain to safety-net hospitals and the patients they serve,” she said earlier this month. “Keeping these cuts in place will only deepen the damage of forced cutbacks in patient services and cancellations of planned care expansions. These effects will be especially detrimental during a global pandemic.”
Abrams contends that much of the confusion and legal wrangling can be attributed to the vagueness of the original 340B legislation, the stated goal of which was to “enable participating institutions to stretch scarce financial dollars.” With little else to go on in terms of the language, those on each side of the issue were able to interpret it in their own way, with participating institutions saying it’s within the bounds of the law to use that revenue stream to enhance their mission – another phrase that’s open to wide interpretation.
“There’s no question this is being put to uses that were never intended,” said Abrams, adding that the profits generated by the buy/sell differential often disappear into balance sheets with little to no accountability.
Hospitals, for their part, feel they’re under siege by HHS at a critical time for the healthcare system’s financial viability. Even before the COVID-19 pandemic, hospitals saw the migration of lucrative inpatient procedures, such as hip and knee replacements, to freestanding outpatient facilities, which in some cases are not owned by the hospital. That represents a significant loss of revenue. Factor in the lost revenue from cancelled or delayed elective procedures due to the coronavirus, as well as patients who are too cautious to enter the healthcare system, and hospitals are hurting. AHA President and CEO Rick Pollack said in July that half of all U.S. hospitals will likely be in the red by the end of the year.
A COMPLICATED PICTURE
Actions by the pharmaceutical industry are also adding to the complication. A recent statement from America’s Essential Hospitals alleges that recent actions by pharmaceutical manufacturers “hinder access to affordable medications for millions of people who face financial hardships and defy clear statutory requirements that they provide drugs to 340B Drug Pricing Program covered entities.”
The manufacturers have threatened punitive actions – including withholding 340B drugs to contract pharmacies – for failing to comply with reporting requirements that Essential Hospitals call “arbitrary.”
“These data requests have no clear link to program integrity,” the group said. “Rather, they seem to be little more than a fishing expedition.”
A concrete example can be found in AstraZeneca’s decision to refuse 340B pricing to hospitals with on-site pharmacies for any drugs that will be dispensed through contract pharmacies. In a statement this week, Testoni of 340B called this action an “attack” on the 340B program that will hurt healthcare institutions as well as low-income and rural Americans.
“We believe that refusing to offer discounts that the 340B statute requires is a violation of federal law,” said Testoni. “We are calling on Health and Human Services Secretary (Alex) Azar to exercise his authority to stop these overcharges before they cause permanent damage to the healthcare safety net.”
Abrams sides more with the appeals court decision, saying that requiring the pharmaceutical industry to sell drugs at a discount comes with significant regulation to ensure they do so – a stark contrast to the lack of regulation around the resulting revenue. Though another appeal certainly isn’t out of the question, Abrams expects participation in the program to shrink back to a level reflecting the size of the target populations.
“This is about helping disadvantaged patients get their drugs, and that should be the driving activity of the program,” he said. “I’m fine with HHS taking this problem on, because it was an abuse that was never intended in the original legislation. It just seems to me that HHS really wants the healthcare sector to deliver care that is more accountable both for efficient use of resources and outcomes.”
One person who disagrees is Circuit Judge Cornelia Pillard, who wrote the dissenting opinion in the appeals court decision.
“The challenged rules took a major bite out of 340B hospitals’ funding,” she said. “Often operating at substantial losses, 340B hospitals rely on the revenue that Medicare Part B provides in the form of standard drug-reimbursement payments that exceed those hospitals’ acquisition costs. 340B hospitals have used the additional resources to provide critical healthcare services to communities with underserved populations that could not otherwise afford these services.”
IN RECENT WEEKS, investment bankers have pressed health care companies on the front lines of fighting the novel coronavirus, including drug firms developing experimental treatments and medical supply firms, to consider ways that they can profit from the crisis.
