BANKS PRESSURE HEALTH CARE FIRMS TO RAISE PRICES ON CRITICAL DRUGS, MEDICAL SUPPLIES FOR CORONAVIRUS

https://theintercept.com/2020/03/19/coronavirus-vaccine-medical-supplies-price-gouging/

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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.

 

 

 

 

The most expensive health care option of all? Do nothing.

https://www.politico.com/news/2020/01/09/medicare-for-all-health-care-096367?utm_source=The+Fiscal+Times&utm_campaign=b67cf54986-EMAIL_CAMPAIGN_2020_01_09_10_31&utm_medium=email&utm_term=0_714147a9cf-b67cf54986-390702969

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‘Medicare for all’ debate sidesteps cost of current system.

The projected multitrillion-dollar cost of “Medicare for All” has pitted Democratic presidential candidates against each other as they argue about the feasibility of single-payer health care.

But the reality is the current health system may cost trillions more in the long run and be less effective in saving lives.

Spending on Medicare, Medicaid, private health insurance and out-of-pocket expenses is projected to hit $6 trillion a year — and $52 trillion over the next decade. At the same time, the number of people with insurance is dropping and Americans are dying younger.

Sen. Bernie Sanders and other single-payer advocates say Medicare for All would cost the government far less — between $20 trillion and $36 trillion over a decade — by slashing overhead, eliminating out-of-pocket costs and empowering federal officials to bargain directly with hospitals and drugmakers. But the streamlined system would have to care for millions of currently uninsured people at a significant cost to taxpayers, and experts disagree whether it would actually save money in the long run.

Centrist Democrats are pushing narrower plans that would, among other things, expand tax credits for people just above the Obamacare subsidy threshold. Virtually no one is arguing for maintaining the status quo, but that’s precisely what could happen given that congressional gridlock has stymied even popular, and bipartisan, causes like halting surprise medical bills.

“It’s really hard to see anything breaking through, especially when the industry interests and the money they’re willing to spend on lobbying and campaign contributions is just mind-boggling,” said Sabrina Corlette, a researcher at Georgetown University’s Center on Health Insurance Reforms. “And, without question, we are on an unsustainable trajectory.”

With Medicare for All and its price tag likely to come up in the next Democratic debate Jan. 14 in Iowa, here are five of the costliest consequences of inaction:

National health spending keeps rising

The Centers for Medicare and Medicaid Services estimates that nationwide health spending will hit $6 trillion a year by 2027 absent any changes in law. That would be nearly a fifth of the economy. In total, the United States is slated to spend about $52 trillion over the coming decade.

The cost drivers include hospitals, physician and clinical services and prescription drugs. Some local health systems have become monopolies that can largely set prices as they please — leading to higher premiums and more out-of-pocket spending for consumers.

“Even the biggest insurance plans are not big enough to bargain down the cost of services, and they don’t have an incentive to,” said Wendell Potter, a former Cigna executive-turned whistleblower and single-payer advocate.

An aging population is driving up Medicare spending, but the rising cost of private insurance is the biggest factor. A recent Kaiser Family Foundation analysis found per capita spending for private insurance grew by nearly 53 percent over the last decade, or more than double the hike in per capita Medicare spending.

More people will be uninsured

The Census Bureau reported in September that the number of Americans without insurance grew by 2 million people since 2017 — the first increase in nearly a decade. Even with a healthy economy and low unemployment, more than 27 million people weren’t covered at any point last year. That could grow to 35 million by 2029, per the Congressional Budget Office, under current law.

The number of people enrolling in the Obamacare marketplace has declined, and more people are dropping employer-sponsored insurance due to cost and other concerns.

Part of this is President Donald Trump’s doing — the administration has slashed efforts to push Obamacare enrollment and rolled back the massive marketing effort that the Obama administration rolled out for years.

There are also more than 400,000 additional uninsured children than just two years ago — and 4 million in all — and states that haven’t expanded Medicaid are seeing the biggest spikes.

“What we also miss in the debate is the number of people temporarily uninsured, who miss open enrollment, who are between jobs, who fall through the cracks,” said Adam Gaffney, a Harvard Medical School researcher and the president of Physicians for a National Health Program. “I see people all the time in my practice in that situation who don’t fill prescriptions and experience serious complications.”

