JANUARY 27, 2020 6:35pm
Web-based electronic health record company Practice Fusion will pay $145 million to resolve criminal and civil charges it engaged in a kickback scheme aimed at increasing opioid prescriptions, federal prosecutors in Vermont said Monday.
As part of the criminal resolution, the San Francisco-based company admitted that it solicited and received kickbacks from a major opioid company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain medications, according to the U.S. Attorney's Office for the District of Vermont in a press release. "Practice Fusion’s conduct is abhorrent. During the height of the opioid crisis, the company took a million-dollar kickback to allow an opioid company to inject itself in the sacred doctor-patient relationship so that it could peddle even more of its highly addictive and dangerous opioids,” Christina Nolan, U.S. Attorney for the District of Vermont, said in a statement.
The case represented the largest criminal fine in federal court history in Vermont and it was the first-ever criminal action against a vendor of electronic health records, the U.S. Attorney's office said in a statement. The criminal Information charges the healthcare technology company with two felony counts for violating the Anti-Kickback Statute and for conspiring with its opioid company client to violate that statute.
Practice Fusion is now owned by healthcare technology company Allscripts, which acquired the company for $100 million in January 2018, a year after the company received an inquiry from the U.S. It has since been rebranded as Veradigm with a focus on the payer and life sciences markets. Brian Farley, Allscripts executive vice president, general counsel and chief administrative officer, said in a statement on Monday that the conduct predated Allscripts' acquisition of Practice Fusion. "Allscripts recognizes the devastating impact that opioids have had on communities nationwide, and we are using our technology to fight this epidemic. We remain committed to Practice Fusion and believe this matter should not overshadow the important and valuable work it is currently performing," Farley said.
Federal prosecutors allege that Practice Fusion extracted unlawful kickbacks from pharmaceutical companies, including a payment of nearly $1 million from an unnamed opioid company, in exchange for implementing clinical decision support (CDS) alerts in its EHR software designed to increase prescriptions for their drug products.
Between 2014 and 2019, healthcare providers using Practice Fusion’s EHR software wrote numerous prescriptions after receiving CDS alerts that pharmaceutical companies participated in designing. The CDS alerts would cause doctors to write more prescriptions for extended-release opioids than were medically necessary, the DOJ said.
"The companies illegally conspired to allow the drug company to have its thumb on the scale at precisely the moment a doctor was making incredibly intimate, personal, and important decisions about a patient’s medical care, including the need for pain medication and prescription amounts," Nolan said. The criminal Information charges Practice Fusion with two felony counts for violating the Anti-Kickback Statute (AKS), 42 U.S.
Practice Fusion has executed a deferred prosecution agreement and agreed to pay over $26 million in criminal fines and forfeiture. The deferred prosecution agreement imposes stringent requirements on Practice Fusion to ensure acceptance of responsibility and transparency as to its underlying conduct, and to invest heavily in compliance overhauls and an independent oversight organization, the DOJ said.
In separate civil settlements, Practice Fusion has agreed to pay approximately $118.6 million to the federal government and states to resolve allegations that it accepted kickbacks from the opioid company and other pharmaceutical companies and also caused its users to submit false claims for federal incentive payments by misrepresenting the capabilities of its EHR software. Of that $118.6 million, $113.4 million will be paid to the federal government and up to $5.2 million to states that opt to participate in separate state agreements.
The EHR company also falsely obtained certification from the Office of the National Coordinator for Health IT for several versions of its EHR software that did not comply with all of the applicable requirements for certification, according to allegations from the HHS Office of Inspector General. As a result of the EHR fraud, from 2014 to 2016, healthcare providers using certain versions of Practice Fusion's 2014 edition EHR to falsely obtained incentive payments from Medicare and Medicaid.
Feb. 17, 2020
Expectations of a whopping payday set off thousands of lawsuits. But lawyers for the suing cities and states now concede that companies will shell out far less.
As talks escalate to settle thousands of opioid-related lawsuits nationwide, a harsh reality is emerging: The money the pharmaceutical industry will pay to compensate ravaged communities will likely be far less than once envisioned.
Lawyers on all sides have been stepping up efforts to reach a national agreement before the start of a New York trial next month. But even plaintiff lawyers now believe the payout from dozens of opioid makers, distributors and retailers is likely to be less than half of what the four Big Tobacco companies agreed to pay more than 20 years ago in a landmark settlement with states over costs associated with millions of smoking-related deaths.
Whatever the final amount, it will certainly fall well short of what public health experts say is needed to heal the long-term effects of the opioid crisis.
