Posted May 29th, 2012

The Affordable Care Act created some desperately needed means to start controlling ever-rising health care costs. Many — like preventive care or delivery reforms — will take some time to realize savings. In contrast, new anti-fraud efforts look to be paying off right away, in amounts much bigger than expected.

The health reform law provided $350 million over ten years to increase anti-fraud investigation and enforcement resources for the Department of Justice (DOJ) and State Attorneys-General. The goal? Saving $6.4 billion over the next decade. Given that some estimate that fraud and waste cost as much as $60 billion a year, or $600 billion over a decade, saving one percent of that amount seems a pretty modest impact.

But wait! New estimates project that current or pending settlements of drug fraud litigation by the DOJ and the Attorneys-General will top $8 billion in FY2012 alone, according to the group Taxpayers Against Fraud. (See list below.) This is not the culmination of hundreds of lawsuits; it’s just the eight biggest. So it looks like this anti-fraud effort under the ACA will meet and then surpass its ten-year goal in less than two years!

To be fair, most of these eight drug fraud investigations were undoubtedly underway before the increased funding for anti-fraud efforts reached the DOJ and State Attorneys-General offices. But there is little doubt that providing these over-worked regulators with increased resources was a big help in increasing enforcement. DOJ probably has fewer lawyers working on all their pending drug fraud cases than some of the biggest drugmakers hire to defend a single lawsuit. But despite these disparities, these results show that very modest government investment in fighting fraud, coupled with hard work by government lawyers and whistleblowers, can pay off big.

For example, earlier this week drugmaker Abbott Labs in Chicago settled a civil and criminal investigation of their illegal promotion of the anti-convulsant drug Depakote as an unapproved treatment of dementia in seniors, and of various conditions in children. Abbott pleaded guilty to promoting these unapproved, or ‘off-label’ uses of Depakote, and agreed to pay $1.6 billion – one of the biggest settlements for the illegal promotion of a single drug.

There could be as many as a couple hundred pending whistle-blower lawsuits that are filed under seal and being investigated now by the federal or state regulators. These pending lawsuits may add up to billions of dollars of additional fines and settlements.

Some critics have warned that even billion-dollar fines are an inadequate deterrent when a drug company can make far in profits on illegally promoted sales of a drug.

For instance, the $1.4 billion record-breaking settlement with Eli Lilly in 2009 for illegal promotion of their antipsychotic drug Zeprexa was less than 5 percent of Lilly’s gross sales. Eight months later, DOJ shattered this record with an even bigger $2.3 billion settlement, which amounted to 14 percent of Pfizer’s gross sales of eight illegally marketed drugs (see here).

Similarly, this month’s $1.6 billion Depakote settlement is nearly 12 percent of the drug’s $13.8 billion in gross sales revenue from 1998 to 2008. Furthermore, DOJ is pioneering two mechanisms to deter future illegal conduct by Abbott, along with this hefty fine.

First, the Depakote settlement places Abbott on probation and imposes a corporate compliance and monitoring program, for five years. If Abbott violates the compliance agreement or significantly violates the law, the government can exclude Abbott, and all their drug products, from federal health care programs. That would cost Abbott billions in lost sales on numerous drugs.

The settlement also aims to hold Abbott’s corporate leadership personally accountable. Abbott’s CEO must personally certify compliance and the board of directors must review and report on compliance each year. If the CEO or the board is lax in these duties, they could be excluded from their positions at Abbott. And if CEO or board intentionally lie to the government to cover up any misconduct, they could face personal criminal liability under the federal False Statements Statute. (Find the plea agreement and related documents here.)

Sadly, Abbott’s illegal promotion of ineffective and dangerous uses of Depakote has both harmed and put at risk what is arguably the most vulnerable patient population – seniors suffering from dementia, who live away from their families in nursing homes. Undoubtedly millions of seniors were, and likely continue to be given Depakote inappropriately as a result of Abbott’s illegal promotional campaign.

Check back soon for more on (1) actions that Medicare and Medicaid can take to address the continuing effects on patients of illegal promotions of off-label use of drugs and (2) how the Arkansas AG fought prescription drug fraud, winning huge fines to plug the state’s Medicaid budget deficit.

Wells Wilkinson

Director, Prescription Access Litigation

Staff Attorney, Community Catalyst

Projected Drug Fraud Settlements in FY 2012, excerpted from the Taxpayers Against Fraud website.

A version of this blog was posted earlier on Health Policy Hub and Postscript. 

