Life Science Compliance Update

February 27, 2018

Watson Pharmaceuticals – Now Part of Teva – to Pay $33 Million to Mississippi


On January 29, 2018, Mississippi Attorney General Jim Hood announced a $33 million settlement with pharmaceutical manufacturer, Watson, Inc., which is now part of Teva Pharmaceuticals.

AG Hood had hired attorneys to sue Watson in a series of suits claiming the company wrongly inflated prescription drug prices paid by the state-federal Medicaid health insurance program.

The State’s Supreme Court upheld a trial court decision that found Watson defrauded the taxpayers of Mississippi by an estimated $7 million when reporting its Average Wholesale Prices. Inflated prices varied from drug to drug, in some cases as much as 1,000 percent. As a result of this fraud, the trial court awarded the state statutory and punitive damages for a total of $33,408,546.72. The Watson case was one of dozens brought against other drug companies that also inflated drug prices causing Mississippi Medicaid to pay too much for prescription drugs.

According to AG Hood, “Of all the companies we have done battle with, Watson Pharmaceuticals is one of the worst offenders. The trial court found they overcharged the state by 1,000 percent on some drugs. A chancery judge in Rankin County issued a $20 million punitive damage verdict, which was upheld by the Mississippi Supreme Court. These types of corporate robbers get away with it unless an attorney general holds them accountable.”

Hood is now using this settlement to disparage current legislative proposals that would limit his power to sue. Mississippi House Bill 1238, recently passed by the House, would bar him from suing under the state’s consumer protection law if the practices are permitted by other Mississippi or federal regulators.

In his press release announcing the settlement, AG Hood also released a statement,

“Should HB 1238 pass, it would be devastating to the protection of Mississippians,” said General Hood. “Much of the successes in our office have been protecting consumers from corporate wrongdoers, and the people of Mississippi deserve more than their lawmakers stripping those protections.”

According to local reports, it is unclear whether the measure will survive in the Senate.

The total settlement is $33,408,546.72, of which $8,143,572.49 are compensatory damages to the Medicaid unit of Mississippi, $5,241,000.00 are civil penalties, and $20,023,974.23 are punitive damages.  

February 19, 2018

Trump Administration Releases Budget Proposal Calls for Changes to Open Payments and Increased Funding for Fighting Fraud and Abuse


The Trump Administration recently released its fiscal year (FY) 2019 budget proposal, including extensive health policy provisions.

The budget proposal features numerous program integrity provisions. For instance, the budget calls for: a $45 million increase in Health Care Fraud and Abuse Control funding; expanded prior authorization requirements for high utilization practitioners of radiation therapy, therapy services, advanced imaging, and anatomic pathology services; expansion of the items of DME, prosthetics and orthotics that are subject to prior authorization; a demonstration to test the use of a benefits manager for serial/refill DME claims; a requirement that clearinghouses and billing agents enroll in Medicare; and the addition of the National Provider Identifier of covered recipients on the public Open Payments website.

The budget proposal also snuck in some proposed changes to Open Payments, including altering the Open Payments reporting and publication cycle, and publishing the National Provider Identifier for covered recipients in the Open Payments Program, as ways to address fraud and abuse in Medicare.  

The budget also includes proposals to streamline Medicare program rules for providers and suppliers, including: relaxing Medicare meaningful use program requirements for hospitals and physicians, simplifying Merit-based Incentive Payment System (MIPS) rules and Advanced Alternative Payment Model (APM) bonus rules for physicians, and various reforms to the Medicare appeals process.

The budget also proposes a new exception to the physician self-referral law for arrangements that arise due to participation in Advanced APMs. Furthermore, several provisions are intended to boost accountable care organizations (ACOs), including a proposal to allow ACOs to pay beneficiaries for a primary care visit.

Trump continues to attempt a “repeal and replace” method to the Affordable Care Act (ACA). This year’s budget calls for a “Market-Based Health Care Grant Program” (similar to the pending Graham-Cassidy-Heller-Johnson legislation) as an initial step to help states stabilize their insurance markets during a transition period. The second step would then repeal the ACA’s Medicaid expansion and significantly restructure Medicaid by allowing states to choose between a per capita cap or a block grant.