Going without insurance hits patients and health care providers: Average hospital spending on care for the uninsured was $13 million in 2018 up roughly 3 percent annually since 2016.

Coverage will be skimpier

As the cost of health care has skyrocketed, insurance companies have squeezed patients, charging higher premiums, deductibles and co-pays, and creating narrow networks of providers and aggressively billing for out-of-network care.

Since 2009, the amount workers have had to pay for health insurance has increased 71 percent, while wages have only risen 26 percent over that time.

More than 80 percent of workers now have to pay a minimum amount out of pocket before insurance kicks in — and the amount of that deductible has doubled over the last 10 years, now standing at an average of $1,655, though many workers have to pay a lot more.

These costs are putting care out of reach for millions.

new Gallup poll found that a full quarter of adults have put off treatment for a serious medical condition due to the cost — the highest since Gallup began asking the question three decades ago. A full third say they’ve delayed or deferred some kind of health care service over the past year. Another Gallup and West Help survey found that 34 million people know at least one friend or family member who died over the past five years after skipping treatment due to costs.

 

Needed drugs will become more out of reach

U.S. patients pay vastly more for prescription drugs than people in other developed countries and the disparity is set to grow. The United States spent $1,443 per person on prescription drugs in 2018, while other developed countries fell somewhere between $466 and $939.

In just five years, national spending on prescription drugs increased 25 percent, according to the Government Accountability Office, and CMS expects that increase to “accelerate” over the next several years.

Increasingly, patients are responding by forgoing their medications. Gallup found in November that nearly 23 percent of adults — roughly 58 million people — said they haven’t been able to “pay for needed medicine or drugs that a doctor prescribed” over the past year.

This widespread inability to take needed medication, a government-funded study found last year, is responsible for as much as 10 percent of hospital admissions. And the Centers for Disease Control and Prevention estimates that medication nonadherence accounts for somewhere between $100 and $300 billion in national health spending every year.

 

Americans will continue to get sicker and die younger

The cost of maintaining the status quo is evident not only in dollars but in human lives.

Life expectancy in the United States has declined over the last three years, even as other developed countries around the world saw improvements.

Though the United States spends nearly twice as much on health care as other high-income countries, there’s been a stark increase in mortality between the ages of 19 and 64, with drug overdoses, alcohol abuse, suicide and organ diseases driving the trend. It’s cut across race and gender with the worst effects felt in rural areas.

The opioid epidemic only accounts for a fraction of the problem. The National Research Council found that the United States has higher mortality rates from most major causes of death than 16 other high-income countries.

Researchers at USC estimate that if these trends continue, it would take the United States more than a century to reach the average life expectancy levels other countries hit in 2016.

 

 

Today’s health problems are tomorrow’s health crises

https://www.axios.com/public-health-crisis-trends-future-c24f9720-4657-45f2-ab73-05a8bb9a4d3e.html

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The health troubles we’re seeing now — especially among young people — will continue to strain the system for years and even decades to come.

The big picture: Rising obesity rates now will translate into rising rates of type 2 diabetes and heart disease. The costs of the opioid crisis will continue to mount even after the acute crisis ends. And all of this will strain what’s already the most expensive health care system in the world.

By the numbers: 18% of American kids are now obese, according to new CDC data. So are roughly 40% of adults. And it’s projected to get worse.

  • That helps explain why diabetes rates are also rising, and why roughly 30% of adults have high blood pressure.

Why it matters: More obese children means there will be more adults down the road with chronic conditions like diabetes — which can’t be cured, only managed — and these diseases in turn increase the risk of further complications, such as kidney disease and stroke.

  • Diabetes roughly doubles your lifetime health care bills, according to the CDC, and costs the U.S. a total of $245 billion per year.
  • As the price of insulin continues to skyrocket, the disease only gets harder for patients to manage, if they can afford treatment at all.

We’re only beginning to see the full costs of the opioid crisis, even though it has raged for years.

  • A White House report earlier this week pegged the cost of the epidemic at a staggering $696 billion last year alone, including the cost of productivity lost to addiction.
  • The tide has only barely begun to turn on overall overdose deaths — they still numbered around 68,000 last year.
  • And many survivors of the epidemic will face long-term health costs. Addiction recovery can be a lifelong process requiring sustained investments. It has also led to skyrocketing rates of Hepatitis C — some states have seen their infection rates rise by more than 200% over the past decade.