The media has mostly focused on individuals who have taken advantage of the market for now-scarce medical and hygiene supplies to hoard masks and hand sanitizer and resell them at higher prices. But the largest voices in the health care industry stand to gain from billions of dollars in emergency spending on the pandemic, as do the bankers and investors who invest in health care companies.
Over the past few weeks, investment bankers have been candid on investor calls and during health care conferences about the opportunity to raise drug prices. In some cases, bankers received sharp rebukes from health care executives; in others, executives joked about using the attention on Covid-19 to dodge public pressure on the opioid crisis.
Gilead Sciences, the company producing remdesivir, the most promising drug to treat Covid-19 symptoms, is one such firm facing investor pressure.
Remdesivir is an antiviral that began development as a treatment for dengue, West Nile virus, and Zika, as well as MERS and SARS. The World Health Organization has said there is “only one drug right now that we think may have real efficacy in treating coronavirus symptoms” — namely, remdesivir.
The drug, though developed in partnership with the University of Alabama through a grant from the federal government’s National Institutes of Health, is patented by Gilead Sciences, a major pharmaceutical company based in California. The firm has faced sharp criticism in the past for its pricing practices. It previously charged $84,000 for a yearlong supply of its hepatitis C treatment, which was also developed with government research support. Remdesivir is estimated to produce a one-time revenue of $2.5 billion.
During an investor conference earlier this month, Phil Nadeau, managing director at investment bank Cowen & Co., quizzed Gilead Science executives over whether the firm had planned for a “commercial strategy for remdesivir” or could “create a business out of remdesivir.”
Johanna Mercier, executive vice president of Gilead, noted that the company is currently donating products and “manufacturing at risk and increasing our capacity” to do its best to find a solution to the pandemic. The company at the moment is focused, she said, primarily on “patient access” and “government access” for remdesivir.
“Commercial opportunity,” Mercier added, “might come if this becomes a seasonal disease or stockpiling comes into play, but that’s much later down the line.”
Steven Valiquette, a managing director at Barclays Investment Bank, last week peppered executives from Cardinal Health, a health care distributor of N95 masks, ventilators and pharmaceuticals, on whether the company would raise prices on a range of supplies.
Valiquette asked repeatedly about potential price increases on a variety of products. Could the company, he asked, “offset some of the risk of volume shortages” on the “pricing side”?
Michael Kaufmann, the chief executive of Cardinal Health, said that “so far, we’ve not seen any material price increases that I would say are related to the coronavirus yet.” Cardinal Health, Kaufman said, would weigh a variety of factors when making these decisions, and added that the company is “always going to fight aggressively to make sure that we’re getting after the lowest cost.”
“Are you able to raise the price on some of this to offset what could be some volume shortages such that it all kind of nets out to be fairly consistent as far as your overall profit matrix?” asked Valiquette.
Kaufman responded that price decisions would depend on contracts with providers, though the firm has greater flexibility over some drug sales. “As you have changes on the cost side, you’re able to make some adjustments,” he noted.
The discussion, over conference call, occurred during the Barclays Global Healthcare Conference on March 10. At one point, Valiquette joked that “one positive” about the coronavirus would be a “silver lining” that Cardinal Health may receive “less questions” about opioid-related lawsuits.
Cardinal Health is one of several firms accused of ignoring warnings and flooding pharmacies known as so-called pill mills with shipments of millions of highly addictive painkillers. Kaufmann noted that negotiations for a settlement are ongoing.
Owens & Minor, a health care logistics company that sources and manufactures surgical gowns, N95 masks, and other medical equipment, presented at the Barclays Global Healthcare Conference the following day.
Valiquette, citing the Covid-19 crisis, asked the company whether it could “increase prices on some of the products where there’s greater demand.” Valiquette then chuckled, adding that doing so “is probably not politically all that great in the sort of dynamic,” but said he was “curious to get some thoughts” on whether the firm would consider hiking prices.
