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. 

Billion-dollar settlement of Paxil birth-defect lawsuits

Only a week after Glaxo SmithKline (GSK) agreed to pay $460 million to settle over 10,000 personal injury lawsuits related to Avandia,  it was reported that GSK has agreed to pay $1 billion dollars to settle  800 cases related to birth defects caused by  the GSK anti-depressant Paxil, taken by pregnant women. Both of these settlements are part of the $2.4 billion GSK has set aside to resolve pending litigation, according to corporate filings last week.

This $1 billion Paxil settlement will provide an average payout of more than $1.2 million to each family of an affected child, many of whom are left with heart defects as a result of their mother taking the drug. However, this settlement leaves more than 100 related cases still pending.

This settlement also follows a recent trial in Philadelphia, where a jury awarded a family $2.5 million for their child’s heart birth defect caused by Paxil. That lawsuit revealed internal “Glaxo documents showing executives talked about burying negative studies about Paxil’s links to birth defects and that its own scientists were alarmed by the rising number of children who had been affected by the drug in the womb.”

These recent settlements, combined with  earlier ones related to allegations that Paxil caused suicide, attempted suicide, and addiction, brings GSK’s total settlements on Paxil to over $2 billion so far.

Yet GSK sales of Paxil, one of the true blockbuster drugs in the last 15 years, generated $11.7 billion in US sales between 1997 and 2006. So GSK has profited dramatically from this drug, while leaving a wide trail of shattered lives and grieving families.

Despite these settlements and the 2005 black-box warning the FDA added to the drug’s label on increased risks of suicidal thoughts among adolescents, Paxil still earned $793 in sales in 2009.  It continues to be one of the more profitable drugs on the market.

Avandia study suspended, conflicts revealed

In a statement released yesterday, the FDA placed the TIDE (Thiazolidinedione Intervention with Vitamin D Evaluation) study comparing Avandia with its rival Actos on a “partial clinical hold.” This means that no new subjects can be enrolled, but that existing subjects can continue to participate.

This decision by the FDA is not all that surprising since, even though the FDA’s Advisory Panel voted 19-11 last week to recommend that the study continue, there was at least one member of the panel who questioned whether it was ethical to continue this study in light of the known serious cardiac risks.

Though the FDA had previously stated that they issued no conflict of interest waivers for the advisory panel hearing last week, two conflicts have since come to light. David Capuzzi, an endocrinologist on the panel, earned $3,750 last year (and $14,750 in total) as a speaker for another GSK drug, Lovaza. Though Dr. Cappuzzi denies he ever spoke about Avandia, a GSK spokesman reported that at least one of Capuzzi’s talks prior to 2008 was on Avandia. It is noteworthy that Dr. Capuzzi defended Avandia during the advisory panel hearing and voted to keep it on the market despite the fact that he claimed he rarely prescribes Avandia as he does not “like the whole class of drugs” and prefers to prescribe metformin.

Dr. Capuzzi explained his failure to disclose by saying that “the FDA doesn’t consider a different product for the same company to be a conflict of interest.” He furthermore said that he did not disclose this information to the FDA because he was never asked about it.

…. Really?

Pharmalot (hat-tip) reports that the FDA policy requires that panel members “report all current financial interests and those held within the previous 12 months that could be affected by the discussion and outcomes of the meeting, or that would present appearance issues.”

The FDA went on to say that they “take these allegations [against Cappuzzi] very seriously and [are] investigating the matter.” Additionally, Pharmalot reported that an FDA spokeswoman stated that “a decision [on their investigation] is expected by the end of the week and, if the agency determines there was misconduct, the matter could be referred to the HHS Office of Inspector General.”

On the flip side, the Wall Street Journal reported yesterday that Abraham Thomas, a doctor who voted to take Avandia off the market, was a paid spokesman for Takeda, who produces Avandia’s rival drug, Actos. Dr. Thomas was a member of the Takeda Diabetes Speakers Bureau from September 2007 to September 2008 and received $5,000 for giving two presentations. It is currently unclear if Dr. Thomas will be investigated by the FDA as well, since his relationship with Takeda took place over a year ago.

Ultimately, other panel members that have been interviewed do not feel that these conflicts of interests affected their decisions. One stated, “the panelists came prepared and had very strong opinions [that] won’t be easily swayed by other people’s opinions unless they’re very compelling,” but one panelist did say that the FDA “encourage[d] us to err on overdisclosing  [and]  to disclose anything in [our] past that may have relevance.” You would think that a paid relationship with the pharmaceutical company in question, or one with the drug’s  major rival in its class would be relevant enough a potential conflict for someone to disclose.