Groundbreaking new treatments offer the first-ever cure for Hepatitis C, but at price tags so high that states are experimenting with entirely new ways of paying for the drugs, fearing the status quo simply can’t bear these costs all at once.

The bottom line: The flaws in the U.S. health care system compound one another.

  • They reward doctors and hospitals for performing more treatment on sick people, and those treatments are expensive. That leaves big gaps in prevention, which drives the need for more expensive treatment.
  • That’s how we ended up with the world’s most expensive health care system, but without a particularly healthy population to show for it. And that trajectory isn’t changing.

 

 

 

 

Purdue Pharma, facing thousands of lawsuits and bankruptcy, wants to pay ‘certain employees’ $34 million in bonuses

https://www.washingtonpost.com/nation/2019/09/19/purdue-pharma-facing-thousands-lawsuits-bankruptcy-wants-pay-certain-employees-million-bonuses/?fbclid=IwAR0r6Psj2gpALR0iJZAv4o8ZYLxPDv6UjGZKLvxMwVIlUF9kOcl1LY5sGlM

People enter the U.S. District Court in White Plains, N.Y., Tuesday, before a bankruptcy hearing for Purdue Pharma. The company is asking a bankruptcy judge to allow it to pay $34 million in bonuses to "certain employees."

Officials at troubled drugmaker Purdue Pharma say “certain employees” should be paid more than $34 million in bonuses for meeting and exceeding goals over the last three years, even though the company is facing thousands of lawsuits over its role in the nation’s opioid crisis and earlier this week filed for bankruptcy.

In a legal filing, attorneys for Purdue Pharma asked a judge to authorize millions in payments to employees who have met “target performance goals.”

It is not clear from the company filings why employees would be eligible for bonuses, because, while the bonuses are supposed to be partly contingent on the company’s financial performance, the company has filed for bankruptcy.

At a bankruptcy court hearing in White Plains, N.Y., on Tuesday, Paul K. Schwartzberg, an attorney for the U.S. Trustee, raised objections to some of the bonuses. While it is typical for companies in bankruptcy to try to pay employees as a firm seeks to regain its financial footing, the Purdue Pharma bonuses go “way beyond” what is typical, he said.

The company is widely blamed for fueling the opioid epidemic because of allegedly misleading sales tactics it used to push physicians to prescribe millions of doses of its OxyContin painkiller. It faces thousands of lawsuits from cities, states and others affected by the opioid crisis, which claimed more than 200,000 lives in the past two decades.

“That $34 million is owed to the victims of the opioid epidemic, and every last cent should be spent on addiction science, treatment and recovery,” Connecticut Attorney General William Tong said in a statement to The Washington Post. “Purdue and the Sacklers still don’t seem to comprehend the pain and suffering they have caused. While I am sympathetic to the workers at Purdue, many of whom live in my hometown and state and had nothing to do with the egregious actions of their employer, this not business as usual.”

The attorneys for Purdue Pharma did not specify which of its 700 employees would be eligible for the bonuses, except that the incentives would not be available to “insiders” or any top executives involved in the company’s “strategic decision-making.” But other senior managers, who are often offered such incentive plans, could be eligible for the bonuses.

The number of employees eligible for the bonuses and the amounts of their rewards are unknown. But if the $34 million in bonuses were distributed equally to each of the 700 employees, each would receive about $50,000.

Company attorneys say the incentives are needed to retain key employees as it seeks to transform itself into a public trust aimed at delivering addiction remedies. Since 2018, about a quarter of the company’s “top tier” employees have left, they said.

“These employees have highly coveted skills in the industry and the company is not an easy place to work right now,” Eli J. Vonnegut, an attorney representing Purdue Pharma, said at the bankruptcy hearing. It “would be very difficult to attract new talent were the company to lose its current employees. With all the negative publicity, many employees are concerned about the economic risks that they are taking by staying at Purdue.”

The employee bonuses are part of the company’s long-standing incentive programs, according to the company. It is asking the bankruptcy court’s permission to pay out $26.5 million under its “Annual Incentive Plan,” which covers one year of company and employee performance, and another $7.9 million under its long-term rewards plan, which covers the last three years.