The inquiry was sharply rebuked by Owens & Minor chief executive Edward Pesicka. “I think in a crisis like this, our mission is really around serving the customer. And from an integrity standpoint, we have pricing agreements,” Pesicka said. “So we are not going to go out and leverage this and try to ‘jam up’ customers and raise prices to have short-term benefit.”
AmerisourceBergen, another health care distributor that supplies similar products to Cardinal Health, which is also a defendant in the multistate opioid litigation, faced similar questions from Valiquette at the Barclays event.
Steve Collis, president and chief executive of AmerisourceBergen, noted that his company has been actively involved in efforts to push back against political demands to limit the price of pharmaceutical products.
Collis said that he was recently at a dinner with other pharmaceutical firms involved with developing “vaccines for the coronavirus” and was reminded that the U.S. firms, operating under limited drug price intervention, were among the industry leaders — a claim that has been disputed by experts who note that lack of regulation in the drug industry has led to few investments in viral treatments, which are seen as less lucrative. Leading firms developing a vaccine for Covid-19 are based in Germany, China, and Japan, countries with high levels of government influence in the pharmaceutical industry.
AmerisourceBergen, Collis continued, has been “very active with key stakeholders in D.C., and our priority is to educate policymakers about the impact of policy changes,” with a focus on “rational and responsible discussion about drug pricing.”
Later in the conversation, Valiquette asked AmerisourceBergen about the opioid litigation. The lawsuits could cost as much as $150 billion among the various pharmaceutical and drug distributor defendants. Purdue Pharma, one of the firms targeted with the opioid litigation, has already pursued bankruptcy protection in response to the lawsuit threat.
“We can’t say too much,” Collis responded. But the executive hinted that his company is using its crucial role in responding to the pandemic crisis as leverage in the settlement negotiations. “I would say that this crisis, the coronavirus crisis, actually highlights a lot of what we’ve been saying, how important it is for us to be very strong financial companies and to have strong cash flow ability to invest in our business and to continue to grow our business and our relationship with our customers,” Collis said.
The hope that the coronavirus will benefit firms involved in the opioid crisis has already materialized in some ways. New York Attorney General Letitia James announced last week that her lawsuit against opioid firms and distributors, including Cardinal Health and AmerisourceBergen, set to begin on March 20, would be delayed over coronavirus concerns.
MARKET PRESSURE has encouraged large health care firms to spend billions of dollars on stock buybacks and lobbying, rather than research and development. Barclays declined to comment, and Cowen & Co. did not respond to a request for comment.
The fallout over the coronavirus could pose potential risks for for-profit health care operators. In Spain, the government seized control of private health care providers, including privately run hospitals, to manage the demand for treatment for patients with Covid-19.
But pharmaceutical interests in the U.S. have a large degree of political power. Health and Human Services Secretary Alex Azar previously served as president of the U.S. division of drug giant Eli Lilly and on the board of the Biotechnology Innovation Organization, a drug lobby group.
During a congressional hearing last month, Azar rejected the notion that any vaccine or treatment for Covid-19 should be set at an affordable price. “We would want to ensure that we work to make it affordable, but we can’t control that price because we need the private sector to invest,” said Azar. “The priority is to get vaccines and therapeutics. Price controls won’t get us there.”
The initial $8.3 billion coronavirus spending bill passed in early March to provide financial support for research into vaccines and other drug treatments contained a provision that prevents the government from delaying the introduction of any new pharmaceutical to address the crisis over affordability concerns. The legislative text was shaped, according to reports, by industry lobbyists.
As The Intercept previously reported, Joe Grogan, a key White House domestic policy adviser now serving on Donald Trump’s Coronavirus Task Force, previously served as a lobbyist for Gilead Sciences.