Last week, the American College of Physicians (ACP), a 129,000-member group of internal medicine physicians, and second-largest doctors group in the US, called for increased FDA authority and  funding to help protect  consumers from the risks of newly-approved prescription drugs.  Their six recommendations were:

1) increased funding for FDA staff and technological capability to keep pace with the increased workload due to the number and scientific complexity of new products submitted for pre-approval, globalization, and emerging safety challenges.

2) increased FDA authority and capacity to regulate drugs manufactured outside the US;

3) expanded FDA authority and involvement in the design of clinical trials to better evaluate safety and efficacy, through longer trials with larger, more representative target populations;

4) a ban on clinical studies of ‘bundled’ drug products that reduce access to drugs;

5) Improvements that increase  reporting of adverse events by doctors and others; and

6) limits on direct-to-consumer advertising in the first 2 years a drug is on the market.  

Increased FDA funding:

The ACP report notes that FDA’s “ability to approve and monitor new drugs has been compromised by chronic underfunding, limited regulatory authority, and insufficient organizational structure.” ACP recommends that FDA funding is increased, to improve their “ability to approve and monitor prescription drugs….”

 Regulating drug manufacturing overseas:

The ACP should be praised for bringing attention to severe under resourcing at FDA, particularly as it affects the Agency’s ability to ensure the safety of drugs manufactured overseas. Today’s globalized pharmaceutical supply chain has rapidly outgrown FDAs capacity, and FDA is not able to inspect foreign sites with any meaningful frequency. A 2008 GAO study found it would take FDA 13 years to inspect each foreign manufacturing establishment once, while domestic sites are inspected on average every 2.7 years.

 ACP points out that a provision for increased foreign inspections were included in a bill (H.R.759) introduced by Reps. Dingell, Pallone and Stupak in January this year. A similar bill (S.882) championed by the late Senator Kennedy and Senator Grassley also seeks to increase foreign site inspections by FDA. Both bills establish new industry user fees to pay for this expanded oversight, but also require annual increases in other appropriations to ensure sustainability. ACP importantly indicates that both types of financial support are needed, and mentions a number of other key provisions in the House bill, including a requirement for dedicated foreign inspection staff.

Facilitating increased physician reporting of adverse events:

The ACP also recommends FDA pursue efforts to “educate physicians on how and when to report an event that is potentially drug-related.” They also proposed streamlining the reporting systems and ensuring anonymity to “facilitate reporting by health professionals.”

DTC advertising of new drugs:

The report acknowledges that direct-to-consumer (DTC) advertising can “dramatically increase [use] of a new drug and … may expose large numbers of people to a drug with undocumented safety concerns.”

The best example of this concerns was seen in the  rapid use of the  pain-killer Vioxx upon hitting the market. The aggressive DTC advertising and other promotional activities  by manufacturer Merck lead to Vioxx’s use by over 20 million consumers, which then lead to  88,000-139,000 cardiac events, and  an estimated 35,000-55,000 deaths.  Adverse reactions and safety concerns arose with the  drugs Zyprexa and Bextra, among many others 

To address this concern, ACP recommended that FDA ‘limit’ the DTC advertising of newly approved prescription drugs, and require that labels and ads indicate that data related to the new drug’s “risks and benefits … are less extensive than those [for older] products…”

 Prohibiting clinical trials of ‘bundled’ products:

In addition, ACP also makes a recommendation that would help FDA avoid placing itself in the position of helping drug manufacturers introduce ‘bundled’ or combination drug products designed to protect a drug from generic competitors. 

For example, the report describes how, in 2005, the drug manufacturer “Pfizer submitted plans to the FDA to begin conducting large trials to test the cholesterol drug torcetrapib in combination with the popular and widely used statin Lipitor.”  By allowing clinical trials of the ‘combination drug’ rather than just torcetrapib alone, approval of the new combination drug product would insulate Lipitor from competition. This then puts FDA, in approving the study design, in the awkward position of helping the drug manufacturer avoid anti-trust prohibitions, the report said.

This concern is similar to the claims in the PAL member lawsuit on the drug Norvir, where drug manufacturer Abbott Labs bundle their HIV protease inhibitor cocktail drug Norvir in a new bundled-product-drug Kaletra, in order to increase market share.

ACP recommends that FDA not approve clinical trials which seem to be designed to ‘bundle’ a new drug with an existing brand name drug, and thus perpetuate the patent-protected sales of the new combination product.

