Drug makers Abbott Laboratories, B. Braun Medical, and Roxane Laboratories will pay $421 million to settle whistleblower allegations that they inflated prices for drugs paid for by Medicare and Medicaid, a violation of the False Claims Act, the U.S. Justice Department announced Tuesday.
DOJ said the three drug makers created artificially inflated "spreads" – the differences between the inflated government payments and the actual price paid by healthcare providers -- for drugs to market, promote and sell the drugs to existing and potential customers.
Because Medicare and Medicaid overpayments were involved, DOJ said, the drug makers caused the government to pay millions of claims for far greater amounts than it would have if the drug makers had reported truthful prices.
"Some pharmaceutical manufacturers have asserted that a culture within the industry gave them license to manipulate the system to suit their interests. This is not the case," said Carmen M. Ortiz, U.S. Attorney for Massachusetts, which led the prosecution. "When manufacturers report drug pricing information that they know will be relied upon by government healthcare programs, they are obliged to report honest prices. It is unlawful to do otherwise."
The settlements resolve allegations brought by whistleblower suits filed by a Florida home infusion company, Ven-A-Care of the Florida Keys Inc. As part of these settlements, the Ven-A-Care whistleblowers could receive about $88.4 million.
Roxane is paying $280 million to resolve claims against it and affiliates Roxane Laboratories Inc., Boehringer Ingelheim Corp. and Boehringer Ingelheim Pharmaceuticals Inc. for the following drugs: Azathioprine, Diclofenac Sodium, Furosemide, Hydromorphone, Ipratropium Bromide, Oramorph SR, Roxanol, Roxicodone and Sodium Polystyrene Sulfonate.
Roxane denied any wrongdoing and said it agreed to the settlement to end "expensive and disruptive litigation with the Department of Justice."
"The company at all times complied with laws, regulations and customary industry practices. Our generic medicines lower the overall cost of the US healthcare system – a shared goal of healthcare reform," Roxane said in a statement. "The expense of protracted litigation adds to the cost of producing Roxane medicines and therefore impacts the competitiveness of our business."
Abbott is paying $126.5 million to resolve the claims against it in two whistleblower cases challenging its pricing of intravenous dextrose solutions, sodium chloride solutions, sterile water, vancomycin, and the oral antibiotic drug erythromycin.
Abbott also denied any wrongdoing. "We continue to believe that we have complied with all laws and regulations and have entered into this agreement to eliminate the uncertainty associated with continued litigation," said Adelle Infanct, manager of external communications for Abbott.
B. Braun Medical Inc., a U.S. subsidiary of German pharmaceutical company, B. Braun Melsungen AG, has agreed to pay $14.7 million to resolve allegations that inflated drug prices for 49 of its drugs, including water-based solutions used for intravenous infusion of other drugs and for fluid replacement, including dextrose solutions, sodium chloride solutions, sterile water and lactated ringers solution, intravenous nutritional solutions and other intravenous drugs.
Tony West, assistant attorney general for the Justice Department's Civil Division, said the federal government has recovered more than $1.8 billion from drug makers using similar drug pricing schemes. "By offering their customers one price and then falsely reporting a greatly inflated price to the lists the government uses when determining how much to pay for the drugs, we believe pharmaceutical companies created an incentive for the purchase of their drugs, since buyers could obtain government payment at the inflated price and pocket the difference," West said. "Taxpayer-funded kickback schemes like this not only cost federal healthcare programs millions of dollars, they threaten to undermine the integrity of the choices healthcare providers make for their patients."
Aetna said Tuesday it will buy healthcare information exchange technology company Medicity for $500 million.
Headquartered in Salt Lake City, UT, Medicity specializes in securing health information systems and identifying quality and efficiency issues in care delivery. Aetna said it will finance the deal with "available resources," and that the deal will be neutral to Hartford, CT-based health insurer's financial results in 2011.
Medicity will operate as a separate business within Aetna, under its existing leadership.
