PAL extends and enthusiastic welcome to Voluntary Hospitals House Staff Benefits Plan (VHHSBP), Committee of Interns and Residents (CIR), SEIU Healthcare to our Coalition. Voluntary Hospitals House Staff Benefits Plan, is a union health and welfare fund that provides medical and prescription benefits to approximately 8,000 members (and their families) of the Committee of Interns and Residents who work in a group of hospitals in the New York City area. CIR is the largest housestaff union in the country, representing more than 13,000 residents in California, Florida, Massachusetts, New Jersey, New Mexico, New York, Washington, D.C., and Puerto Rico. CIR contracts improve housestaff salaries and working conditions as well as enhance the quality of patient care. CIR was founded in 1957. In May, 1997, CIR affiliated with the Service Employees International Union (SEIU), which now has 2 million members and over 1 million healthcare workers all over the country.
The Prescription Access Litigation coalition has more than 130 organizational members that represent over 13 million individuals. The coalition includes consumer advocacy organizations, senior citizen groups, health care advocacy groups, labor unions, union benefit funds, nonprofit health plans, and others. PAL coalition members join class action lawsuits, help get the word out about new lawsuits and settlements, and participate in advocacy campaigns to curtail runaway drug marketing and unethical drug pricing. If your organization is interested in joining the PAL coalition, learn more here.
As we reported last month in “Unions in PAL Coalition win $350 Million settlement in McKesson class action,” PAL coalition members AFSCME District Council 37 Health and Security Plan and New England Carpenters Benefits Fund were among the plaintiffs who helped achieve the historic settlement with McKesson.
The good folks at AFSCME DC 37 have their own newspaper, Public Employee Press, which goes to several hundred thousand DC 37 members and others in New York City. In the December 2008 issue, PEP, as it’s known, ran an article on the McKesson settlement. DC 37′s cartoonist has a knack for boiling down hundreds of pages into a single image.
Here are the two cartoons that accompanied the article about the McKesson settlement.
The first summarizes the case against McKesson, showing McKesson as a giant pill holding up consumers, with a “gun” labelled Rx. Note: While the bag of money says “$350 million,” the case alleged that the monetary damages of consumers and health plans were much higher. $350 million represents what McKesson is willing to pay to settle.
The second shows the DC 37 “cop on the beat” taking the McKesson pill into custody.
Here’s the full text of the article that ran in PEP about the case:
The McKesson Corp. has agreed to pay $350 million to settle a lawsuit brought by DC 37 and others who charged the drug wholesaler with illegally inflating the price of members’ medications.
In November, McKesson agreed to settle the case, which accused the firm of fixing prices in 2001 and 2002. The proceeds — including millions of dollars in damages for the DC 37 Health and Security Plan — will go to health plans and consumers.
In the 2006 suit, the DC 37 plan and a group of plaintiffs charged that McKesson conspired to fraudulently inflate the prices of more than 400 prescription drugs by manipulating price information published by First DataBank. The suit was filed under the Racketeer Influenced and Corrupt Organizations Act (RICO) and the settlement is one of the largest of its type.
“DC 37 is fighting a huge battle to provide quality prescription drug coverage for our members,” said DC 37 Executive Director Lillian Roberts. “It doesn’t help when those in the industry make it more difficult by rigging the system.”
First DataBank settled quickly, but McKesson, whose annual revenues top $500 billion, refused to settle until now.
McKesson was charged with creating the price-fixing scheme to benefit key retail clients who might otherwise have purchased wholesale prescriptions from its competitors. The lawsuits charged that the McKesson/First DataBank scheme raised the markup on hundreds of brand-name drugs from 20 percent to 25 percent.
DC 37 and three other union members of Prescription Access Litigation, a nationwide coalition of more than 120 senior, labor and consumer health advocacy groups that is fighting to make prescription drugs more affordable, participated in the lawsuit.
DC 37 Health and Security Plan Administrator Cynthia Chin-Marshall said the plan expects compensation in the settlement “for the millions of dollars in inflated prices we’ve been forced to pay.”
“Hopefully we have taught the drug industry a lesson and they will refrain from fixing prices in the future,” said Audrey A. Browne, the plan’s director of regulatory compliance.
These two union health and welfare funds first filed a class action lawsuit, with other union funds and individual consumers, back in June 2005 and February 2006, alleging that First Databank and McKesson had carried out an illegal scheme from 2002 to 2005 to raise the price of prescription drugs.