Panel decision-making warrant scrutiny 

 Finally,  in even more news to cause the public to question the reasoning methods used by the Avandia advisory panel, it was recently reported by the USA Today that at least one of the 10 advisory panel members who voted to keep Avandia on the market with tight restrictions says he’d actually prefer that the FDA withdraw it. This panelist, Clifford Rosen, has publicly stated that the only reason he didn’t vote to withdraw Avandia from the market is because he was “very anxious” he’d be the only one to vote that way. Dr. Rosen, who chaired the 2007 advisory committee meeting where panelists voted 22-1 to keep Avandia on the market despite the cardiovascular risks associated with the drug, says that he and the 21 other panelists who voted to keep the drug on the market  did so because they did not know whether Actos may be even riskier. Despite his previous vote, Rosen has stated that he has not prescribed Avandia since this 2007 meeting.

 After all this, we clearly haven’t heard the last on Avandia ….

Following up on last week’s blog discussing the FDA hearing underway to determine the safety of the prescription diabetes drug, Avandia, the FDA advisory review panel concluded a two-day hearing last Wednesday by recommending 20 to 12 that Avandia remain on the market with label revisions and other restrictions. This deeply divided panel included 17 votes to add warnings or restrictions on the drug, and 12 votes to remove the drug from the market.

The members voting for Avandia’s removal said the drug “has no unique benefits and therefore the benefits of the drug do not outweigh the risks.” They also pointed out that Avandia’s primary competitor, Actos, is an acceptable alternative to Avandia and therefore there is no therapeutic necessity to keep Avandia on the market.

Even the use of Actos has been called into question. Harvard researchers based at the Independent Drug Information Service (www.RxFacts.org), note that “in mid-2007 the FDA added black-box warnings cautioning that both rosiglitazone (Avandia) and pioglitazone (Actos) increase the risk of congestive heart failure.” These safety concerns, “along with an increased risk of fracture, have greatly dampened enthusiasm for use of both of these drugs.”

The ultimate fate of Avandia now rests in the hands of the FDA who stated that they “took the panel’s advice seriously and that [the FDA] would consider its regulatory options.” If the proposed additional warnings and restrictions are implemented, scientist Steve Nissen, who published the first study documenting the cardiac risks of Avandia in 2007, estimates that 95 percent of Avandia’s use will end. “Effectively, this drug is gone.”

Interestingly, the committee also recommended by a vote of 19-11 that the trial currently underway comparing Avandia to its rival Actos be continued, though at least one member questioned the ethics of this, given the potential risks.

Litigation yields access to studies, helps expose risks

Litigation plays a valuable role in exposing industry schemes to withhold safety data. For instance, GSK’s earlier suppression of studies showing risks associated with the drug Paxil lead to litigation and settlements that required GSK to post information on-line about all their clinical trials. It was this posted information that Nissen and fellow researcher Kathy Wolski of the Cleveland Clinic used to perform their 2007 analysis of over 40 studies that showed that Avandia raised the risk of heart attack, stroke and death in comparison to Actos.

Another example of the benefit of litigation is seen by the PAL-member class action lawsuit concerning the drug Zyprexa whichyielded hundreds of documents, some of which revealed Eli Lilly’s own internal studies documenting the increased risks that Zyprexa posed as a treatment for dementia in elderly patients.

New evidence, studies bring risks to light

Ongoing investigations by Senator Grassley and almost a dozen new studies documenting the risks of Avandia have kept the issue alive, prompting the FDA’s ongoing review, including last week’s hearing.

One comparative effectiveness study by David Graham of the FDA was published this past June. Graham worked with researchers at the Centers for Medicare and Medicaid Services to collect records from nearly a quarter million Medicare recipients.  Elderly diabetics, who used Avandia instead of its competitor, Actos, had a 68 percent increase in the risk of heart attack, stroke, heart failure or death. Graham stated:

“We estimate that about 48,000 excess cases of [heart attack], stroke, heart failure, or death were attributable to the use of [Avandia] rather than [Actos] from 1999-2009.”

Graham additionally stated “the RECORD study would have been dismissed as ’garbage’ if it had been used to seek the drug’s original approval.”

What’s next?

The question of whether the FDA will allow Avandia to remain on the market is still up in the air.  Beyond that, what else can we do to stop such illegal and hazardous industry behavior—the same behavior that resulted in the Vioxx tragedy, which lead to up to 60,000 deaths? As litigation and other sources have revealed suppression of drug risks concerning Vioxx, Paxil, Celexa, Zyprexa, and many other drugs, the problem seems endemic.

To begin to address this problem, the FDA needs the resources and authority to examine all relevant clinical studies for data-tampering. Government and private consumer lawsuits must continue, including possible criminal prosecution. Finally, we should all remember that what you read on your drug label or hear in a TV ad may not be the whole story. Skepticism is warranted and further regulation is critical to all of us–we need medical care we can trust.

Monday’s story by New York Times reporter Gardiner Harris revealed that Glaxo SmithKline (GSK) had withheld studies showing serious risks associated with the world’s former best selling diabetes drug for 11 years.