"This acquisition will enable Aetna to offer a set of convenient, easy-to-access technology solutions for physicians, hospitals and other healthcare providers. That, in turn, can help improve the quality and efficiency of patient care," said Mark T. Bertolini, Aetna CEO/president. "Strategically, we believe this acquisition will enhance Aetna's capabilities and accelerate our growth in the health information technology and health information exchange space."
Medicity said its HIT products and services are used by more than 760 hospitals, 125,000 physicians and 250,000 end users.
"We are excited about joining Aetna, with the shared vision for improving the healthcare experience for all stakeholders," said James K. Lassetter, MD, Medicity chairman/CEO. "The combination of Medicity's connected healthcare platform for providers with the clinical decision support capabilities of Aetna's ActiveHealth Management subsidiary can help physicians make better decisions in real-time as they collaborate and coordinate care."
Tony West left a thriving private law practice to return to the Department of Justice as a political appointee when President Obama took office in 2009. Over the last year and half, the department has recovered more than $4 billion lost to healthcare fraud. [Sponsored by Emdeon]
State Medicaid pharmacy programs could save more than $30 billion over the next decade if they switched from fee-for-service programs to the more efficient approaches used by Medicare Part D plans, Medicaid managed care organizations, and commercial plans, claims a study from healthcare and human services consulting firm, TheLewin Group.
The study notes that Medicaid FFS pharmacy programs use fewer generic drugs and pay pharmacies higher dispensing fees and ingredient costs than other programs.
Lewin said the findings challenge the assumption that Medicaid pharmacy can reduce costs only by cutting benefits, limiting eligibility, demanding deeper manufacturer rebates, or paying drugstores higher dispensing fees in exchange for more pricing transparency.
"Medicaid is one of the few pharmacy benefit programs that still relies heavily upon a fee-for-service approach. By operating more like Medicare and commercial market plans, Medicaid could increase the use of generics and save billions without cutting benefits," said Pharmaceutical Care Management Association President/CEO Mark Merritt.
Three-fourths of Medicaid pharmacy dollars are administered using a fee-for-service approach in which public officials play a role in determining how much to pay drugstores for each prescription filled and ingredient costs.
The remaining one-fourth of Medicaid pharmacy dollars is managed more like pharmacy benefits in the commercial sector, where third-parties use management tools and negotiate pharmacy payments directly with chain drugstores and the drug wholesalers that represent independent pharmacies.
The Lewin study also found that although state Medicaid programs pay widely varying Medicaid dispensing fees, they are largely unrelated to the level of ingredient cost reimbursements a state pays, or the level of generic utilization a state achieves. For example, Texas pays the nation's highest dispensing fees ($7.50) and New Hampshire pays the lowest ($1.75), but they both pay about the same for ingredient costs and generate similar rates of generic drug utilization.
In addition, Lewin said the statutory and supplemental rebates paid to Medicaid by brand name drug makers are determined separately from pharmacy dispensing fees and ingredient costs. This means that manufacturer rebates have no impact on the savings that more active management of dispensing fees and ingredient costs could achieve. Likewise, these savings also do not assume any additional cost sharing for Medicaid beneficiaries.
Lewin identified four areas where pharmacy benefit management could improve:
Generic Drug Dispensing: Medicaid FFS is less effective at encouraging the use of generic drugs. The generic dispensing rate in Medicaid FFS averages 68%, compared to an average 80% generic dispensing rate in Medicaid MCOs.
Dispensing Fees: At $4.81 per prescription, the national average dispensing fee that Medicaid FFS programs pay to retail pharmacies per each prescription is more than doublethe average dispensing fees paid by Medicare Part D payers, Medicaid MCOs, or health plans in the commercial sector.
Ingredient Costs: The rate at which retail pharmacies are reimbursed for the pills, capsules, etc. is also higher, on average, in Medicaid FFS programs than in Medicare Part D or the commercial sector.
Drug Utilization: The number of prescriptions dispensed per person is typically higher in Medicaid FFS programs than in Medicaid MCOs due to less effective controls on polypharmacy, fraud, waste, abuse, and other factors in the FFS setting.