The lawsuits claimed that in 2002, McKesson and First Databank began arbitrarily raising the “WAC-to-AWP spread” to 25% for over 400 brand-name drugs. Those drugs previously had only 20% WAC-to-AWP spread. To learn more about the allegations, and what the heck WAC & AWP are, read our page about the case here.
The case against First Databank settled back on October 6, 2006, an event which was covered on the front page of the Wall Street Journal. That settlement has been amended several times, and is still awaiting approval by the Judge in the case.
However, for the past two years, the case against McKesson has been proceeding. Until last month, McKesson publicly expressed an unwillingness to settle the case and seemed ready to go to trial. In fact, the trial was scheduled to begin on December 1. But on November 21, the plaintiffs’ counsel in the case and McKesson each issued statements announcing the settlement.
McKesson agreed to pay $350 Million to settle the case, and took an additional charge of $143 million for “outstanding and expected future AWP-related claims by public entities.” (Earlier this year, the state of Connecticut and the city of San Francisco each filed lawsuits against McKesson. It’s likely that other cities and states would have followed suit, no pun intended.)
There are two notable things about the settlement:
1. The Size: As far as we are aware, this is the largest settlement to date of a private class action lawsuit concerning pharmaceutical pricing. The next largest is probably the $150 million settlement of In re Lupron® Marketing and Sales Practices Litigation. In the case of In re Pharmaceutical Industry Average Wholesale Price Litigation, there have four settlements, totalling $232 million, but those settlements have involved more than a dozen defendants.
2. The Role of Unions: Four out of the five organizations that were plaintiffs in the case are Health & Welfare benefit funds affiliated with labor unions. Unions and their health & welfare funds have been very active in drug price and marketing lawsuits since the beginning. This is not surprising, given that union benefit funds feel the effects of drug pricing so directly. Unlike for-profit commercial insurers, union benefit funds can’t just “pass on” the increased cost of drugs to their members through increased premiums. As entities created “by, for and of” the individual members of their unions, they are answerable to those members. They are funded by the union dues of their members, and they are run not by board of directors populated by outsiders, but by boards of trustees composed of union members and staff and employer representatives.
In addition, unions generally are concerned about the rising costs of health care and are often very involved in efforts to increase access to health care, reform the health care system, and rein in costs. So being involved in such cases is a natural extension of the labor movement’s commitment to increasing and improving health care. (The U.S.’s employer-based health insurance system in fact has its roots in union benefits in the 40s and 50s).
A class action lawsuit, at its core, shares certain similarities with the role of labor unions generally. In both, the power of a single individual (either a consumer or an employee, respectively) to protect their rights against a much larger, wealthier entity (a pharmaceutical defendant, or an employer) is severely limited. Only by combining their numbers (in a class action or a union, respectively), can a large but dispersed group of otherwise-lone individuals protect their rights and challenge illegal behavior.
The Court held a hearing on the settlement on December 11, 2008 to consider whether the settlement should receive “”preliminary approval.” This would allow notices to be published and sent to class members, letting them know that a settlement has been reached and may be approved by the Court. This triggers a period during which members of the class can file a claim form, and/or object to the terms of the settlement.
Steve Berman, lead plaintiffs counsel in the case, gave a number of reasons in his presentation to the Court why the settlement is fair, reasonable and adequate. He pointed to the fact that the settlement is the 3rd largest settlement ever of a RICO (Racketeer Influenced and Corrupt Organizations) Act case and possibly the largest drug fraud settlement ever. He said that the $493 million that McKesson has set aside for the settlement (and future settlements with public entities) represents 45% of McKesson’s total cash reserves. Speedy settlement, he argued, is in the interests of the class, particularly cash-paying consumers, given the state of the economy.
There are a number of innovative mechanisms proposed to ensure that settlement proceeds actually reach consumers in the classes. Large chain pharmacies would receive subpoenas to produce information about uninsured consumers who purchased the drugs at issue in the lawsuit. This information would be used to calculate payments for and issue checks directly to those consumers, without them needing to fill out a form and provide any documentation of their purchases. A group of large commercial health plans that are active in the case have agreed to collect data to calculate payments for and issue checks to consumers with insurance who paid for drugs at issue in the case and who would be eligible for such payments (this includes any consumers who had a percentage co-payment, rather than a fixed copayment, e.g. someone who paid 20% of the cost of a drug, and had 80% paid by their insurance, would be eligible for a payment from the settlement).