GSK withheld results from a 1999 study that they conducted comparing Avandia to its main competitor, Actos. Rather than demonstrate that Avandia was safer, this 1999 study linked Avandia to a 43 percent increased risk of heart attacks. GSK never reported these findings to the FDA, and has spent the last 11 years trying to cover them up.  One GSK executive at that time even said in email exchanges that:

 “Per Sr. Mgmt request, these data should not see the light of day to anyone outside of GSK.”

In fact when one GSK official asked about whether two of the drug trials in question should be published, this same executive responded:

“Not a chance. These put Avandia in quite a negative light ….”

But the case against GSK doesn’t stop there. In addition to failing to disclose these results to FDA,  there is evidence that GSK researchers excluded a dozen serious heart problems in the total tally of adverse events from their 6-year ‘RECORD’ study on Avandia released in 2007.

One FDA reviewer  found a number of instances where “deaths that occurred while taking Avandia were inexplicably dropped from the final analysis.”

A former manager of the FDA’s drug safety unit, Rosemary Johann-Liang, revealed in a deposition last month that Glaxo withheld from FDA other records from 2001 showing Avandia may cause heart attacks and that Glaxo did not turn over an e- mail from researchers who concluded Avandia “strengthens the signals” of heart ailments.

Does this leaves anyone else with a feeling of déjà vu? This is Vioxx all over again. In 1999, manufacturer Merck withheld studies or other data documenting  the serious cardiovascular side effects associated with Vioxx. This block-buster drug rose to $2.5 billion in annual sales before its risks were revealed in 2004. Some estimate Vioxx led to 44,000 deaths and 80,000 heart attacks.  While this Vioxx scandal resulted in a record-breaking $4.8 billion dollar settlement of 26,000 personal injury claims, many feel that Merck got away with murder, or at least manslaughter. And while $4.8 billion is a lot of money even to Merck, their gross sales of Vioxx were far greater.

Another example of  drug industry executives putting profits ahead of patient safety.

What’s next for Avandia? And GSK?

Today’s panel at FDA will decide whether to recommend that the drug be withdrawn from the market.

GSK has negotiated over 10,000 settlements for $460 million, according to Business Week. This seems like a small amount. Certainly other cases are bound to follow.

Back in April the PAL fortune teller made some bold predictions about GlaxoSmithKline’s (NYSE:GSK) new migraine drug Treximet. (’GlaxoSmithKline sets out to dupe migraine sufferers with Treximet smoke and mirrors“). Treximet is nothing more than a combination of Imitrex (sumatriptan, soon to be available as a generic) and naproxen sodium (commonly known as Aleve and available over-the-counter). Treximet is a perfect example of what we called a Goober Grape drug, which we described thusly:

What’s a Goober Grape Drug?

Goober Grape, for the (fortunately) uninitiated, is a appalling combination of peanut butter and jelly in a single jar….

So henceforth, a “Goober Grape Drug” refers to any combination drug that offers no additional clinical advantage and only the most ridiculously minimal increase in patient convenience. There are certainly conditions in which combination pills are important, in that reducing the number of pills to be taken increases patient compliance, but allergies sure as heck ain’t one of ‘em.

Neither, for that matter, are migraines. There’s no evidence that taking Imitrex and naproxen in a single pill (as Treximet) is any more effective than taking it in two separate pills, which is not surprising. Given that migraines are often excruciating, it’s absurd to think that someone in the midst of a migraine would take one pill, but not two, to relieve their suffering.

So was the PAL Fortune Teller correct?
As the PAL fortune teller gazed into the Pharma Crystal Ball, a prediction was made that “TV ads will appear in prime time singing the praises of this “new” treatment for migraines. People frolicking through fields of flowers may or may not appear.” Anyone who watched the recent presidential debates saw the new Treximet commercial. In case you missed it see for yourself, here it is. (Note: there are not, in fact, people frolicking through fields of flowers)

Notice that the ad only says that Treximet is “superior to Imitrex tablets at relieving migraine pain” – it does NOT say that Treximet is superior to Imitrex and naproxen taken together.

The PAL fortune teller also predicted that:

“Yet you can be sure that Treximet’s price will be similar to what Imitrex costs right now ($25 a pill) and there’s a good chance it will be more expensive, as new drugs typically are ($30 a pill? More? Who knows?).”

We were wrong on this one — at least for now. On drugstore.com, 9 pills of Imitrex cost $199.98, and 9 pills of Treximet cost $229.78. That’s about $25 a pill for Imitrex and about $22 a pill for Treximet. Wait a minute, that means Imitrex is more expensive than Treximet (right now). What gives?