If all state Medicaid programs used a market-based approach with norms for Medicaid MCOs, Medicare Part D, and commercial payers, Lewin estimates that:
Combined federal and state savings to the Medicaid program would total $30.3 billion over the next decade.
Medicaid FFS prescription costs could be reduced by 14.8%.
Per member per month costs for Medicaid FFS pharmacy benefits could be reduced by $12 in 2011 under optimal management.
The Institute for Healthcare Improvement and Catholic Health Partners have announced that they have formed a partnership to reduce preventable harm throughout CHP's nine regional health systems.
Cambridge, MA-based IHI will work with CHP—the largest health system in Ohio, and with 34 hospitals in Ohio, Tennessee, Kentucky, Indiana and Pennsylvania—on a large-scale patient safety initiative in model hospitals to spread best practice improvements across the CHP organization.
The independent, not-for-profit IHI and CHP have already began the first phase of the partnership, which is based on the Institute of Medicine's six Aims for Improvement—healthcare that is safe, effective, patient-centered, timely, efficient and equitable.
"This partnership with Catholic Health Partners provides an extraordinary opportunity to take evidence-based improvements to scale in the states served by Catholic Health Partners," said IHI President/CEO Maureen Bisognano. "We look forward to implementing this initiative and drawing on IHI's wealth of experience in spreading proven improvement practices across the United States and around the world."
CHP President/CEO Michael D. Connelly said the health system has worked over the last decade to improve clinical quality and patient safety. "Our objective is to harm no patient. Nothing exemplifies our mission better or is as foundational to our strategic direction and annual plans," he said. "Now, in partnership with IHI, our intention is to continue to reduce inpatient mortality, eliminate preventable harm, achieve nationally-designated quality measures and increase patient satisfaction."
The partnership will accelerate CHP's use of professionals equipped with enhanced improvement and safety knowledge; implement proven changes to improve patient safety within selected hospitals, to create exemplar hospitals that will spread improvement across the CHP system; and collaborate with leaders at all levels of CHP.
IHI designed the initiative and modeled it after its Safer Patients Initiative in the United Kingdom.
The National Labor Relations Board, which has leaned toward organized labor since President Obama took office two years ago, may soon ease restrictions against union worksite soliciting during organizing campaigns.
That's the opinion of Jay Krupin, a veteran labor relations attorney with the Washington, DC-based firm EpsteinBeckerGreen. Krupin says it's not clear exactly what will emerge early next year as NLRB examines issues related to union worksite access for organizing purposes. Given the new composition of the four-member board – which includes Obama's recess appointees Craig Becker and Mark G. Pearce, and Clinton appointee and Chair Wilma B. Leibman – Krupin anticipates that unions will be happier with the results than will management.
"We have a three-to-one supermajority of pro-union members of the board. They are implementing the parts of the (Employee Free Choice Act) that they couldn't get through the legislative process. The pro-labor leaning members of the board are taking that agenda and running with it," he says.
Krupin says he expects NLRB will hear arguments from organized labor that the no solicitation policy violates the National Labor Relations Act because it precludes unions from equal access to workers considering organizing. "Right now on the employers' premises you only hear from one side. The issue is the employers have a 'captive audience.' Our argument has always been the unions can meet with the employees any place else in the world," he says.
Improving union access to the worksite would be disruptive, and create an unfair and coercive environment, Krupin says. "The union doesn't represent the employees until the employees say they do. This is like having an insurance agent coming into your house until you sign the policy. If you want to sign the policy you will find them," he says.
Krupin predicts that NLRB will examine the parameters of the so-called 24-hour rule, which prohibits management from holding mandatory mass meetings with employees within 24 hours of a union vote. "Unions won't be able to speak to employees whenever they want, but I suspect it is going to be more of an equal access question," he says. "If an employer engages at any time, not just within 24 hours, with mass meetings with more than one employee on the premises, then the union should have the same access. It will be more equal access, rather than total access."
"The board's justification would be that since the employer has access to the employees, the unions should have the same access," Krupin says. "I'm making a supposition, but I'm pretty good at looking at this stuff and knowing the history. It's like the communications world, where stations have to give candidates equal access."
