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Sunday, April 8, 2018

Health Care Reform Articles - April 8, 2018

The Disappearing Doctor: How
Mega-Mergers Are Changing
the Business of Medical Care

by Reed Abelson and Julie Crewel - NYT - April 7, 2018

Is the doctor in?
In this new medical age of urgent care centers and retail clinics, that’s not a simple question. Nor does it have a simple answer, as primary care doctors become increasingly scarce.
“You call the doctor’s office to book an appointment,” said Matt Feit, a 45-year-old screenwriter in Los Angeles who visited an urgent care center eight times last year. “They’re only open Monday through Friday from these hours to those hours, and, generally, they’re not the hours I’m free or I have to take time off from my job.
“I can go just about anytime to urgent care,” he continued, “and my co-pay is exactly the same as if I went to my primary doctor.”
That’s one reason big players like CVS Health, the drugstore chain, and most recently Walmart, the giant retailer, are eyeing deals with Aetna and Humana, respectively, to use their stores to deliver medical care.
People are flocking to retail clinics and urgent care centers in strip malls or shopping centers, where simple health needs can usually be tended to by health professionals like nurse practitioners or physician assistants much more cheaply than in a doctor’s office. Some 12,000 are already scattered across the country, according to Merchant Medicine, a consulting firm.
On the other side, office visits to primary care doctors declined 18 percent from 2012 to 2016, even as visits to specialists increased, insurance data analyzed by the Health Care Cost Institute shows.
There’s little doubt that the front line of medicine — the traditional family or primary care doctor — has been under siege for years. Long hours and low pay have transformed pediatric or family practices into unattractive options for many aspiring physicians.
And the relationship between patients and doctors has radically changed. Apart from true emergency situations, patients’ expectations now reflect the larger 24/7 insta-culture of wanting everything now. When Dr. Carl Olden began watching patients turn to urgent care centers opening around him in Yakima, Wash., he and his partners decided to fight back.
They set up similar clinics three years ago, including one right across the street from their main office in a shopping center.
The practice not only was able to retain its patients, but then could access electronic health records for those off-site visits, avoiding a bad drug interaction or other problems, said Dr. Olden, who has been a doctor for 34 years.
“And we’ve had some folks come into the clinics who don’t have their own primary care physicians,” he said. “So we’ve been able to move them into our practice.”

Merger Maneuvers

The new deals involving major corporations loom over doctors’ livelihoods, intensifying pressure on small practices and pushing them closer to extinction.
The latest involves Walmart and Humana, a large insurer with a sizable business offering private Medicare plans. While their talks are in the early stages, one potential partnership being discussed would center on using the retailer’s stores and expanding its existing 19 clinics for one-stop medical care. Walmart stores already offer pharmacy services and attract older people.
In addition, the proposed $69 billion merger between CVS Health, which operates 1,100 MinuteClinics, and Aetna, the giant insurer, would expand the customer bases of both. The deal is viewed as a direct response to moves by a rival insurer, UnitedHealth Group, which employs more than 30,000 physicians and operates one of the country’s largest urgent-care groups, MedExpress, as well as a big chain of free-standing surgery centers.
While both CVS and UnitedHealth have large pharmacy benefits businesses that would reap considerable rewards from the stream of prescriptions generated by the doctors at these facilities, the companies are also intent on managing what type of care patients get and where they go for it. And the wealth of data mined from consolidation would provide the companies with a map for steering people one way or another.
On top of these corporate partnerships, Amazon, JP Morgan and Berkshire Hathaway decided to join forces to develop some sort of health care strategy for their employees, expressing frustration with the current state of medical care. Their announcement, and Amazon’s recent forays into these fields, are rattling everyone from major hospital networks to pharmacists.
Doctors, too, are watching the evolution warily.
“With all of these deals, there is so much we don’t know,” said Dr. Michael Munger, president of the American Academy of Family Physicians. “Are Aetna patients going to be mandated to go to a CVS MinuteClinic?”