As we reported back in April, generic versions of Imitrex will become available starting in late 2008 and into 2009, when Imitrex’s patent will expire. So over the next year, the price of Imitrex will go down, finally settling most likely, as most generics do, at 20-30% of the brand-name’s price. We predicted that the cost of taking generic Imitrex and over-the-counter Aleve would eventually be about $7.50.

So GSK needs to do as much as they can to get people to switch to Treximet before generic Imitrex becomes available. That means running ads on TV, having drug sales people promoting Treximet to doctors, aggressively distributing samples to physicians’ offices. And another way to encourage doctors and patients switching is to price Treximet below the price of Imitrex.

What remains to be seen is what will happen once generic Imitrex becomes available. Inevitably there will be:

1. Imitrex patients who switch to Treximet before the generic becomes available who choose to stay on Treximet
2. New patients who start on Treximet without ever having taken Imitrex
3. Imitrex patients who switch to Treximet before the generic becomes available who then switch to generic Imitrex,
4. Imitrex patients who don’t switch to Treximet who then switch to generic Imitrex, many of them automatically. This is probably the scenario that GSK most wants to avoid. Most states, and most health plans, have policies requiring “mandatory generic substitution,” that is, if a generic is available for your drug, you’ll get the generic, unless your doctor writes “Dispense as Written” or “No Substitution” on the prescription.

Categories #1 & #2 above are those most likely to remain Treximet Loyalists. It’s distinctly possible that GSK will gradually increase the price of Treximet over time, after the generic becomes available. I’m willing to guess that a lot will depend on how successful they’re initial advertising and promotion is in manufacturing a market for Treximet. It’ll be interesting to observe.

So: We were right about the Treximet ads, and wrong (at least for now) about Treximet’s price. In the end, the PAL Fortune Teller is batting .500. Which is more than we at PAL can say right now for our beloved Red Sox, who are down 2-1 in the ALCS.

As we’ve previously reported on the PAL blog, GlaxoSmithKline agreed to pay $40 million to settle a national class action lawsuit brought against it on behalf of “third party payors” (health plans, union benefit funds and others). The case alleged that GlaxoSmithKline (NYSE:GSK) defrauded third party payors by failing to disclose the increased risk of suicidal thoughts and behavior among children and adolescents taking the prescription antidepressants Paxil® and Paxil CR®.

PAL coalition members, Sergeants Benevolent Association Health and Welfare Fund, AFSCME District Council 37 Health and Security Plan and IUOE Local 4 Health and Welfare Fund had filed an objection to a proposed $40 million settlement in the case, Carpenters and Joiners Welfare Fund et. al. v. SmithKline Beecham Corp (04-3500 D.MN). The objectors were able to negotiate significant changes to the settlement, and withdrew their objection.

On September 30, the U.S. District Court for the District of Minnesota held a “Final Approval” hearing in the case. Lawyers for the plaintiffs, defendant and objectors all made presentations to the Court about why the settlement is “fair, reasonable and adequate” and why it should be approved. The Court issued its order granting final approval to the settlement shortly after the hearing ended.

Now that the settlement has received Final Approval, payments can be made to Third Party Payors that paid for Paxil for pediatric patients between 1998 and 2004. The deadline to submit claims forms is December 12, 2008. A letter will go out shortly to 42,000 third party payors that had previously received a notice by mail of the settlement. The letter will apprise them of the changes to the settlement that the objectors were able to negotiate, and let them know about changes to the claims form. As of this writing, the claims form had not yet been updated on the settlement website – www.pediatricpaxiltppsettlement.com. We urge third party payors to check back soon at pediatricpaxiltppsettlement.com to see if the new form has been posted, or to call the Settlement Administrator at 1-800-396-5655.

Back in August, we reported that three PAL coalition members, Sergeants Benevolent Association Health and Welfare Fund, AFSCME District Council 37 Health & Security Plan and IUOE Local 4 Health and Welfare Fund, filed an objection to a proposed $40 million settlement in the case Carpenters and Joiners Welfare Fund et. al. v. SmithKline Beecham Corp (04-3500 D.MN).

The lawsuit alleged that GlaxoSmithKline (NYSE:GSK) defrauded health plans, union benefit funds and other “third party payors” by failing to disclose the increased risk of suicidal thoughts and behavior among children and adolescents taking the prescription antidepressants Paxil® and Paxil CR®.

The three union benefit funds objected to a number of provisions in the settlement, including an extremely burdensome, if not impossible, process to file claims for a refund of 40% Paxil expenditures. The objectors argued that this process would have unfairly favored larger health plans that have easy access to diagnosis information related to individual prescriptions. Without this information, only a 15% refund was possible. Other terms of the settlement that these funds objected to included limitations on class members’ rights to object to the settlement, opt out of it, speak at the fairness hearing, or appeal approval of the settlement.