So what should hospitals do about it?
"They have to be aware of this and develop policies in anticipation of an equal access provision," Krupin says. "We are saying let's review what policies they have now to see where they sit. Then in anticipation of the changes in the rules, how would we change those policies, setting up a fire drill before the fire as to how we should change the policies."
It's also a good time to examine protocols. "If the union wants to come on the premises, and they have the right to come on the premises, how will they be escorted? What areas will they go to? What times can they come on the premises," Krupin says. "You have to establish preventive policies. Look at those issues in anticipation of the rules being changed. As the decisions come out of the board we can modify them, but we are getting a head start."
Healthcare unions have enjoyed tremendous success in the past few years, winning well over 70% of their organizing elections, but they are not invulnerable. Krupin says hospitals that interact effectively with employees have the best chance of defeating organizing efforts. "That means communicating with employees, comparing wages and benefits, making sure you deal with grievances and that other issues that employees have are handled effectively. If you do the things you are supposed to do and your employees understand the communication and the transparency, they may not like the decision but at least they know you are thinking about them and you are trying to do the right thing," Krupin says.
The problem, he says, is that hospitals wait too long to act. "There is a process to do this. Hospitals wait until their blood pressure is 190/140, their cholesterol is at 300, and they are 40 pounds overweight. Then they say 'Oh my goodness I will stop smoking then,'" he says. "Employees only go to unions when they feel the employer is not listening. Unions don't organize employees, managers do."
The National Labor Relations Board, which has leaned toward organized labor since President Obama took office two years ago, may soon ease restrictions against union worksite soliciting during organizing campaigns.
That's the opinion of Jay Krupin, a veteran labor relations attorney with the Washington, DC-based firm EpsteinBeckerGreen. Krupin says it's not clear exactly what will emerge early next year as NLRB examines issues related to union worksite access for organizing purposes. Given the new composition of the four-member board—which includes Obama's recess appointees Craig Becker and Mark G. Pearce, and Clinton appointee and Chair Wilma B. Leibman—Krupin anticipates that unions will be happier with the results than will management.
"We have a three-to-one supermajority of pro-union members of the board. They are implementing the parts of the (Employee Free Choice Act) that they couldn't get through the legislative process. The pro-labor leaning members of the board are taking that agenda and running with it," he says.
Krupin says he expects NLRB will hear arguments from organized labor that the no solicitation policy violates the National Labor Relations Act because it precludes unions from equal access to workers considering organizing. "Right now on the employers' premises you only hear from one side. The issue is the employers have a 'captive audience.' Our argument has always been the unions can meet with the employees any place else in the world," he says.
Improving union access to the worksite would be disruptive, and create an unfair and coercive environment, Krupin says. "The union doesn't represent the employees until the employees say they do. This is like having an insurance agent coming into your house until you sign the policy. If you want to sign the policy you will find them," he says.
Krupin predicts that NLRB will examine the parameters of the so-called 24-hour rule, which prohibits management from holding mandatory mass meetings with employees within 24 hours of a union vote. "Unions won't be able to speak to employees whenever they want, but I suspect it is going to be more of an equal access question," he says. "If an employer engages at any time, not just within 24 hours, with mass meetings with more than one employee on the premises, then the union should have the same access. It will be more equal access, rather than total access."
"The board's justification would be that since the employer has access to the employees, the unions should have the same access," Krupin says. "I'm making a supposition, but I'm pretty good at looking at this stuff and knowing the history. It's like the communications world, where stations have to give candidates equal access."
So what should hospitals do about it?
"They have to be aware of this and develop policies in anticipation of an equal access provision," Krupin says. "We are saying let's review what policies they have now to see where they sit. Then in anticipation of the changes in the rules, how would we change those policies, setting up a fire drill before the fire as to how we should change the policies."
It's also a good time to examine protocols. "If the union wants to come on the premises, and they have the right to come on the premises, how will they be escorted? What areas will they go to? What times can they come on the premises," Krupin says. "You have to establish preventive policies. Look at those issues in anticipation of the rules being changed. As the decisions come out of the board we can modify them, but we are getting a head start."