Constant Changes in Care

Dr. Susan Kressly, a pediatrician in Warrington, Pa., has watched patients leave. Parents who once brought their children to her to treat an ear infection or check for strep, services whose profits helped offset some of the treatments she offered, are now visiting the retail clinics or urgent care centers.
What is worse, some patients haven’t been getting the right care. “Some of the patients with coughs were being treated with codeine-based medicines, which is not appropriate at all for this age group,” Dr. Kressly said.
Even doctors unfazed by patients going elsewhere at night or on weekends are nervous about the entry of the corporate behemoths.
“I can’t advertise on NBC,” said Dr. Shawn Purifoy, who practices family medicine in Malvern, Ark. “CVS can.”
Nurse practitioners allow Dr. Purifoy to offer more same-day appointments; he and two other practices in town take turns covering emergency phone calls at night.
And doctors keep facing new waves of competition. In California, Apple recently decided to open up its own clinics to treat employees. Other companies are offering their workers the option of seeking medical care via their cellphones. Investors are also pouring money into businesses aiming to create new ways of providing primary care by relying more heavily on technology.

An Absence of Proof

Dr. Mark J. Werner, a consultant for the Chartis Group, which advises medical practices, emphasized that convenience of care didn’t equal quality or, for that matter, less expensive care.
“None of the research has shown any of these approaches to delivering care has meaningfully addressed cost,” Dr. Werner said.
Critics of retail clinics argue that patients are given short shrift by health professionals unfamiliar with their history, and may be given unnecessary prescriptions. But researchers say neither has been proved in studies.
“The quality of care that you see at a retail clinic is equal or superior to what we see in a doctor’s office or emergency department,” said Dr. Ateev Mehrotra, an associate professor of health care policy and medicine at Harvard Medical School, who has researched the retail clinics. “And while there is a worry that they will prescribe antibiotics to everybody, we see equal rates occurring between the clinics and doctor’s offices.”
Still, while the retail clinics over all charge less, particularly compared with emergency rooms, they may increase overall health care spending. Consumers who not long ago would have taken a cough drop or gargled with saltwater to soothe a sore throat now pop into their nearby retail clinic for a strep test.
Frustration with the nation’s health care system has fueled a lot of the recent partnerships. Giant companies are already signaling a desire to tackle complex care for people with a chronic health condition like diabetes or asthma.
“We’re evolving the retail clinic concept,” said Dr. Troyen A. Brennan, the chief medical officer for CVS. The company hopes its proposed merger with Aetna will allow it to transform its current clinics, where a nurse practitioner might offer a flu shot, into a place where patients can have their conditions monitored. “It requires new and different work by the nurse practitioners,” he said.
Dr. Brennan said CVS was not looking to replace patients’ primary care doctors. “We’re not trying to buy up an entire layer of primary care,” he said.
But people will have the option of using the retail clinic to make sure their hypertension or diabetes is well controlled, with tests and counseling provided as well as medications. The goal is to reduce the cost of care for what would otherwise be very expensive conditions, Dr. Brennan said.
If the company’s merger with Aetna goes through, CVS will initially expand in locations where Aetna has a significant number of customers who could readily go to CVS, Dr. Brennan said.
UnitedHealth has also been aggressively making inroads, adding a large medical practice in December and roughly doubling the number of areas where its OptumCare doctors will be to 75 markets in the United States. It is also experimenting with putting its MedExpress urgent care clinics into Walgreens stores.
Big hospital groups are also eroding primary care practices: They employed 43 percent of the nation’s primary care doctors in 2016, up from 23 percent in 2010. They are also aggressively opening up their own urgent care centers, in part to try to ensure a steady flow of patients to their facilities.
HCA Healthcare, the for-profit hospital chain, doubled its number of urgent care centers last year to about 100, according to Merchant Medicine. GoHealth Urgent Care has teamed up with major health systems like Northwell Health in New York and Dignity Health in San Francisco, to open up about 80 centers.
“There is huge consolidation in the market right now,” said Dr. Jeffrey Le Benger, the chief executive of Summit Medical Group, a large independent physician group in New Jersey. “Everyone is fighting for the primary care patient.” He, too, has opened up urgent care centers, which he describes as a “loss leader,” unprofitable but critical to managing patients.
Eva Palmer, 22, of Washington, D.C., sought out One Medical, a venture-backed practice that is one of the nation’s largest independent groups, when she couldn’t get in to see a primary care doctor, even when she became ill. After paying the annual fee of about $200, she was able to make an appointment to get treatment for strep throat and pneumonia.
“In 15 minutes, I was able to get the prescriptions I needed — it was awesome,” Ms. Palmer said.
Patients also have the option of getting a virtual consultation at any time.
By using sophisticated computer systems, One Medical, which employs 400 doctors and health staff members in eight major cities, allows its physicians to spend a half-hour with every patient.
Dr. Navya Mysore joined One Medical after working for a large New York health system, where “there was a lot of bureaucracy,” she said. She now has more freedom to practice medicine the way she wants and focus more on preventive health, she said.
By being so readily available, One Medical can reduce visits to an emergency room or an urgent care center, said Dr. Jeff Dobro, the company’s chief medical officer.
As primary care doctors become an “increasingly endangered species, it is very hard to practice like this,” he said.