Another area of emphasis in this year’s budget proposal is reducing prescription drug prices, although there is debate regarding the potential effectiveness of the Administration’s approach. Among other things, the budget would:

  • “Modernize” the Medicare Part D benefit by requiring Part D sponsors to apply at least one-third of total rebates and price concessions at the point of sale and eliminating cost sharing for generic drugs for low-income, among others.
  • Establish new standards for hospitals to receive redistributed savings resulting from reduced payment for outpatient drugs purchased through the 340B discount drug program, based on the hospital’s level of uncompensated care.
  • Reduce Medicaid drug spending by establishing a Medicaid demonstration to test coverage and financing reforms that build on private sector best practices,  requiring state Medicaid to cover all FDA-approved Medication Assisted Treatments for opioid use disorder, and establishing minimum standards for Medicaid drug utilization review programs.

This budget proposal is separate from the two-year budget deal passed by Congress in early February, which is complicating efforts made by the White House to reorder federal priorities.

February 01, 2018

State of the Union De-Briefing


President Donald Trump gave his second State of the Union address this week, and while reactions to his speech were mixed, he mentioned several items of importance to the healthcare space.

Affordable Care Act

First, he noted the repeal of the individual mandate found in the Affordable Care Act, by noting, “We eliminated an especially cruel tax that fell mostly on Americans making less than $50,000 a year -- forcing them to pay tremendous penalties simply because they could not afford government-ordered health plans. We repealed the core of disastrous Obamacare -- the individual mandate is now gone.”

Interestingly to some of his most ardent fans, however, the President did not call for the repeal of the Affordable Care Act in its entirety. Therefore, it seems as though his focus on the ACA will be muted with respect to the rest of the ACA that is still in place, including the Medicaid expansion and other reforms.

Right to Try

President Trump also noted his belief in right to try laws, stating, “We also believe that patients with terminal conditions should have access to experimental treatments that could potentially save their lives. People who are terminally ill should not have to go from country to country to seek a cure -- I want to give them a chance right here at home. It is time for the Congress to give these wonderful Americans the ‘right to try.’”

Vice President Mike Pence has long held Right to Try as a priority of his, and Trump’s call on Congress to pass legislation comes amid stalled House legislation, which easily passed the Senate in August.

More than half of the states have laws that already exist to allow some patients access to experimental treatments and the Food and Drug Administration also hash a pathway that grants expedited access to treatment to patients with terminal illnesses; however, FDA Commissioner Scott Gottlieb has been reluctant to expand much past that.

Opioid Abuse

Many Senators and Congresspeople wore purple ribbons in an attempt to highlight the opioid crisis. President Trump addressed this hot-button issue as well, saying, “In 2016, we lost 64,000 Americans to drug overdoses: 174 deaths per day. Seven per hour. We must get much tougher on drug dealers and pushers if we are going to succeed in stopping this scourge. My Administration is committed to fighting the drug epidemic and helping get treatment for those in need.”

As we have previously written, President Trump has always placed a priority on resolving opioid abuse, including creating a Task Force to review the situation and craft a plan of action. However, he has yet to propose new funding to help states respond (one of the suggestions we often hear from Democrats).

Newly appointed Health and Human Services Alex Azar recently highlighted the administration’s five-point strategy, including (1) encompassing better treatment, prevention, and recovery services; (2) better targeting of overdose-reversing drugs; (3) better data on the epidemic; (4) better research on pain and addiction, and (5) better pain management. Funding for treatment will continue to be central to the debate, and it remains to be seen whether Congress will provide the boost that many public health advocates have been calling for.  

Drug Pricing

Prescription drug prices were a hot topic in the 2016 Presidential election and were, naturally, mentioned during the State of the Union as well. President Trump stated, “To speed access to breakthrough cures and affordable generic drugs, last year the FDA approved more new and generic drugs and medical devices than ever before in our history... One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my Administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down.”

Given the political climate, little action has been seen on this front while excessive rhetoric continues to be the modus operandi of the political class.


Overall, there were statements by the President that earned cheers and some jeers from both sides of the political aisle. While lip service can be effective in providing a motivating speech, we will have to wait to see what changes are actually effectuated in the future.



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