The objectors were able to negotiate significant changes to the settlement that addressed their primary concerns regarding fairness and burdensome claims filing:

• In order to ensure that the settlement funds go first and foremost to health plans and union funds that paid for pediatric Paxil prescriptions, the revised settlement caps any cy pres award to a maximum of $1 million. Previously, any funds in the settlement that went unclaimed would be distributed a one or more organizations addressing children’s mental health issues.

  Cy pres awards are frequently granted by Courts when there are unclaimed funds left in a class action settlement. Such awards are supposed to benefit class members who did not file claims. However, the cy pres award in this settlement will not go to benefit the health plans that paid for Paxil, but rather to children’s mental health organizations. While those organizations no doubt do invaluable work, the benefit to the class members here is indirect at best.

• Class members’ claims will be calculated in two “stages.” In the first stage, class members that are able to document individual prescriptions that were for Major Depressive Disorder will get refunds of 40% for those prescriptions. All other prescriptions will be refunded at 15%. In the second stage, the remaining settlement funds (after the $1 million cy pres award) will be distributed to all class members who file claims, based on their proportions of the total Paxil purchases claimed by all class members.
• Class members will not be required to include rebates and discounts in their calculations of the net cost of each prescription. The objectors had argued that it would be impossible for many, if not most, class members to make the calculation with rebates and discounts included. This is because in most cases, manufacturers give rebates to a health for all of their purchases of all of that company’s drugs – it’s not possible to separate what rebates were for Paxil, for instance, as opposed to for another GlaxoSmithKline drug.
• Lastly, the revised settlement gets rid of the provisions that attempted to limit the rights of class members to opt out or appeal the approval of the settlement.

Because these changes addressed their most pressing concerns, the objectors withdrew their objection. The objectors and PAL thus now support the revised settlement and will argue in favor of the Court approving it at the Final Approval hearing scheduled for September 30, 2008 in the U.S. District Court in Minneapolis, Minnesota.

The objection by PAL’s members underscores the important role that PAL plays in monitoring pharmaceutical class action settlements to ensure that they adequately protect the rights of consumers and smaller third party payors, health plans and union funds. To find out more about PAL’s coalition of consumer advocates and union benefit funds, and how to join, click here.

How to file a claim for reimbursement from the settlement:
Any private insurers, employee welfare benefit plans, union health and welfare funds, employer-sponsored health plans, and other third-party payors (“TPPs”) that reimbursed, purchased, or paid for Paxil® (in both tablet and suspended form) and Paxil CR® prescribed to persons under 18 years of age, from January 1, 1998 through December 31, 2004 are eligible to submit claims forms for payment from the settlement. The deadline to submit claims for payment from the settlement is December 12, 2008.

More information about the settlement, including claims forms, can be found at www.pediatricpaxiltppsettlement.com. The objection to the settlement filed by the 3 PAL members can be found here.

Below is a press release that we here at Prescription Access Litigation (PAL) issued today. Three members of the PAL coalition filed a formal objection to a settlement proposed in the class action lawsuit, Carpenters & Joiners Welfare Fund et. al. v. SmithKline Beecham, (U.S. District Court, Minnesota, Case #04-cv-3500). Details of the settlement are at www.pediatricpaxiltppsettlement.com.

A key component of PAL’s mission is to ensure that settlements of pharmaceutical class action lawsuits genuinely benefit the consumers, health plans and union benefit funds on whose behalf they are brought. When we learn of a settlement that does not benefit them, that makes it harder for them to derive a benefit, or that undermines their rights, we work with our coalition members to object to the settlement. And that is what our members Sergeants Benevolent Association Health and Welfare Fund, AFSCME District Council 37 Health and Security Plan and IUOE Local 4 Health and Welfare Fund did yesterday. Here is the press release:

__________________

FOR IMMEDIATE RELEASE

August 1, 2008

Contact:
Wells Wilkinson
(617) 275-2869
wwilkinson@communitycatalyst.org

Labor Unions File Objection to Paxil Pediatric Class Action Settlement
Union Benefit Funds Criticize Settlement as Unfair, Call on Court to Reject it

Boston, MA – Three labor union benefit funds filed a formal objection yesterday to the proposed $40 million nationwide settlement of a class action lawsuit against GlaxoSmithKline (NYSE:GSK). The lawsuit alleged that Glaxo defrauded health plans, union benefit funds and other “third party payors” by failing to disclose the increased risk of suicidal thoughts and behavior among children and adolescents taking the prescription antidepressants Paxil® and Paxil CR®. The $40M settlement is to reimburse third party payors for payments they made to pharmacies for Paxil prescribed to children and adolescents from 1998 to 2004.

The union benefit funds objected to the settlement because the proposed claims process requires information that many health plan and benefit funds don’t have, or could only get through a burdensome, unreasonable process that would be more work than the potential claim was worth. The objectors are Sergeants Benevolent Association Health and Welfare Fund, AFSCME District Council 37 Health and Security Plan and IUOE Local 4 Health and Welfare Fund. They provide prescription drug coverage for more than 320,000 union members, retirees and their families.