Long-Term Lifelines

But more traditional doctors like Dr. Purifoy stress the importance of continuity of care. “It takes a long time to gain the trust of the patient,” he said. He is working with Aledade, another company focused on reinventing primary care, to make his practice more competitive.
One longtime patient, Billy Ray Smith, 70, learned that he needed cardiac bypass surgery even though he had no symptoms. He credits Dr. Purifoy with urging him to get a stress test.
“If he hadn’t insisted,” Mr. Smith said, “it would have been all over for me.” Dr. Purifoy’s nurse routinely checks on him, and if he needs an appointment, he can usually see the doctor that day or the next.
“I trust him 100 percent on what he says and what he does,” Mr. Smith said.
Those relationships take time and follow-up. “It’s not something I can do in a minute,” Dr. Purifoy said. “You’re never going to get that at a MedExpress.”

Virginia Is Close to Expanding Medicaid After Years of Republican Opposition

by Trip Gabriel - NYT - April 7, 2018

Elections have consequences, goes the old saw, and in Virginia a Democratic wave in November remade the political landscape on one of the state’s longest-running and most contentious issues: whether to expand Medicaid to 400,000 low-income residents.
Republicans lost 15 seats in the House of Delegates and, left clinging to a bare majority, did an about-face on Medicaid expansion — an issue that to many had smacked of “Obamacare.” But Republicans in the State Senate, who had not faced voters, blocked expansion last month, and lawmakers failed to pass a state budget because of the issue.
Now, as Gov. Ralph Northam orders the House and Senate back to the capital on Wednesday for a special session to fix the problems, what remains of Republican opposition to expansion appears to be cracking.
Two Republican state senators said this week they would accept some form of broader Medicaid benefits, as provided under the Affordable Care Act — enough votes to carry the day on an issue that is widely popular in state polls.
State Senator Frank Wagner said on Friday that he supported Medicaid expansion, drawing a strong rebuke from leaders of his fellow Senate Republicans, who currently hold a 21-19 majority. He joined State Senator Emmett W. Hanger Jr., who in recent years has been the sole supporter of expansion among his party members in the Senate.
“I feel strongly the timing is right to move forward with the Medicaid expansion,” Mr. Hanger said in an interview on Thursday.
Broadening Medicaid would give Mr. Northam, a Democrat who won by a landslide last year, a major policy victory, one that eluded and frustrated his predecessor, Terry McAuliffe.
Mr. McAuliffe, a potential Democratic candidate for president in 2020, spent years trying to wear down Republican lawmakers on the issue, with little success.
Mr. Wagner on Friday said he backed an expansion plan as long as it required able-bodied adults to work and taxed hospitals to pay the state’s share of the $2 billion yearly costs.
Both provisions are in the House-passed version of the expansion, which received Mr. Northam’s support despite liberals’ opposition to the work requirements.
“There were things we didn’t want to see in the deal but were important to Republicans,” Brian Coy, a spokesman for the governor, said. “He believes Virginians elected him to work with everyone.”
The House and Senate must reach a compromise to pass a budget by June 30.
Although the two Republican senators’ embrace of expansion seem to promise a speedy resolution, there are enough differences in the proposals that a deal could founder.
Medicaid is the public health insurance program for low-income people jointly paid by states and the federal government. Since expanding benefits became a state option under a 2012 Supreme Court decision that upheld the Affordable Care Act, 33 states have embraced expansion. Eighteen, mostly led by Republicans in the South and Midwest, have turned it down.
Currently, Virginia has one of the most restrictive Medicaid programs. Childless adults are not eligible and working parents cannot exceed an income of 30 percent of the federal poverty level, or $5,727.
Expanding Medicaid would cover families and single adults earning up to 138 percent of the poverty level, or $28,180 for a family of three.
The dam in the House began to break in February when an influential conservative Republican, Delegate Terry Kilgore, long an expansion opponent, announced his support in an opinion column in The Roanoke Times, saying: “It is time to act.”
Mr. Kilgore’s district in southwest Virginia is one of the poorest in the state, where each July thousands of people visit a free pop-up clinic at a county fairground.
Delegate Chris Peace, another Republican who favored expansion in the House, said he had changed his position in part because in his family law practice, he had come to see the dire effects that a lack of health care had on low-income families.
He called the House bill that includes work requirements “the epitome of the Republican conservative mantra of a hand up, not a handout.”
Ahead of the special session, activists from the conservative group Americans for Prosperity have demonstrated outside Mr. Peace’s office in Mechanicsville, trying to pressure him to change his mind.
He dismissed them as remnants of the Tea Party movement straining to remain relevant. “Half are 60-plus gray-haired white men who hate Obama,” he said.
Mr. Peace said there was little question that November’s ballot wave changed the minds of Republicans in the House, who he said wanted to get Medicaid expansion off the table as a political issue before the midterm elections this year and the next round of legislative elections in 2019.
Senate Republicans opposed to expansion risk being swept from office next year, Mr. Peace said: “They haven’t seen the wave that has come everywhere.”
Just as conservative activists have targeted Mr. Peace, liberal door-knockers are pressuring State Senator Siobhan Dunnavant, a Republican expansion opponent, whose suburban Richmond district was carried by Hillary Clinton in 2016.
Dr. Dunnavant, an obstetrician-gynecologist, said that she cared about improving public health and stabilizing the costs, but that expanding Medicaid would accomplish neither.
“You don’t fix health care by throwing money at it,” she said. “You fix health care by using evidence-based programs and having them accountable.”