The settlement is very early in the stages it needs to go through before it is finally approved. But the fact that a settlement was reached is a very good development for consumers and health plans, and hopefully will serve to put other entities in the pharmaceutical marketplace on notice that fraud such as that alleged in this will not go unchallenged.
To learn more about the case against both First Databank, Medispan and McKesson see our page on the cases.
As we reported back in August, (Abbott and plaintiffs agree to proposed Norvir settlement), Abbott Laboratories (NYSE:ABT) and plaintiffs who brought a nationwide class action challenging Abbott’s 400% price increase on its HIV/AIDS drug Norvir agreed to a settlement of between $10 million and $27.5 million. Under the settlement, the amount that Abbott would have to pay would depend on whether the Ninth Circuit Court of Appeals accepts an appeal of certain key issues in the case, and how that Court ultimately rules on those questions. For a full description of the different scenarios, and amounts that Abbott would have to pay, see the earlier post here.
Yesterday, the Ninth Circuit Court of Appeals issued an order accepting the appeal. This allows the settlement process to move forward, although how much Abbott will have to pay will remain up in the air until the Ninth Circuit issues its actual decision on the appeal.
The Council is the umbrella organization of union retirees clubs and local unions with retirees throughout Minnesota. It provides retired union members and spouses official representation within the Minnesota AFL-CIO, and enables retired trade unionists to speak with a unified voice on public policy issues. The Council publishes a bimonthly newsletter, the Gopher Retiree, and produces a local cable television show, Voices of Experience.
The Prescription Access Litigation coalition has more than 130 organizational members that represent over 13 million individuals. The coalition includes consumer advocacy organizations, senior citizen groups, health care advocacy groups, labor unions, union benefit funds, nonprofit health plans, and others. PAL coalition members join class action lawsuits, help get the word out about new lawsuits and settlements, and participate in advocacy campaigns to curtail runaway drug marketing and unethical drug pricing. If your organization is interested in joining the PAL coalition, learn more here.
It’s being widely reported this morning (See, for example, the WSJ article here and the AP article here) that Pfizer (NYSE:PFE) has agreed to settle the bulk of the lawsuits against it related to the increased risk of heart attacks and strokes from the painkillers Celebrex and Bextra.
The $894 Million settlement includes $745 million to settle 90% of the personal injury suits brought by patients who were allegedly physically injured by the drugs, $60 million to resolve primarily Bextra suits brought by Attorneys General in 33 states and the District of Columbia, and $89 million to settle suits brought by consumers and “third party payors” who alleged that they defrauded by Pfizer’s marketing and failure to disclose the risks of the drugs into paying for them when they otherwise would not have.
Even after the increased risks of Celebrex, Vioxx and Bextra became common knowledge, Pfizer kept Celebrex on the market, and even resumed TV ads for it, running an unusually long ad which extensively described the drug’s risks, but sought to downplay the risks by claiming that all NSAIDS (the class of drugs Celebrex is in) carry the same risks. Here is the ad:
At the time of this entry, no further details about the settlement were available, and the settlement itself had apparently not been filed in Court (Pfizer’s press release described the settlement as “Agreements in Principle”)
Prescription Access Litigation’s parent organization, Community Catalyst, launched a new program this summer in conjunction with the Alosa Foundation called Generics are Powerful Medicine. Generics are Powerful Medicine (GPM) is a national project to educate consumers about the safety, value and effectiveness of generic drugs. In 11 states, community organizations partnering with GPM are actively conducting outreach to low-income and uninsured populations to provide information and education on generic drugs.
GPM just announced the launch of its website today, genericsarepowerful.org. The site features
All of GPM’s consumer education materials about generic drugs, in both English and Spanish.
GPM’s 8-minute consumer video on generics (see below)
A tool to look up 100 of the most common brand-name drugs, to find their generic equivalent
Here’s GPM’s video, featuring Dr. Jerry Avorn, a pharmacist and three consumers talking about how generic drugs have enabled them to afford their medications:
The site also allows visitors to see if their drug is available as a generic and to connect to various pharmacies offering discounted generics.
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Recently, the FDA requested comments on direct-to-consumer (“DTC”) advertising, and its effects upon subsets of the general population, such as the elderly, children, and racial and ethnic minority communities.