The tobacco settlement of 1998 totaled more than . When pressed to name the dollar figure he was swinging for, Joe Rice, the chief negotiator for thousands of cities and counties suing the pharmaceutical industry who conceded in an interview: “People would say I was crazy if I thought we could get over $100 billion.”
Eric Percher, a senior analyst who follows the litigation for Nephron Research, an independent investment research firm, recently predicted that the total would end up between $75 billion and $85 billion.
Estimates vary wildly over just how much money it would take to finance the treatment and prevention programs, emergency services, law enforcement and other measures needed to fix the problems created by opioids. In October, the federal Council of Economic Advisers said that during the four-year period from 2015 through 2018, the economic toll from opioids was , including the cost of health care and law enforcement, and estimates of lost productivity.
The idea that some of the biggest American corporations would not be made to cover a substantial portion of the opioid bill defies common sense to some people. But analysts and lawyers said the calculus to reach these settlements is even trickier than it was with the .
For starters, four cigarette companies produced a single product — one whose dangers were undisputed. But prescription opioids are beneficial for some patients. In addition, the dozens of companies targeted in the opioid lawsuits “do some very good things,” said Mr. Rice, including making or selling an array of medicines, vitamins and medical devices as well as drugstore products like shampoo and baby lotion.
They include the health and consumer products giant ; some of the world’s largest makers of generic medicines; the huge drug distributors ; and the national pharmacy chains, including . Opioids usually represent only a sliver of their business. Even plaintiffs’ lawyers say it may not be in the public interest to squeeze the companies too tightly.
Lawyers and economists also say that pharma will most likely pay less than Big Tobacco because, by one crude measure, its damage is smaller: prescription painkillers have claimed far fewer lives than cigarettes.
Apportioning blame. For cigarettes, that issue was relatively straightforward. The tobacco companies were almost entirely responsible for the manufacture, marketing, distribution and product placement of cigarettes. While the government could ban sales to minors, it had little authority to regulate marketing and distribution of tobacco .
But medications pass through many types of businesses. The defendants argue that the federal government bears blame too, because the Food and Drug Administration approved opioids for the market and the Drug Enforcement Administration was supposed to be monitoring sales and distribution.
Until recently, a broad national opioid settlement seemed elusive. Since 2013, when the first municipal lawsuits were filed, the defendants largely refused to negotiate. But now, continuing bad publicity, legal expenses in the hundreds of millions and the imminent specter of jury trials have begun to force defendants’ hands. March 20, the start of the trial between New York State and two counties against manufacturers and distributors, looms large. Other trials are on the runway this year in , and .
So far, only two offers for a nationwide settlement have been disclosed. , the maker of OxyContin, is valued by the company at about $10 billion, including at least $3 billion in cash from the members of the Sackler family, the owners. It has been tentatively accepted by about two dozen states and thousands of local governments but is far from final.
Another proposal, ostensibly worth $48 billion, is from the three drug distributors and two manufacturers (Teva and Johnson & Johnson), much of it to be paid over 18 years. But nearly half that figure is an in-kind assessment of the value of addiction treatment drugs and distribution services that the companies pledge to provide.
Twenty-one states and lawyers negotiating for cities and towns have called the proposal , with too long a timetable for communities that need help immediately. Last week, they called for further talks.
A lawyer for one state supporting the offer, who spoke on the condition of anonymity because discussions were confidential, said that these numbers were the best negotiators could extract.
“If we could have gotten more, we would have,” the lawyer said, “and this is way more than the companies came to the table with.”
The financial model of the tobacco settlement took into account the prediction that rising prices and taxes on cigarettes would fund payouts over time. But that structure cannot sustain an opioid settlement that hopes to fund decades of research and treatment because the production of opioids is expected to decline precipitously, and prices are not expected to rise.
So which defendants have the means to make a significant impact on recovery efforts?
The distributors argue that they do not have much extra cash. Mr. Percher, a former director of strategic finance at McKesson, explained that while McKesson’s U.S. pharma and specialty division would generate $190 billion in revenue in 2020, making it eighth on the Fortune 500 list, its operating profit would total just $2.8 billion, or 1.47 percent, which wouldn’t even place it among the top 100 companies.
The status of Teva, which makes generic and branded drugs and has struggled with debt, is less clear. In October, the company proposed settling claims by paying $250 million in cash and donating treatment drugs — which the company estimates to be worth $23 billion — over 10 years. Critics say that estimate is wildly inflated.
Ronny Gal, an analyst at Sanford C. Bernstein, an investment research firm, said Teva’s recent earnings report suggested it could afford to pay more. “Teva will generate at least $2.5 billion in cash each year for the next five years,” he said. He estimated that it could pay $4 billion in cash “without material difficulties.”