Under the terms of the proposed settlement, TPPs can be reimbursed up to 40% of their costs for Paxil prescribed for Major Depressive Disorder, while all other prescriptions for Paxil for other conditions will only be reimbursed at 15%. This requires TPPs to list a diagnostic code for each and every pediatric prescription for Paxil that they paid for during the seven year period. The objectors challenged this distinction, arguing that almost no one will really get a 40% refund, because almost no TPPs have diagnostic codes for the prescriptions they pay for.

In addition, millions of prescriptions for Paxil were written during the seven years covered by the lawsuit (1998-2004), yet the settlement requires any claim for more than $1,000 in reimbursement to include exhaustive details regarding every individual prescription of Paxil paid for during that seven-year period.

The funds also objected to other requirements, including the way that TPPs are required to calculate the net cost of the payments they made, and to misleading and inaccurate statements in the settlement notice about class members’ rights to object, appear at the hearing, or appeal final approval of the settlement.

“A $40 million settlement may sound very positive, but the devil is very much in the details,” said Gina Alongi, Administrator of IUOE Local 4 Health and Welfare Fund. “The way the settlement is currently structured will prevent many health plans and union benefit funds like ours from getting any real compensation from it.”

The three union funds objecting to the settlement are all members of Prescription Access Litigation (PAL), a national coalition of more than 130 unions and consumer advocacy groups that works to challenge illegal practices by the pharmaceutical industry.

“TPPs will have to comb through mountains of medical records and bury themselves in paperwork before they ever see a penny from this settlement,” said Alex Sugerman-Brozan, director of PAL. “Class action settlements are only as good as their claims process, and this one fails at a very fundamental level.”

Last year, Prescription Access Litigation objected to an earlier Paxil class action settlement (Hoorman et. al. v. SmithKline Beecham). That $63M settlement was of a class action brought on behalf of consumers who paid for Paxil prescriptions for children and adolescents. As a result of that objection, important changes protecting consumers’ rights were made to the settlement.

A settlement of a class action must be approved by the Court where the case is brought. Because class actions affect the rights of people and entities that aren’t even aware of the lawsuit, the Court reviews settlements to make sure they are “fair, reasonable and adequate.” Members of the class may object to the settlement, and request to speak at a hearing before the Court.

The case is Carpenters and Joiners Welfare Fund et. al. v. SmithKline Beecham Corp. (U.S. District Court for Minnesota, Case #04-CV-3500). The Final Approval hearing in the case is scheduled for September 30, 2008 in the U.S. District Court in Minneapolis, Minnesota. The deadline for third party payors to submit claims for payment from the settlement is December 12, 2008. More information about the settlement, including claims forms, can be found at www.pediatricpaxiltppsettlement.com. A full copy of the funds’ objection to the settlement can be found at www.prescriptionaccess.org/docs/pediatric-paxil-objection.pdf

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About AFSCME District Council 37 Health & Security Plan
AFSCME District Council 37 Health & Security Plan is a union benefit fund that provides supplemental health and welfare benefits, including a prescription drug benefit, to over 300,000 individuals, consisting of active municipal employees, their spouses and dependants, as well as retirees, who work or worked for New York City, the New York State Court System, various authorities, cultural institutions and the NYC Health and Hospital Corporation.

About Sergeants Benevolent Association Health and Welfare Fund
Sergeants Benevolent Association Health and Welfare Fund provides supplemental health and welfare benefits, including a prescription drug benefit, to 10,000 active and retired sergeants of the New York City Police Department.

About IUOE Local 4 Health and Welfare Fund
IUOE (International Union of Operating Engineers) Local 4 Health and Welfare Fund provides a health and welfare plan, including a prescription drug benefit, to 10,000 covered members of IUOE Local 4 and their families. IUOE Local 4 represents heavy equipment operators, apprentices, mechanics, surveyors, equipment house employees, as well as waste water technician and some public sector employees in Eastern Massachusetts, Eastern New Hampshire and Maine.

About Prescription Access Litigation
Prescription Access Litigation (PAL) is a nationwide coalition of over 130 state, local, and national senior, labor and consumer health advocacy groups fighting to make prescription drugs affordable. The organizations in the PAL coalition have a combined membership of over 13 million people. PAL, a project of the national nonprofit health care advocacy group Community Catalyst, works to end illegal drug industry practices that increase the price of prescription drugs beyond the reach of the American consumer, using class action litigation and public education. PAL members have filed more than 30 lawsuits targeting such practices. News about PAL’s cases and public education efforts is published regularly on the PAL Blog.

