Life Science Compliance Update

August 26, 2015

New Report Looks At Intersection of "Medical Lending" and Pelvic Mesh Lawsuits


A recent article in Reuters shed an interesting and potentially disturbing light on the “medical lending” industry, which operates in some cases by funding surgeries for patients involved in litigation over allegedly defective medical devices. The article focused on pelvic mesh lawsuits against device companies—one of the biggest sources of personal injury litigation in the country. Financers here will “invest” in operations to remove implants from women suing the device makers, and “reap an inflated share of the payouts when cases settle,” according to the report.

The way this works, in short, is that medical funders, often through a middleman representative or attorney, contact surgeons to perform operations to remove pelvic mesh implants in patients involved in the tort litigation. The funder might offer surgeons a guaranteed $2,500 per procedure (in the Reuters example), which might be similar or slightly higher than the discounted rates insurers might pay for the procedure. The funders then wait for the patient's legal case to settle and place liens against those settlements for the full, non-discounted costs of the surgeries. Reuters reports that medical lenders have asked patients to pay as much as $62,000 for the removal surgery. The standard insurance reimbursement rate is between $2,000 and $7,000, according to the article.

And there are arguments in support of this arrangement. The surgically inserted mesh devices, while intended to treat urinary incontinence and pelvic organ prolapsed, have been linked to problems such as chronic infection, associated pain, and even death. Thus, medical funders and certain surgeons believe the financial arrangement is a valuable service, offering patients corrective surgeries they otherwise might not be able to afford. The inflated, non-discounted, costs are a fair transaction, argue the lenders, due to the risks they take on by paying for the surgeries despite an uncertain settlement future. “By guaranteeing surgeons revenue…[medical lenders] give patients access to good doctors who don't want to wait years for bills to be paid from settlement proceeds,” adds the Reuters article.

However, the most disturbing allegations in the Reuters article relate to the influence medical lenders may have on the settlement from which they will ultimately, they hope, be paid from. The article reveals that lenders or their agents may recruit doctors willing to overstate injuries or may manipulate what doctors are documenting about their patients. For example, one surgeon profiled in the story suggested the he was urged to include "key phrases in the operative report,” for the best result in federal court. These would include phrases like “defective mesh” and “mesh erosions.” 

Additionally, some argue that funders promote potentially unnecessary surgery. Patients who undergo surgery "typically receive larger settlements than plaintiffs who don't have devices removed or replaced," according to the Reuters article. For example, while almost half the mesh plaintiffs who received implants to treat incontinence did not have surgery to remove or repair the devices, their suits account for just 10% of the estimated value of the litigation. Based on the Reuters investigation, "at least several hundred women with claims against mesh makers appear to have used medical lenders to fund surgery to remove their implants."

Underscoring the magnitude of these settlements, Modern Healthcare outlined the recent payouts related to mesh litigation:

Boston Scientific agreed in April to pay $119 million to settle nearly 3,000 cases and claims over its transvaginal surgical mesh products though the company did not admit to wrongdoing. In May, a jury ordered Boston Scientific to pay $100 million to a woman who still had pieces of the mesh embedded inside her despite two surgeries. Last year, Endo International agreed to pay an $830 million settlement over the mesh but it also did not admit liability or fault, according to the Reuters.

The full Reuters report goes into detail about one patient's experience with a medical lending arrangement here, but the article suggests wider issues that will be important for the life sciences industry to follow. 

August 24, 2015

Purdue Pharma Settles With New York AG Over Oxycontin Promotion; Agrees To Long List of Requirements To Ensure “Responsible and Transparent Marketing”



New York’s Attorney General recently announced an agreement with Purdue Pharma, the manufacturer of OxyContin, that holds the company to a long list of requirements aimed at stemming the recent increase in opioid addiction and opioid-related deaths. The settlement resolves an investigation launched in December 2013 where the government found Purdue may have “failed to take the necessary steps” to ensure their sales reps properly flagged prescribers who may abuse or divert the medication. Further, the settlement resolves the government’s investigation into Purdue’s unbranded pain advocacy website. While “the site creates the impression that it is neutral and unbiased,” notes the government, it failed to disclose that a number of the healthcare providers providing testimonials had financial relationships with Purdue.  