Teva declined to comment.
Two companies that manufacture branded opioids, Insys Therapeutics, the maker of a fentanyl spray, and , are now in , each struggling over restructuring plans to manage payouts, a model also being discussed as a possibility for some manufacturers.
The biggest unknown is how much the pharmacy chains can or should pay. Financially, this is the healthiest group of defendants. Their first trial, brought by two Ohio counties, is scheduled for November.
The chains are mostly being sued based on the quantity of opioids they distributed to their own pharmacies. Mr. Percher, the Nephron Research analyst, said that if the chains paid a figure proportional to what the national distributors offered, it would be about $13.8 billion.
“Could it be higher, given that they also dispensed the pills to the consumer?” he said. “Yes.”
The delay in reaching a broad agreement has been due in some measure to sharp divisions among the many constituencies of plaintiffs themselves. Thousands of local governments , bitter because largely wound up being .
The states that support the offer say that a major roadblock is the fee demanded by private lawyers who work both for some states and local governments. “We need to focus on getting dollars into treatment for those suffering, not into the pockets of lawyers,” said Josh Shapiro, the attorney general of Pennsylvania.
Mr. Rice scoffed at that notion, saying that the real impediments are the amounts offered by the opioid defendants.
“We don’t want these companies to go out of business,” he said. “But we want them to pay for what they did.”
A huge settlement was reached for 2 municipalities engaged in a trial against opiod manufacturers.
"About $50 billion in settlement offers by drugmakers and distributors have sparked a fight between state attorneys general and thousands of local governments over how much the pharmaceutical industry should pay for its role in creating the U.S. .
Drugmaker said Monday it offered $23 billion in treatment medications and $250 million toward a settlement of more than 2,700 lawsuits by states and municipalities. That follows a proposal by Johnson & Johnson for $4 billion and another for $18 billion by opioid distributors , and , along with $2.5 billion in distribution services.
While many attorneys general are backing the offers, lawyers for local governments have rejected them. Municipalities fear they wouldn’t get enough money to address their opioid problems, citing the experience of the 1998 Big Tobacco settlement, in which some states put the cash into their general funds.
“While the companies strongly dispute the allegations made by the two counties, they believe settling the bellwether trial is an important stepping stone to achieving a global resolution and delivering meaningful relief,” McKesson, Cardinal and AmerisourceBergen, which together control 90% of the U.S. drug-distribution market, said in a statement.
Drugmakers are accused of pushing opioid prescriptions on doctors across the U.S. and downplaying the risks of addiction, while distributors and pharmacies are accused of turning a blind eye to suspicious orders and failing to meet government-compliance requirements covering the painkillers.
Where does the opioid litigation stand?
More than 400,000 Americans have died of opioid overdoses over two decades as U.S. addiction rates surged, and local communities have sued to recover expenses on more drug treatment and police services."
As you can see there is substantial renumeration to all institutions, municipalities, hospitals. etc. that have experienced damages from these defendants and this crisis.
By Jan Hoffman
Oct. 21, 2019
The deal involves large pharmaceutical distributors and Teva, resolving cases that sought redress from the devastation caused by two decades of opioid abuse. Judge Dan A. Polster of the Northern District of Ohio announced from the bench Monday morning that a deal had been reached to avert the first federal opioids trial.
CLEVELAND — The three major drug distributors and an opioid manufacturer have reached a $260 million settlement with two Ohio counties to avoid the landmark first federal opioid trial that was set to begin here Monday. The deal, which is a combination of cash payouts and donations of addiction treatments, could become a model for settlement of thousands of similar cases brought in an attempt to hold the pharmaceutical industry accountable for an epidemic of addiction that has killed hundreds of thousands of Americans.
Judge Dan A. Polster of the Northern District of Ohio announced from the bench Monday morning that the deal was struck around 1 a.m. In the settlement, the drug distributors — McKesson, Cardinal Health and AmerisourceBergen, which distribute about 90 percent of all the medicines to pharmacies, hospitals and clinics in the United States — agreed to pay $215 million to the two Ohio counties that brought the lawsuit. Teva, the Israel-based manufacturer of generic drugs, agreed to pay $20 million in cash over three years and donate $25 million worth of addiction treatment drugs such as a generic Suboxone, which blunts cravings for opioids.
“We hope it provides a benchmark for a national resolution for other communities to have the resources to do what is necessary to abate the epidemic,” said Peter H. Weinberger, a Cleveland lawyer who represents some Ohio counties.