** Breaking News: To see updated information about the cost of Treximet, see our more recent post on this topic, from October 14, 2008: Was PAL right about GSK’s Goober Grape Drug, Treximet? Yes and No. **

GlaxoSmithKline (NYSE:GSK) sells a popular brand-name prescription drug for migraines, Imitrex. 2007 U.S. sales of Imitrex were $1.12 billion, making it a “blockbuster” in drug industry parlance. A single pill of Imitrex costs about $25.

Glaxo has certainly done its part over the years to preserve its market share on drugs with expiring patents and to prevent consumers from having access to more affordable generic versions, as alleged in several lawsuits that we here at PAL have been involved in (see Relafen and Augmentin, for example).

Well, $1.12 billion in annual sales is too good to just give up, right? Even if Imitrex’s patent is expiring next February? Not surprisingly, then, Glaxo has done a number of things to keep a generic version of Imitrex (sumatriptan) off the pharmacy shelves:

• Later this year, Glaxo will begin selling an “authorized generic” version of Imitrex. Authorized generics really should be called “fake” generics, because they’re most often not generics at all, but the company’s own pill technically sold by a different company, under a license. In this case, the shill licensee is Dr. Reddy’s, a generic drug company that originally challenged Glaxo’s Imitrex patent and then settled when Glaxo sued them for patent infringement.
• Also later this year (December 2008), Ranbaxy, another generic drug maker, will also begin selling a generic version of Imitrex. Again, this stems from a settlement between Glaxo and the generic maker.

Great, right? Two generic versions of Imitrex will be available by the end of the year! Huzzah! A victory for patients, right?

Not so fast! You don’t think Glaxo is going to let its billion dollar baby leave home so easily, do you?

Introducing GSK’s Treximet! Treximet was just approved by the FDA for acute treatment of migraines in adults.

Is Treximet a fabulous new breakthrough treatment for migraines?

Umm… No.

It is a combination of Imitrex (soon to be available as a generic) and naproxen sodium (commonly known as Aleve, available Over the Counter).

So Treximet is a combination of (a) a soon to be generic drug and (b) an Over the Counter drug. Yet you can be sure that Treximet’s price will be similar to what Imitrex costs right now ($25 a pill) and there’s a good chance it will be more expensive, as new drugs typically are ($30 a pill? More? Who knows?).

How much would it cost a patient to take these 2 drugs separately?

• Naproxen sodium can be had for about 8 cents a pill. A single Aleve pill has 220 mg of naproxen sodium. There’s 500 mg of naproxen sodium in Treximet, so a patient would have to take about 2 1/4 Aleve pills to get to 500 mg. Since you can’t really take 1/4 of a pill, let’s assume most patients would take 2. 2 pills would give you 440 mg, so that’s pretty close to the 500 mg. Cost: 16 cents.
• We don’t yet know how much generic Imitrex will cost. But the price of a generic typically drops to about 30% of the brand-name’s price within 6 months of the drug’s patent expiring and more generic companies introducing their own versions. So it’s safe to assume that generix Imitrex will cost about $7.50 by middle of 2009. (Even before then, the price of generic Imitrex will begin dropping from the current price of $25 a pill.) Cost: $7.50

So, by spending $7.50 on generic Imitrex and 16 cents on over-the-counter Aleve, you can get the same thing you’d get in a Treximet — which is very likely to cost $25 or more. Why would you bother with the Treximet? I guess it’s fewer pills to take, but is that worth at least $18 in additional cost?

Interesting, Glaxo apparent didn’t even try to compare Treximet to a standalone-combination of Imitrex and naproxen sodium. Their press release on the FDA approval says:

“Treximet provided more patients migraine pain relief at two and four hours compared to sumatriptan 85 mg, naproxen sodium 500 mg or placebo alone.”

In other words, Treximet worked better than just Imitrex, or just naproxen sodium, or nothing at all. This is kind of like saying that a chocolate cake tastes better than eating the ingredients separately (a bowl of flour, a few eggs, some chocolate) or eating nothing at all.

Here’s some other things I think you can safely gaze into the crystal ball to see:

• Glaxo’s pharmaceutical salespeople will descend on doctors’ offices like ants at a picnic and aggressively pitch Treximet to doctors of all kinds (neurologists, headache specialists, internists and family physicians).
• TV ads will appear in prime time singing the praises of this “new” treatment for migraines. People frolicking through fields of flowers may or may not appear.

Is this the kind of “breakthrough treatment” than PhRMA is always arguing justifies the high cost of prescription drugs?

This type of putting “old wine in new flasks” is straight from Big Pharma’s tired playbook. Instead of engaging in the harder, more long-term process of discovering genuinely new medications, drug companies instead “tweak” existing blockbuster drugs in the most minor of ways, including:

• Combining two existing drugs, such as was done with Vytorin (made up of Zocor, which had gone generic, and Zetia)
• Making a “extended release” version (once a day, once a month, etc)
• Making a “new” version that’s just a chemical tweak of the original but not any better (as Nexium is of the now-generic and over-the-counter Prilosec)

Conclusion: Migraine sufferers, don’t be suckered by Glaxo’s poorly-concealed bait and switch. And go read Consumer Reports Best Buy Drugs report on migraine medications.