“Notwithstanding the pressure they may feel from the markets, corporate CEOs have large amounts of discretion and in this case, they should be very mindful of price gouging, they’re going to be facing a lot more than reputational hits,” said Robert Weissman, president of public interest watchdog Public Citizen, in an interview with The Intercept.
“There will be a backlash that will both prevent their profiteering, but also may push to more structural limitations on their monopolies and authority moving forward,” Weissman said.
Weissman’s group supports an effort led by Rep. Andy Levin, D-Mich., who has called on the government to invoke the Defense Production Act to scale up domestic manufacturing of health care supplies.
There are other steps the government can take, Weissman added, to prevent price gouging.
“The Gilead product is patent-protected and monopoly-protected, but the government has a big claim over that product because of the investment it’s made,” said Weissman.
“The government has special authority to have generic competition for products it helped fund and prevent nonexclusive licensing for products it helped fund,” Weissman continued. “Even for products that have no connection to government funding, the government has the ability to force licensing for generic competition for its own acquisition and purchases.”
Drug companies often eschew vaccine development because of the limited profit potential for a one-time treatment. Testing kit companies and other medical supply firms have few market incentives for domestic production, especially scaling up an entire factory for short-term use. Instead, Levin and Weissman have argued, the government should take direct control of producing the necessary medical supplies and generic drug production.
Last Friday, Levin circulated a letter signed by other House Democrats that called for the government to take charge in producing ventilators, N95 respirators, and other critical supplies facing shortages.
The once inconceivable policy was endorsed on Wednesday when Trump unveiled a plan to invoke the Defense Production Act to compel private firms to produce needed supplies during the crisis. The law, notably, allows the president to set a price ceiling for critical goods used in an emergency.
AS THE NEW CORONAVIRUS spreads illness, death, and catastrophe around the world, virtually no economic sector has been spared from harm. Yet amid the mayhem from the global pandemic, one industry is not only surviving, it is profiting handsomely.
“Pharmaceutical companies view Covid-19 as a once-in-a-lifetime business opportunity,” said Gerald Posner, author of “Pharma: Greed, Lies, and the Poisoning of America.” The world needs pharmaceutical products, of course. For the new coronavirus outbreak, in particular, we need treatments and vaccines and, in the U.S., tests. Dozens of companies are now vying to make them.
“They’re all in that race,” said Posner, who described the potential payoffs for winning the race as huge. The global crisis “will potentially be a blockbuster for the industry in terms of sales and profits,” he said, adding that “the worse the pandemic gets, the higher their eventual profit.”
The ability to make money off of pharmaceuticals is already uniquely large in the U.S., which lacks the basic price controls other countries have, giving drug companies more freedom over setting prices for their products than anywhere else in the world. During the current crisis, pharmaceutical makers may have even more leeway than usual because of language industry lobbyists inserted into an $8.3 billion coronavirus spending package, passed last week, to maximize their profits from the pandemic.
Initially, some lawmakers had tried to ensure that the federal government would limit how much pharmaceutical companies could reap from vaccines and treatments for the new coronavirus that they developed with the use of public funding. In February, Rep. Jan Schakowsky, D-Ill., and other House members wrote to Trump pleading that he “ensure that any vaccine or treatment developed with U.S. taxpayer dollars be accessible, available and affordable,” a goal they said couldn’t be met “if pharmaceutical corporations are given authority to set prices and determine distribution, putting profit-making interests ahead of health priorities.”
When the coronavirus funding was being negotiated, Schakowsky tried again, writing to Health and Human Services Secretary Alex Azar on March 2 that it would be “unacceptable if the rights to produce and market that vaccine were subsequently handed over to a pharmaceutical manufacturer through an exclusive license with no conditions on pricing or access, allowing the company to charge whatever it would like and essentially selling the vaccine back to the public who paid for its development.”