The Final Obamacare Tally Is In. About 400,000 Fewer People Signed Up This Year.

by Abby Goodnough - NYT - April 3, 2018

WASHINGTON — The Trump administration said on Tuesday that 11.8 million people had signed up for health insurance through the Affordable Care Act marketplaces for 2018 — roughly 400,000 fewer than last year. The drop was relatively small, given that Mr. Trump had sharply cut federal outreach efforts and the open enrollment period was half as long as in past years.
Virtually the entire decrease came in the 39 states that use the marketplace run by the federal government, HealthCare.gov. In the 11 states that sell coverage for the Affordable Care Act — popularly known as Obamacare — through their own marketplaces, enrollment remained the same as last year. Seema Verma, the administrator of the federal Centers for Medicare and Medicaid Services, congratulated her agency in a Twitter post on “the most cost-effective and successful open enrollment to date!”
Yet Ms. Verma, who frequently echoes Mr. Trump’s attacks on the health law, also said on Twitter that “Americans continue to experience skyrocketing premiums and limited choice” under the law.
According to the agency's final enrollment report, monthly premiums for federal marketplace customers before any subsidy was applied rose by 30 percent this year, to $621 from $476. Subsidies are covering about 86 percent, on average, of the premium cost for those who qualify.
New customers made up about 27 percent of the total enrollment, down from 31 percent last year. The share of customers younger than 35 dropped slightly, while the share of customers older than 55 grew slightly. In all, 83 percent qualified for subsidies that lowered the cost of their premiums, often significantly. Only people with incomes between 100 percent and 400 percent of the poverty level — for an individual, between $12,140 and $48,560 — can get subsidies, with the poorest customers getting the most help.
“The administration should view this report as further evidence for the need for healthy and robust health insurance marketplaces,” said Joshua Peck, who was the chief marketing officer for HealthCare.gov in the Obama administration and now advocates on behalf of the health law.
Mr. Trump’s decision last fall to halt a certain type of payment to insurers was initially expected to hurt enrollment, but it actually ended up helping people who qualify for premium subsidies. Insurers and state regulators worked together to find a way to protect them from cost increases.
Customers who did not qualify for subsidies had no such protection. As a result, Ms. Verma said, they chose plans that were 18 percent less expensive, on average, than those chosen by people with subsidies.
The law’s future remains uncertain despite the failure of Republican efforts to repeal it last year. The tax cut that Congress passed this year repeals the law’s tax penalties for Americans who go without insurance, starting next year, which is likely to lead to further drops in enrollment.
And Ms. Verma’s agency has proposed expanding the availability of short-term insurance, which she said on Tuesday would “provide additional options to Americans who cannot afford to pay the costs of soaring health care premiums.” Such plans are cheaper, but they skirt provisions of the health law and may not cover pre-existing conditions or basic medical needs.
In a poll released on Tuesday by the nonpartisan Kaiser Family Foundation, 53 percent of respondents said they believed that the Affordable Care Act marketplaces were collapsing. But some experts believe that the market has stabilized, with many insurers no longer losing money.