Healthcare unions have enjoyed tremendous success in the past few years, winning well over 70% of their organizing elections, but they are not invulnerable. Krupin says hospitals that interact effectively with employees have the best chance of defeating organizing efforts. "That means communicating with employees, comparing wages and benefits, making sure you deal with grievances and that other issues that employees have are handled effectively. If you do the things you are supposed to do and your employees understand the communication and the transparency, they may not like the decision but at least they know you are thinking about them and you are trying to do the right thing," Krupin says.
The problem, he says, is that hospitals wait too long to act. "There is a process to do this. Hospitals wait until their blood pressure is 190/140, their cholesterol is at 300, and they are 40 pounds overweight. Then they say 'Oh my goodness I will stop smoking then,'" he says. "Employees only go to unions when they feel the employer is not listening. Unions don't organize employees, managers do."
While the nation's unemployment rate has increased to 9.8 percent, hospitals reported 8,000 payroll additions in November and 42,200 payroll additions so far this year. The growth in hospital jobs is nearly double the 21,700 jobs created in the first 11 months of 2009, but is still well off the pace of hospital job growth for most of the decade, data released Friday by the Bureau of Labor Statistics show.
After erratic hospital job growth in the first seven months of this year, hospitals have seen four straight months of growing employment, and have added 23,900 jobs since August. Overall, hospitals employed more than 4.7 million people in November.
BLS data from October and November is preliminary and may be considerably revised in the coming months.
The job growth comes even as hospitals “mass layoffs” affecting 50 or more employees are keeping pace with the record 152 mass layoffs set in 2009. BLS data show that the nation's hospitals reported 16 mass layoffs in October —the latest figures available.
Hospitals shed 1,900 jobs in July, added 5,700 jobs in June, and shed 1,400 jobs in May, after creating 15,900 jobs in the first four months of the year. The sector reported 98,800 payroll additions in the first 11 months of 2008.
The healthcare sector—everything from hospitals, to chiropractors' offices, blood and organ donor banks, to walk-in clinics—added 19,200 jobs in November, and employed 13.8 million people that month. Healthcare has been one of the few areas of steady job growth during the recession and sputtering recovery, creating an average of 20,880 jobs each month, and 229,700 jobs in the first 11 months of 2010.
Healthcare created 215,300 jobs in 2009, and 763,400 jobs since the recession began in December 2007, BLS data show.
Job growth in the healthcare sector continues to be powered by ambulatory services, which accounted for 7,400 payroll additions in November, and 139,600 payroll additions in the first 11 months of 2010. Nursing and residential care facilities reported 3,800 payroll additions in November, and physicians' offices reported 500 payroll additions, BLS preliminary data show.
The larger economy gained 39,000 jobs in November, but the nation's jobless rate rose from 9.6% to 9.8% for the month. Since December 2009 nonfarm employment has increased by 946,000 jobs. However, 15.1 million people were unemployed in November, and 6.3 million of them were long-term unemployed who had been without a job for at least 27 weeks, BLS preliminary data show.
It's been 11 years since the Institute of Medicine reported in December 1999 that medical errors caused more than 98,000 deaths and injured more than 1 million people each year. Unfortunately, the results from two recent studies indicate that—despite a lot of focus and effort—the nation's hospitals have not significantly reduced medical errors, which still lead to tens of thousands of deaths each year.
Hospital advocates don't dispute the findings, but they also don't believe the last 10 years were a lost decade. They believe that progress has been made, even if it is not immediately apparent.
"It was discouraging not to see more evidence that the hard work that has gone on in the past decade has had as substantial an impact as we believe it has. But the studies are what the studies are," says Nancy Foster, vice president for quality at the American Hospital Association.
"There are enormous numbers of hospitals engaged in a number of activities directly addressing patient safety issues. Are we there yet? No. It is a multifaceted problem that requires a multifaceted approach," she says. "We have to keep hammering at it until we get to the level of safety that we expect of ourselves and the public rightfully expects of us. As these studies suggest, we have a ways to go."