But many Republicans opposed adding language to the bill that would restrict the industry’s ability to profit, arguing that it would stifle research and innovation. And although Azar, who served as the top lobbyist and head of U.S. operations for the pharmaceutical giant Eli Lilly before joining the Trump administration, assured Schakowsky that he shared her concerns, the bill went on to enshrine drug companies’ ability to set potentially exorbitant prices for vaccines and drugs they develop with taxpayer dollars.
The final aid package not only omitted language that would have limited drug makers’ intellectual property rights, it specifically prohibited the federal government from taking any action if it has concerns that the treatments or vaccines developed with public funds are priced too high.
“Those lobbyists deserve a medal from their pharma clients because they killed that intellectual property provision,” said Posner, who added that the language prohibiting the government from responding to price gouging was even worse. “To allow them to have this power during a pandemic is outrageous.”
The truth is that profiting off public investment is also business as usual for the pharmaceutical industry. Since the 1930s, the National Institutes of Health has put some $900 billion into research that drug companies then used to patent brand-name medications, according to Posner’s calculations. Every single drug approved by the Food and Drug Administration between 2010 and 2016 involved science funded with tax dollars through the NIH, according to the advocacy group Patients for Affordable Drugs. Taxpayers spent more than $100 billion on that research.
Among the drugs that were developed with some public funding and went on to be huge earners for private companies are the HIV drug AZT and the cancer treatment Kymriah, which Novartis now sells for $475,000.
In his book “Pharma,” Posner points to another example of private companies making exorbitant profits from drugs produced with public funding. The antiviral drug sofosbuvir, which is used to treat hepatitis C, stemmed from key research funded by the National Institutes of Health. That drug is now owned by Gilead Sciences, which charges $1,000 per pill — more than many people with hepatitis C can afford; Gilead earned $44 billion from the drug during its first three years on the market.
“Wouldn’t it be great to have some of the profits from those drugs go back into public research at the NIH?” asked Posner.
Instead, the profits have funded huge bonuses for drug company executives and aggressive marketing of drugs to consumers. They have also been used to further boost the profitability of the pharmaceutical sector. According to calculations by Axios, drug companies make 63 percent of total health care profits in the U.S. That’s in part because of the success of their lobbying efforts. In 2019, the pharmaceutical industry spent $295 million on lobbying, far more than any other sector in the U.S. That’s almost twice as much as the next biggest spender — the electronics, manufacturing, and equipment sector — and well more than double what oil and gas companies spent on lobbying. The industry also spends lavishly on campaign contributions to both Democratic and Republican lawmakers. Throughout the Democratic primary, Joe Biden has led the pack among recipients of contributions from the health care and pharmaceutical industries.
Big Pharma’s spending has positioned the industry well for the current pandemic. While stock markets have plummeted in reaction to the Trump administration’s bungling of the crisis, more than 20 companies working on a vaccine and other products related to the new SARS-CoV-2 virus have largely been spared. Stock prices for the biotech company Moderna, which began recruiting participants for a clinical trial of its new candidate for a coronavirus vaccine two weeks ago, have shot up during that time.
On Thursday, a day of general carnage in the stock markets, Eli Lilly’s stock also enjoyed a boost after the company announced that it, too, is joining the effort to come up with a therapy for the new coronavirus. And Gilead Sciences, which is at work on a potential treatment as well, is also thriving. Gilead’s stock price was already up since news that its antiviral drug remdesivir, which was created to treat Ebola, was being given to Covid-19 patients. Today, after Wall Street Journal reported that the drug had a positive effect on a small number of infected cruise ship passengers, the price went up further.
Several companies, including Johnson & Johnson, DiaSorin Molecular, and QIAGEN have made it clear that they are receiving funding from the Department of Health and Human Services for efforts related to the pandemic, but it is unclear whether Eli Lilly and Gilead Sciences are using government money for their work on the virus. To date, HHS has not issued a list of grant recipients. And according to Reuters, the Trump administration has told top health officials to treat their coronavirus discussions as classified and excluded staffers without security clearances from discussions about the virus.