Even as the two-county settlement was being announced, the drug distributors and other corporate defendants in the trial were pursuing a global deal, worth $48 billion in cash and donated addiction treatments, to resolve all opioid lawsuits against them.
On Monday afternoon, four state attorneys general — from North Carolina, Pennsylvania, Texas and Tennessee — announced a step toward that much more ambitious goal, saying they had reached a tentative agreement to settle the cases against the three distributors, Teva, and Johnson & Johnson. But they not only have to sell the deal to the rest of the states, but also to the cities and counties, who have been pushing for more money paid out in a shorter time frame.
In a telephone news briefing, the attorneys general laid out the basics of their agreement: that the three distributors and Johnson & Johnson would give $22 billion in cash over 18 years; and that, over the next decade, Teva would give $250 million as well as addiction treatment drugs it values at $23 billion. In addition, the distributors would provide about $3 billion in distribution services for a decade.
Although the states acknowledged that the cities and counties were not on board, they said that their arrangement could cover the entire country immediately. “This is a national crisis that demands a national solution,” said Josh Stein, the attorney general of North Carolina.
But minutes after the states’ announcement, Paul J. Hanly, Jr., a lead lawyer for the cities and counties, scorned the agreement. “The proposed deal put forth is nothing more than wishful thinking on the part of the A.G.s, who are 20 months too late to this party,” he said.
The states began filing their opioid lawsuits only relatively recently, but those by local governments were first filed years ago. The lawsuits from the two Ohio counties settled Monday are among more than 2,300 such cases that Judge Polster has been overseeing for nearly two years. Monday’s settlement is the latest in a flurry of deals reached by drug companies to avoid that landmark federal trial, which was to serve as a test case for legal arguments and evidence.
Other companies that already reached a settlement to avoid the opening trial include Johnson & Johnson; Mallinckrodt Pharmaceuticals, one of the biggest manufacturers of generic opioids; and Purdue Pharma, which has been widely blamed for igniting the opioids crisis with misleading marketing of its drug OxyContin.
The ultimate goal of all companies is to reach a so-called global settlement to resolve the cases still on the runway in federal and state courts. Purdue reached a tentative settlement to do just that in September — a deal that involves a cash payment of up to $4.5 billion from its owners, members of the Sackler family, and a restructuring of the company into a public entity that would donate all profits to cities, counties and states to compensate for costs associated with the epidemic. But that deal is mired in a long bankruptcy court process.
With today’s agreements, the combined total so far for the two Ohio counties alone — Cuyahoga, which includes Cleveland, and Summit, which includes Akron — comes to roughly $320 million. Cuyahoga will receive 62 percent of the money, and Summit will receive 38 percent. Recently, executives from both counties announced plans to abate the local crisis, and the money has already begun to be distributed.
In a joint statement, the three distributors, which are among the richest companies in the United States, disputed the counties’ allegations that the companies had delivered highly suspicious quantities of opioids without reporting them to the authorities.
The distributors added that they expected “settlement funds to be used in support of initiatives to combat the opioid epidemic, including treatment, rehabilitation, mental health and other important efforts.”
Ilene Shapiro, the Summit County executive, said in a statement, “These settlement agreements give us the ability to help people now.”
Walgreens, the giant pharmacy chain, was also a defendant in this trial and is the only company that has not settled. It had been sued as a distributor that supplied opioids to its own pharmacies. Now Walgreens will face a separate trial that would focus on its role as a dispenser, Judge Polster announced on Monday morning.
“We never prescribed any opioid medication, and never sold opioid medications to pain clinics, internet pharmacies or the ‘pill mills’ that fueled the national opioid crisis,” Phil Caruso, a spokesman for Walgreens, said in a statement. “Our pharmacists have always been committed to serving patients in the communities where they live and work.”
The big pharmacy chains, including Rite Aid, CVS and Walmart, generally have undergone less scrutiny so far than the drug manufacturers and distributors. That may soon change.
“We have powerful evidence that pharmacies were also implicated in this epidemic,” said Mr. Hanly, a lead lawyer for local governments. “Those folks now have targets on their backs. Even so, we’re very interested in a global settlement, and we believe those companies are too — or they ought to be. ”
There are many more pharmaceutical industry defendants that were not in the first trial, including generic drug manufacturers, smaller drug distributors and the other big pharmacy chains. But lawyers expressed hopes that Monday’s settlement could push other defendants to settle their cases as well, even on a broader, comprehensive basis.
One signature dispute between the state attorneys general and plaintiffs for cities, counties and tribes is about how settlement money will be disbursed and who will control the purse strings. One of the biggest criticisms of the Big Tobacco settlement some 20 years ago, which was brokered in large measure by state attorneys general, was that most of the money wound up in legislative funds to balance budgets and even fix potholes. That is why local governments involved in the opioid litigation want to ensure they have better access to settlement money.