Last week, we here at PAL joined 11 other consumer and public interest organizations in filing a amicus curiae (“friend of the Court”) brief in the case of Tafas / GSK v. Dudas et al. Details are below. PAL believes that manipulation of the patent process by pharmaceutical companies has a detrimental effect on consumers’ access to prescription drugs. The brief was written by the Public Patent Foundation, a member of the PAL coalition.

Press release issued by Public Patent Foundation:

Consumer and Public Interest Groups Back New U.S. Patent Rules That Would Curtail Abusive Behavior By Applicants

ALEXANDRIA, VA – December 20, 2007 – A coalition of consumer advocacy and public interest groups today filed legal papers supporting new U.S. Patent Office (USPTO) rules that would curtail abusive behavior by patent applicants and improve patent quality.

In a friend-of-the-court brief filed in U.S. District Court in Alexandria, VA., the groups urged that an injunction blocking the proposed rules be lifted and they be implemented immediately.

The proposed new regulations ask applicants to justify the need for more than two continuations per application and to assist the USPTO in performing initial technological research on applications that contain an excessive number of claims.

The groups joining in filing the Public Interest Amici brief are: The Public Patent Foundation (“PUBPAT”), Computer & Communications Industry Association (“CCIA”), AARP, Consumer Federation of America (“CFA”), Essential Action, Foundation for Taxpayer and Consumer Rights (“FTCR”), Initiative for Medicines, Access & Knowledge (“I-MAK”), Knowledge Ecology International (“KEI”), Prescription Access Litigation (“PAL”), Public Knowledge (“PK”), Research on Innovation (“ROI”), and Software Freedom Law Center (“SFLC”).

“The public interest overwhelmingly supports the USPTO’s Final Rules for at least two significant reasons,” the brief said. “First, they will enable the USPTO to curtail abuses of the patent application process made by those patent applicants who seek to pervert the system to gain an unfair advantage. Second, the Final Rules will help the USPTO
improve patent quality, which is a critical issue for ensuring the patent system benefits the American public.”

The new rules were to have been implemented by the patent office on Nov. 1, but were blocked by suits brought by drug maker GlaxoSmithKline and inventor Triantafyllos Tafas.

Under current rules which allow unlimited continuations, USPTO examiners who have repeatedly rejected an application often face an endless stream of continuation applications that “may well succeed in ‘wearing down the examiner’, so that the applicant obtains a broad patent not because he deserves one, but because the examiner has neither the incentive nor will to hold out any longer,” according to professor Mark A. Lemley of Stanford Law School and Kimberly A. Moore, now a Circuit Judge on the U.S. Court of Appeals for the Federal Circuit.

Pharmaceutical companies are most likely to use continuations in order to help them keep monopolies over their drugs. According to the publication Nature Biotechnology, from 1995 to 1999, 41% of drug patents issued were based on continuations. In contrast only 22% of the patents issued in mechanical engineering were based on continuations.

The consumer and public interest groups’ brief said the new rules would:

– Curtail abuse of continuation applications and unlimited claiming,
– Help the USPTO improve patent quality, and
– Increase patent office efficiency.

The legal papers, available below, also noted that while briefs filed opposing the new rules claimed they were acting in the “public interest”, in fact they represented the narrow interests of patent holders and patent attorneys.

“Congress has intentionally implemented a patent system that balances the incentives provided to patentees with the benefit to the public of the disclosure and ultimate dedication of the resulting inventions to society,” the consumer groups said. “Thus, the public interest lies in an efficiently functioning patent system, not one that is subject to abuse and manipulation.”

The consumer and public interest groups said that despite having various missions and activities, they are united in their belief that patent law and policy should be crafted to ensure that it benefits the public interest. They “firmly believe that the Final Rules would significantly advance both the general public interest and the specific aspects of the public interest that they each separately exist to represent. Thus, the Public Interest Amici have united in this brief to express a single voice in support of the Final Rules.”

Papers Filed By Public Interest Amici Curiae, Public Patent Foundation et al., in Tafas / GSK v. Dudas et al.

• Brief for Amici Curiae Public Patent Foundation et al. in Tafas / GSK v. Dudas et al. (PDF; 521KB)
• Motion for Leave to File Brief for Amici Curiae Public Patent Foundation et al. in Tafas / GSK v. Dudas et al. (PDF; 469KB)
• Memorandum in Support of Motion for Leave to File Brief for Amici Curiae Public Patent Foundation et al. in Tafas / GSK v. Dudas et al. (PDF; 472KB)