Former top lobbyists of both Eli Lilly and Gilead now serve on the White House Coronavirus Task Force. Azar served as director of U.S. operations for Eli Lilly and lobbied for the company, while Joe Grogan, now serving as director of the Domestic Policy Council, was the top lobbyist for Gilead Sciences.
Drug companies facing more than 2,000 lawsuits over their alleged roles in the opioid epidemic demanded Saturday that the federal judge overseeing the case step aside, questioning his impartiality because he has consistently urged both sides to settle the case.
The request comes after a series of rulings against the companies by U.S. District Judge Dan Aaron Polster in the landmark trial slated to begin Oct. 21.
“Defendants do not bring this motion lightly,” the lawyers wrote in a filing Saturday morning on behalf of some of the nation’s biggest drug distributors and retailers but no drug manufacturers. “Taken as a whole and viewed objectively, the record clearly demonstrates that recusal is necessary.”
The lawyers contended Polster has overstepped his authority and created the appearance of bias. They cited his statements since the beginning of the case encouraging settlement so that money for badly needed drug treatment and other services could go quickly to communities hard hit by the opioid epidemic.
With just two counties “seeking $8 billion in cash for so-called ‘abatement,’ the Court has determined that it, not a jury, has the discretion to decide how much money defendants may pay to government agencies for medical treatment and other addiction-related services and initiatives,” the drug companies wrote.
Polster could not be reached for comment. A telephone call to his assistant Saturday went unanswered.
Lawyers for the more than 2,000 cities, towns, counties and tribal communities suing the drug industry called the attempt to remove Polster a desperate move. The lead plaintiffs’ lawyers said in a statement they “remain confident the judiciary will swiftly respond to yet another attempt by the opioid defendants to delay the trial.”
The plaintiffs have demanded the drug companies, including manufacturers, distributors and retailers, pay billions of dollars for the damage they allegedly caused. Since 1999, more than 200,000 people have died of overdoses of prescription narcotics, and another 200,000 have died from overdoses of heroin and illegal fentanyl, according to government data.
Two Ohio counties, Cuyahoga and Summit, are scheduled to begin trial next month as test cases to determine how other plaintiffs and defendants may fare before a jury.
As of now, they would face off against drug distributors McKesson Corp., Cardinal Health, AmerisourceBergen and Henry Schein; manufacturers Johnson & Johnson and Teva Pharmaceuticals; and retail drugstore chain Walgreens.
Two law professors called the defendants’ motion unusual and saw little chance it would succeed.
The law that authorizes large, consolidated cases like this one — known as “multidistrict litigation” — explicitly recognizes that judges would use the opportunity to encourage settlements, said Carl Tobias, a professor at Richmond University School of Law.
“Judges overseeing MDLs are supposed to encourage settlement and most MDLs end with settlements” for the majority of plaintiffs, Tobias wrote in an email.
Alexandra Lahav, a professor at the University of Connecticut School of Law, agreed.
“It is a highly unusual motion and not one that I think can win,” she wrote in an email. “I am not sure what the strategy is behind bringing it, and filing on Saturday, other than public relations.”
She added, however, “I don’t think there is anything wrong with filing a non-frivolous motion to bring attention to an issue and start a conversation. Given the courts’ historic emphasis on settlement, I just don’t see how that conversation goes anywhere.”
This past week, Purdue Pharma, the company most widely blamed for its role in the crisis, announced a tentative settlement with all the municipalities and about half the state attorneys general who have separately sued members of the drug industry in state courts. If finalized, that agreement would remove Purdue from the first trial.
Ohio Attorney General Dave Yost (R), whose state backs the Purdue settlement, also has asked to halt the trial, saying the municipalities should allow states to take the lead in the litigation.
In the lead-up to the trial, Polster denied a series of motions filed by the companies seeking to throw out, or limit, the case against them. Those included a defense motion to dismiss arguments that the drug companies conspired with each other to protect their companies from enforcement actions by the Drug Enforcement Administration.