People close to the talks said that a model being discussed was to apportion the money into three buckets: one for the states, a second for the cities and counties, and the third and largest for an opioid remediation fund for the general public, supervised by a monitor who would possibly be appointed by the court.
On Monday morning, when expectations were high that a trial would indeed begin, a line to get into the courthouse began forming before 7 a.m. Many people said they were fans of the plaintiffs’ trial lawyer, Mark Lanier — known for his dramatic, even impish opening statements, replete with slides and props — and hoped to see his performance.
In the scrum following Judge Polster’s announcement that the trial would not go forward, Mr. Lanier was offering samples of the opening argument he would not be able to give, a thundering indictment of the opioid industry that he had spent months preparing. The warm-up alone included a 3,000-year-old Sumerian poppy jar; a first edition of Thomas De Quincey’s “Confessions of an English Opium-Eater”; and a reading from “The Wonderful Wizard of Oz.” (As Dorothy falls asleep in the poppy fields: “If we leave her here she will die,” said the Lion. “The smell of the flowers is killing us all.”)
A defense lawyer walking by overheard him, gave an eye roll and said: “You ought to hear my opening. I throw glitter.
Purdue Pharma recently agreed to pay Oklahoma $270 million rather than face trial on charges of misleading marketing practices and misrepresentation regarding Oxycontin, according to company and state press releases.
Court battles are far from over for the pharmaceutical company, which still faces 35 state lawsuits and a federal lawsuit in Cleveland involving more than 1,000 entities alleging the company withheld information about the addictive potential of Oxycontin from the public, according to experts.
The New York Times recently reported that New York, Massachusetts, Connecticut, Rhode Island and Utah have filed suit against members of the Sackler family who own Purdue Pharma and that the Sacklers are also named in the aforementioned federal lawsuit in Cleveland. In addition, lawsuit filings by attorney generals in New York and Massachusetts allege those states have documents that show the Sackler family sought to increase the market for Oxycontin, even after Purdue Pharma admitted in a plea deal it had “misrepresented the drug’s addictive qualities and potential for abuse.”
The Oklahoma settlement was announced about 2 months before the state trial against Purdue Pharma and three other pharmaceutical companies was slated to begin, according to the Oklahoma Attorney General’s office.
The bulk of the Oklahoma settlement is earmarked towards a national center for addiction treatment and research. Smaller amounts are intended to address the opioid epidemic throughout Oklahoma and reimburse the state for legal costs, Purdue Pharma said in a press release.
As trial preparations involving those other companies continue, David L. Noll, JD, associate professor of law at Rutgers Law School, offered potential reasons for Purdue Pharma’s decision to settle.
“The settlement seems driven by the imminent court date and the possibility that members of the Sackler family would be called to testify,” he told Healio Rheumatology.
The settlement in Oklahoma takes the legal proceedings against Purdue Pharma and the Sackler family out of the spotlight for now, but the investigations will continue, according to Noll.
“No other trials are scheduled in the immediate future where the Sacklers will be called to testify, so there probably won’t be any more settlements for a while,” he said. “However, bellwether trials in the federal case are scheduled to begin this fall. The threat of subpoenas to the Sacklers — and the threat that internal documents that suggest the family and company knew about these deceptions regarding Oxycontin’s addictive and potency qualities will enter the trial record — will create renewed settlement pressure.”
Docket No. X07 HHD CV 17 6086134 S
(Ct. Super. Ct. Jan. 8, 2019)
On the defense front, a Connecticut state court judge dismissed lawsuits brought by local governments, stating that the plaintiffs in those opioid lawsuits had no standing because they could not prove a causal link between the manufacture of opioids and the costs incurred in combating the opioid epidemic. In City of New Haven v. Purdue Pharma, L.P., et al., (Ct. Super. Ct. Jan. 8, 2019), defendants moved to dismiss plaintiffs’ claims (which were substantially similar to the claims in other opioid cases) on the basis that any alleged link between the plaintiffs’ damages and defendants’ alleged conduct is too speculative to hold defendants liable. The court agreed, finding that “[plaintiffs’] lawsuits can’t survive without proof that the people they are suing directly caused them the financial losses they seek to recoup” and plaintiffs failed to offer any method of proving this connection. The court explained that although other courts handling opioid lawsuits may be tempted to overlook plaintiffs’ burden of proof, “these matters are ordinary civil damages cases and face the ordinary civil rules about who can sue for what.”