In addition to a fine of $75,000, the settlement requires Purdue to modify its business practices in a number of significant ways. First, it adds to Purdue’s pre-existing “Abuse and Diversion Detection” (ADD) program. Under the ADD program, if a Purdue sales rep learns of or observes any of a variety of activities that suggest an HCP (or his or her patients) may be involved in the abuse and diversion of opioids, the rep must report it to Purdue. The company may then add those HCPs to a “No Call List.” (See page 4 of the settlement for the list of potentially suspicious behavior, which includes “An HCP who has a disproportionate number of patients who pay cash for office visits and dispensed medication “ and “An allegation that individuals from a particular HCP’s practice have overdosed.”)

Despite Purdue’s ADD program, the Attorney General’s investigation found that sales reps continued to detail certain suspicious HCPs, and some reps continued to call doctors on the “No-Call List.” Under the terms of the agreement, Purdue must continue to implement the ADD program in New York for so long as it markets OxyContin in the state. It also adds measures that Purdue must adopt to ensure it does not promote its opioid products to providers who may prescribe inappropriately or illegally. Such measures include adding new “red flags” that will trigger an internal investigation by Purdue. Further, sales reps “must now file reports about providers who may not be abiding by I-STOP, New York’s signature law requiring New York health care providers to consult a database of a patient’s prescription history before prescribing a controlled substance, including narcotic painkillers,” states the AG press release. The agreement further ensures that reps do not contact providers on the “no call” list by imposing such safeguards as: (a) requiring representatives to check the “no-call” list before contacting a provider, (b) subjecting representatives to potential disciplinary action for contacting such providers, and (c) not counting prescriptions of Purdue opioid products by such providers towards sales representatives’ bonuses.

Second, a condition of the settlement requires Purdue to disclose any financial arrangements with health care providers that appear on websites endorsing pain treatments like OxyContin. The Attorney General investigated Purdue’s website ( that, prior to the settlement, contained a number of HCP testimonials advocating for patients with chronic pain. While the website indicated it was the product of Purdue Pharma, it did not reveal that some of the HCP “advocates” were paid speakers or consultant. Thus, the settlement requires that the company reveal the existence of payments it has made to any such person on the website, going back three years. Interestingly, Purdue is required to use the information based on CMS Open Payments reports as the financial disclosures for any HCPs. 

Third, the government’s investigation pointed to “deficiencies in certain HCPs’ knowledge of appropriate opioid prescribing practices.” Thus, the settlement requires that the first time a Purdue sales rep visits a New York HCP each year, the rep must ask whether the HCP completed a training program for the appropriate prescribing of opioids. If not, the rep must provide the HCP information about training that is compliant with the Food and Drug Administration’s “REMS for Extended Release/Long Acting Opioids.” The information on ER-LA REMS CME courses are available here.

Finally, the government highlighted the need for patients undergoing opioid therapy to receive information about the risks of addiction and addiction treatment resources. 


The government has been focused on stemming opioid abuse, and diligent in its enforcement of healthcare providers who facilitate this abuse. The Office of Inspector General has targeted several HCPs with questionable opioid prescribing habits, and also recently released a report entitled “Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D,” which focuses on commonly abused opioids.

This settlement shows that the government is not stopping their inquiry at prescribers. Here, New York is holding Purdue responsible for curtailing the misuse of the company’s products through a long list of required measures. With the government's increased focus on the opioid abuse epidemic, it seemed like only a matter of time before improper prescribing habits were traced back up the chain to the manufacturer. Indeed, New York’s Attorney General, Eric Schneiderman, announced that his office is “Committed to Preventing Opioid Abuse [and] Holding Drug Companies Accountable.” It will be interesting to see whether other states follow suit.

Another interesting aspect of the case is the government's recognition of required opioid-related continuing medical education as a beneficial tool to ensure safe prescribing. 

 View the NY Attorney General Press Release here.


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