PAL and our sister organization, the Prescription Project (www.prescriptionproject.org ) weighed in on the relationship between DTC advertising and the risks and costs of prescription drugs. Our assessment overall was that
“direct-to-consumer advertising produces no proven public health benefits and likely plays a role in driving unnecessary use of pharmaceuticals. Manufacturer-sponsored television advertisements, in particular, are ill-suited to effective communication of risk-benefit information about prescription drugs. Elderly consumers, the less-educated and those with English as a second language may be at particular risk for misunderstanding the potential risks and benefits associated with advertised drugs.”
First, we noted that there is evidence that DTC ads prompt people to discuss advertised conditions and treatments with their doctors – in short, DTC ads work. Why else would the drug companies spend increasing billions each year on drug ads. But, more importantly, we point out that there is no evidence that what ‘works’ to sell drugs is of any benefit for patients. To the contrary, there is abundant evidence of the harm and cost of DTC advertising to consumers.
Populations at risk.
Drug companies tend to focus their advertising on new drugs, with the hopes of finding the next billion-dollar block-buster. When successful, ads drive a rapid increase in prescribing that can expose a large number of the public to the health risks and previously-unknown side effects associated with the new drug. (Clinical trials of new drugs that drug companies run as part of getting FDA approval usually involve only a few thousand participants for a short time, usually less than two years. Therefore side effects that are rare, or that emerge only after patients have used a drug for a longer period of time, may only become obvious once the drug is on the market for a while and being taken by millions of people.)
Vioxx: The Poster Child for Drug Usage Driven by Advertisements
Developed as a daily-use pain reliever, Vioxx was no more effective than ibuprofen (Advil) or naproxen (Aleve). Its only established improvement over these older, time-tested (and much cheaper!) medicines was a decreased risk of stomach bleeding and ulcers. However, no more than 2-4% of patients are at risk for developing these stomach problems. As a result of the substantial DTC advertising and other aggressive promotion, Vioxx use soared from 1999 until its recall on September 30, 2004. Our comment notes that the rapid explosion of Vioxx use, made possible in part by DTC advertising, was
“responsible for an estimated 88,000 to 140,000 cases of serious coronary heart disease and an estimated 38,000 to 61,000 deaths in the USA.”
Even without these risks, DTC advertising drives up health care costs. DTC advertising promotes medically unnecessary prescribing that offers “little or no meaningful clinical benefit for many patients….” This is true of cholesterol lowering agents, allergy medications, antidepressants, and many other types of heavily advertised drugs.
For instance, we noted one study in which actors went to doctors offices posing as patients, and specifically asked for Paxil after supposedly seeing an ad. Doctors wrote prescriptions for Paxil in very high percentages even when the purported condition was one for which there was little evidence (minor depression), or even no evidence (social adjustment disorder) that Paxil was an effective treatment. This illustrates how DTC advertising helps fuel medically inappropriate use.
Debunking drug industry propaganda that DTC advertising promotes public health
In our comments, we took the opportunity to review the many other submissions to the FDA by drug companies which claimed that DTC advertising promotes public health. We noted that most of their purported ‘proof’ were ‘opinion surveys’ of how doctors or patients felt ads helped lead to needed diagnoses or treatment. Only one cited study looked at how often ads lead a patient to seek diagnosis. But we noted that there were no studies proving that DTC ads actually lead to objectively measured, medically necessary and appropriate care.
DTC advertising is not balanced
Under federal regulations, promotional materials for prescription drugs must achieve a ‘fair balance’ between showing the benefits of a drug, and its risks. Also, promotional materials must provide adequate warning of the possible risks or adverse side effects.
The heart of the problem with direct to consumer advertising is that it does not achieve this ‘fair balance.’ DTC ads have been shown to focus more on the benefits, and to downplay or undermine the viewer’s understanding of risks. As a result, one study found that patients can accurately describe the benefits of drugs 80% of the time, but can only understand the risks 20% of the time. This is because drug ads spend more time describing a drug’s benefits, using easier language, with frequent repetition. In contrast, drug risks are often presented more quickly, in more difficult language, with other audio and visual distractions.
Our conclusion
We recommend that FDA closely examine whether DTC ads can or do achieve a ‘fair balance’ between benefits and risks, given the ads representation of, and the public’s perceptions of, these risks. In addition,
“it must be remembered that DTC advertising drives attention to conditions chosen for their return on investment, not their importance in improving the public health.”
PAL’s and Prescription Project’s comments are here.
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