To read the full report, visit http://www.acponline.org/advocacy/where_we_stand/policy/fda.pdf

Consumer Reports recently published a list of drugs that have heightened risks for older adults, due to the fact that as kidneys age, they lose some ability to process drugs. Consumer Reports compiled a “list of medications that are best avoided by those 65 and older, as well as a list of alternative medications.” See below:

Medicines Older Adults May Want to Avoid

Adverse drug reactions that result in emergency room visits affect older Americans nearly twice as often as young people. One reason is that as the body ages, the kidneys’ ability to process medications declines. As a result, some drugs stick around longer in the body, and others can build up to unhealthy levels if multiple doses per day are required.

At the same time, millions of older Americans take five or more medications a day, which multiplies the risk of experiencing an adverse drug event.

Consumer Reports Health has published new information to help guide people in their drug selections. A list of medications that are best avoided by those 65 and older, as well as a list of alternative medications, is included.

For example, antihistamines Chlor-Trimeton (chlorpheniramine) and Benadryl (diphenhydramine) can cause confusion, sedation and the inability to fully empty the bladder (urine retention) in people over 65. Generic cetirizine (Zyrtec), fexofenadine (Allegra) and loratadine (Claritin) are generally safer bets.

Another example is pain relievers. Aleve and Naprosyn (naproxen), Daypro (oxaprozin) and Feldene (piroxicam) can cause gastrointestinal bleeding and kidney damage. Demerol (meperidine) can cause confusion and falls. Better and safer choices include Tylenol (acetaminophen), Advil (ibuprofen), Zostrix (capsaicin cream) and for severe pain, morphine.

Click here for a complete list of drugs to avoid for older individuals.

Find more information at Consumer Report’s Best Buy Drugs about comparative effectiveness
and comparative cost for many of these medicines.

The FDA Amendments Act of 2007, also known as FDAAA, as in “open wide and say FDAAA,” is a riveting 156-page read, and buried in its contents is a provision, known to its friends as 121 Stat. 890 Sec. 502(f)(1), that requires drugmakers to include a toll-free number in print advertisements for prescription drugs, for consumers to report adverse effects or negative side effects from those drugs.

(The FDA published a notice in the Federal Register on January 3, advising that the rule went into effect on January 1, 2008. Interestingly, although it says the rule goes into effect January 1, that doesn’t mean that all drug companies must comply with the rule by January 1 — the Federal Register notice says “In the preamble to the toll-free number proposed rule, the agency proposed that all manufacturers, dispensers and
pharmacies subject to the rule be in compliance not more than 1 year after the effective date of the final rule.” I guess only at the FDA does “in effect on Jan. 1, 2008″ really mean “in effect one year later than Congress required.”)

But what about TV ads? There’s no requirement that drugmakers include that toll-free number in their television ads. And no doubt drug companies wouldn’t want that requirement. Can you imagine a drug ad that said “Side effects may include bloat, foaming at the mouth, heart attack, hives, hallucinations, insomnia, excessive sleepiness, erections lasting longer than 4 hours, and compulsive gambling. Call 1-800-FDA-1088 if you experience any negative side effects while taking this drug.” That certainly would tend to, um, accentuate the negative, if you will.

But having these toll free numbers on TV ads is arguably far more important. It’s impossible to watch prime time TV without seeing several drugs an hour. People spend far more time watching TV than they do reading magazines. Drug companies spent twice as much on TV ads on Network and Cable TV in the first half of 2007 (nearly $1.6 billion) as they did on national magazines, sunday supplements and newspapers (just over $838 million). [Source: DTC Perspectives, "Spending Review," December 2007]

Consumers Union submitted a citizen petition to the FDA calling on the FDA to require that TV ads be required to include this toll free number as well. Here’s the press release about it.

Consumers Union is circulating an online petition, and asking consumers to sign it in support of this request. To sign the petition, go here.

And what’s that toll free number? 1-800-FDA-1088. You can also report a negative side effect through your doctor, or by going to www.fda.gov/medwatch

Below is a new trailer for the documentary, Money Talks. The documentary is a companion to the independent feature film, Side Effects, which stars Katherine Heigl, of Grey’s Anatomy fame.

“This 50-minute documentary was created to give an in-depth, academic perspective on the questionable marketing tactics of the pharmaceutical industry, and features the commentary of investigative journalists and medical professionals including Dr. John Abramson, author of Overdosed America, and Prescription Access Litigation Project Director, Alex Sugerman-Brozan. Other notable interviewees include Dr. Bob Goodman of Columbia University, founder of the ‘No Free Lunch’ program, and Dr. Jerome Hoffman of UCLA Medical School.”