Polster also rejected a motion to dismiss the plaintiffs’ legal theory that the companies created a “public nuisance” by inundating communities across the nation with enormous amounts of pain pills. And he denied a defense motion to dismiss a strategy to pursue the case under the Racketeer Influenced and Corrupt Organizations Act, originally created to prosecute the Mafia.
This past week, Polster agreed to an unusual plan that would include 30,000 jurisdictions across the United States in any settlement, if they agreed to it. It is aimed at preventing more lawsuits and ensuring that communities everywhere get some money from any settlement.
In their motion, the drug distributors and retail chains said the crucial test is whether a reasonable person would conclude that Polster appeared biased against the defendants.
They cited Polster’s statements inside and outside court “evidencing a personal objective to do something meaningful to abate the opioid crisis, with the funding to be provided through defendants’ settlements,” as well as “numerous improper comments to the media and in public forums about the litigation.”
And they noted Polster’s “apparent prejudgment of the merits and outcome of the litigation and singular focus on, and substantial involvement in, settlement discussions.”
They also protested his decision to limit defendants to 12.5 hours apiece to present their cases during the upcoming trial.
Last month, an appellate court admonished some of the defendants for a legal attack on Polster over an unrelated question. The panel of appellate judges said their claim that Polster’s “assurances are not entitled to our respect because [he] has been deceptive or duplicitous … is a very serious allegation and we find no merit to it.”
As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless companies.
Today’s infographic comes to us from CB2 Insights, and explores how and why the notorious Big Pharma are interested in the nascent cannabis industry.
The term refers to some of the largest pharmaceutical companies in the world, considered especially influential as a group. To give a sense of their sheer size, the market cap of the top 10 Big Pharma companies is $1.7 trillion—Johnson & Johnson being the largest, with a market capitalization of $374 billion.
So far, Big Pharma has watched the cannabis industry from the sidelines, deterred by regulatory concerns. What we are seeing now is the sleeping giant’s takeover slowly intensifying as more patents, partnerships, and sponsored clinical trials come to fruition.
The cannabis plant has been used in medicine for 6,000 years. However, there is still considerable debate around the role it plays in healthcare today. There are currently almost 400 active and completed clinical trials worldwide surrounding cannabidiol (CBD), a type of cannabinoid that makes up 40% of the cannabis plant’s extract.
Cannabis relies on CBD’s therapeutic properties, and recent studies suggest it may be useful in combating a variety of health conditions, such as:
As of 2019, 33 states and the District of Columbia have legalized cannabis for medical use. Its potential for pain management has led some experts to recommend it as an alternative to addictive painkillers, with one study of 13 states showing opiate-related deaths decreasing by over 33% in the six years since medical cannabis was legalized.
As the industry evolves, data is becoming increasingly important in understanding the potential of cannabis—both as a viable medical treatment, and as a recreational product. The shift away from anecdotal evidence towards big data will inform future policies, and give rise to a new era of consumer education.
Further legalization of cannabis will challenge Big Pharma’s bottom line, and poach more than $4 billion from pharma sales annually. In fact, medical cannabis sales are projected to reach $5.9 billion in 2019, from an estimated 24 million patients.
Seven of Canada’s top 10 cannabis patent holders are major multinational pharmaceutical companies, a trend that is not unique to Canada.
It comes as no surprise that many pharmaceutical giants have already formed strong partnerships with cannabis companies, such as Novartis and Tilray, who will develop and distribute medical cannabis together in legal jurisdictions around the world.
While the body of knowledge about the many uses of cannabis continue to grow, clinical evidence is key for widespread adoption.
Products backed by data will be a defining criteria for major companies to come into the market en masse. And ultimately, Big Pharma’s entry could accelerate public understanding and confidence in cannabis as a viable option for a range of ailments, and mark the next major milestone for the industry.