The studies—one from Health and Human Services Office of Inspector General, the other from the New England Journal of Medicine—indicate that medical errors remain widespread, common, and deadly. The OIG study found that one in seven Medicare beneficiaries suffers an adverse event during a hospital stay, and those events, nearly half of them preventable, contributed to at least 15,000 deaths in a single month.
The second study, published in the Nov. 25 issue of The New England Journal of Medicine, examined 2,300 randomly selected patients' records at 10 hospitals in North Carolina from 2002-2007 and found 588 instances of "patient harm," including surgical errors, hospital falls, misdiagnoses, medication errors, and hospital-acquired infections. Fifty of the incidents were considered life threatening, and 14 people died, according to the study.
Ironically, North Carolina was chosen for the study because of that state's recent emphasis on reducing medical errors. "It's a fair study. It points out that there is much more work to be done despite the fact that we have had some very intense efforts in this state over the last five years," says Don Dalton, vice president and spokesman for the North Carolina Hospital Association. "A little to our disappointment, the years of the study didn't coincide with some of our years of greatest improvement. We created a quality center here in 2005 so we have done a lot in the last five years and three of those five years would not have been included in the study."
Dalton says NCHA and its member hospitals have worked hard to reduce central line bloodstream infections and surgical site infection. "More importantly we have done a lot of work with hospitals around the issue of creating just cultures, where hospitals are taking greater responsibility for changes in the system that would eliminate the opportunity for harm, and healthcare professionals continuing to take personal responsibility for their actions. We feel like it is the system work that has the greatest opportunity to improve the quality of care," Dalton says.
In some respects, Foster says, the two studies' results also reflect the improving quality of data collection and identification of hospital errors. "What I see in these two studies is that we have learned an enormous amount about safety and our risks to patients, what might constitute an error and new ways to identify them which are much more robust than the original methodology used in the Harvard Medical Practice study which was the foundation of the IOMs original estimate," Foster says.
"In addition we now see more things as potentially preventable than we did a decade ago," Foster says. "The biggest example is central line bloodstream infection. We used to think of them as having a certain level of inevitability and now we know we can get very close to zero with them. That's terrific news for patients but it does mean the count of things that are preventable has gone up."
Online ads for healthcare practitioners and technical workers rose by 12,400 listings to 555,500 in November, the largest increase of any job sector for the second consecutive month, and vacancies for the skilled providers outnumber qualified job seekers by almost 3 to 1, a report shows.
The Conference Board's Help Wanted Online Data Series, which tracks more than 1,000 online job boards across the United States, attributed the uptick to "advertised vacancies for family and general practitioners."
Healthcare support vacancy listings held steady with an increase of 600 listings to 112,600. There were 2.4 unemployed people for every advertised vacancy in healthcare support, The Conference Board reports.
The average wage advertised for healthcare practitioners and technical workers was $33.51 an hour, and the average wage for healthcare support occupations was $12.84 an hour, the report says.
The U.S. Bureau of Labor Statistics, which will release on Friday its employment statistics for November, has shown that the healthcare sector is one of the few areas in the economy that has seen monthly job growth throughout the recession, although that growth has slowed considerably since 2009.
In the overall economy, online advertised vacancies rose 47,400 in November to 4,457,200, following an increase of 113,700 in October, The Conference Board reports.
"In November, demand for workers continued to be positive, albeit moving at a disappointingly slow pace for the last few months," said June Shelp, vice president at The Conference Board. "November was a surprisingly quiet month throughout the nation, with most states posting small gains/losses in advertised vacancies. In this weak U.S. economic recovery, office help, construction jobs, and positions in business and finance continue to show very sluggish growth."
The nation's supply/demand rate stood at 3.27 unemployed for every advertised vacancy in October (the last available unemployment data), down from a peak of 4.73 in October 2009. Nationally, there are 10.4 million more unemployed than advertised vacancies, The Conference Board reports.
The Conference Board also reported a modest increase in demand for transportation and material sector jobs, and a decline in demand for sales and sales management positions.