Under both programs, the size of the bonuses would depend on employees’ work and the company’s performance.

The company filing described the bonuses as something that employees “have come to rely on as a part of their annual compensation.”

The company is also seeking $1.5 million a month to cover anticipated legal expenses of employees. More than 270 former employees already have been witnesses or defendants in pending litigation, the company said.

U.S. Bankruptcy Judge Robert D. Drain is expected to consider the bonuses in October.

“These people are highly compensated,” Schwartzberg said. “They can wait” until then.

 

 

 

Texas docs, pharmacists charged in alleged opioid pill mill scheme

https://www.healthcaredive.com/news/texas-docs-pharmacists-charged-in-alleged-opioid-pill-mill-scheme/563270/

Dive Brief:

  • The U.S. Department of Justice said Wednesday it charged 58 people in Texas in connection with their alleged roles in various schemes to defraud government health programs, including distributing and dispensing medically unnecessary opioids, billing Medicaid for non-emergency ambulance services that were never actually provided and paying kickbacks and laundering money through durable medical equipment companies.
  • The allegations involved multiple programs including Medicare, Medicaid, TRICARE, the Department of Labor-Office of Worker’s Compensation programs as well as private insurance companies.
  • Separately, DOJ brought charges against a total of 34 people for their alleged participation in Medicare and Medicaid fraud schemes in other states, including California, Arizona and Oregon. Seventeen of the people charged in those schemes were doctors or licensed medical professionals.

Dive Insight:

Created in 2007, the Medicare Fraud Strike Force​ has units operating in 23 districts, and has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. It’s a joint effort between DOJ and HHS to deter healthcare fraud.

According to the most recent statistics, from January, the strike force has brought 2,117 criminal actions, secured 2,754 indictments and recovered $3.3 billion in connection with its investigations.

HHS declared the opioid crisis a national emergency in 2017. And the DOJ is increasingly focusing on fraud related to opioids, including going after medical professionals allegedly involved in the unlawful distribution of opioids and other prescription narcotics.

“Sadly, opioid proliferation is nothing new to Americans,” U.S. Attorney Ryan K. Patrick of the Southern District of Texas said in a statement announcing the charges. “What is new is the reinforced fight being taken to dirty doctors and shady pharmacists,” he said.

The coordinated healthcare fraud enforcement operation across Texas resulted in charges involving networks of “pill mill” clinics that led to $66 million in losses and the distribution of 6.2 million pills, the government said. Sixteen doctors and pharmacists were among those charged.

And that’s on top of last month, when the Health Care Fraud Unit’s Houston Strike Force charged dozens of people in a trafficking network that diverted more than 23 million oxycodone, hydrocodone and carisoprodol pills.

The Texas actions also involved healthcare fraud other than opioid diversion, including fraudulent physician orders for durable medical equipment, fraudulent claims for ambulance services and stealing protected healthcare information.

The separate actions in California, Arizona and Oregon involved schemes that ran the gamut from billing for medically unnecessary compounded drugs, unnecessary cardiac treatments and testing, billing for chiropractic services never provided and a hospice kickback scheme.

 

 

 

Drug companies seek removal of judge in landmark opioid case

https://www.washingtonpost.com/health/drug-companies-seek-removal-of-judge-in-landmark-opioid-case/2019/09/14/1609f69a-d6f6-11e9-9343-40db57cf6abd_story.html?wpisrc=nl_most&wpmm=1

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.”

 

 

Purdue Pharma struggling amid lawsuits

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Purdue, the maker of OxyContin, is facing sluggish sales, a dwindling workforce and restructuring challenges as it fights a slew of lawsuits claiming that the company contributed to the opioid epidemic, WSJ reports.

  • The company’s revenue is expected to be less than $1 billion this year for the first time in a decade, and it has said it’s considering filing for bankruptcy.
  • Sales for OxyContin have been declining since 2010, as providers have changed their prescribing habits and the public has grown more aware of the threat of opioid addiction.

Purdue’s financial reliance on OxyContin was a result of business decisions made by the company and its board, including members of the Sackler family — which is also under legal scrutiny.

  • The company’s leaders are now more focused on dealing with the ongoing litigation than growing the business, sources told the WSJ.