Can Doctors Choose Between Saving Lives and Saving a Fortune?

by Siddhartha Mukherjee - NYT - April 3, 2018

To understand something about the spiraling cost of health care in the United States, we might begin with a typical conundrum: Imagine a 60-something man — a nonsmoker, overweight, with diabetes — who has just survived a heart attack. Perhaps he had an angioplasty, with the placement of a stent, to open his arteries. The doctor’s job is to keep the vessels open. She has two choices of medicines to reduce the risk for a second heart attack. There’s Plavix, a tried-and-tested blood thinner, that prevents clot formation; the generic version of the drug costs as little as 25 cents a pill. And there’s Brilinta, a newer medicine that is also effective in clot prevention; it costs about $6.50 a pill — 25 times as much.
Brilinta is admittedly more effective than Plavix — by all of 2 percentage points. In a yearlong trial of 18,600 patients, 10 percent died from vascular causes, heart attack or stroke on Brilinta, while about 12 percent did on Plavix. Should the doctor prescribe the best possible medicine, assuming that the man has private health insurance that will pay the bulk of the costs? Or should she try to conserve health care costs by prescribing the cheaper medicine that is nearly as good? And consider this: If the cost to you was the same — you have maxed out your co-pay and will end up with the same out-of-pocket expenditure — would you agree to take the slightly inferior drug to benefit the system as a whole? You’ve just had a heart attack, for God’s sake. You pay thousands of dollars for health insurance. Is it fair to ask you to bear the slightly increased risk to enable some broader social good?
“We thought about this nearly every day when discharging patients from the cardiology unit,” Dhruv Khullar, a newly minted hospital attending, told me. “Some of us believed that a doctor’s job is to deliver the best possible care, period. Others argued that doctors should aim to find some balance between medical benefit, financial cost and social responsibility. It’s the kind of question that we aren’t really trained to solve. Are costs something that an individual doctor should do something about? What is a doctor supposed to do?”
I returned repeatedly to the basic elements of Khullar’s quandary — the extraordinary price of medical care, the incremental returns of value to a patient and the shifting responsibilities of a doctor — while reading a new study that hopes to solve the riddle of health care costs in the United States. As the authors, Irene Papanicolas, Liana Woskie and Ashish Jha, lay it out, the United States is a sore-thumb outlier among 11 wealthy nations in medical spending. We spend 18 percent of our G.D.P. on health care, while Australia, Canada, Denmark and Japan seem to make do with about half that amount. Yet life expectancy in the United States is the lowest in the group, and infant mortality is the highest. Our out-of-control prices have a stifling effect on the economy. Companies that pay a portion of health insurance for their workers may find themselves burdened by cost. (“General Motors,” the quip runs, “is a health-insurance business that also happens to make cars.”) Why are we spending astronomically more for health care that performs worse, on aggregate, than care in most other comparable nations?
The researchers begin by extirpating some common myths. Are our health care costs astronomically high because we don’t have enough primary-care doctors? No; the number of primary-care physicians in the United States lies squarely in the middle of the 11 countries. Is our population more prone to illness? Yes and no; Americans smoke fewer cigarettes and drink less alcohol, but our rate of obesity is highest. Do we pay more for health care because we use more health care? Again, at face value, no. As a country, we went to the hospital about half as often as the Germans. We consulted doctors about a third as often as the Japanese. We beat the stoic Swiss and the frugal Dutch in the number of days that we spent in the hospital.
So what is driving the cost? Each time we did go to a doctor, it seems, we managed to spend more. Tests were ordered more frequently: We sat inside M.R.I. and CT scanners more often than patients in most other countries. We had high-cost surgical procedures performed more often than most other populations in the world. Knee replacements, cataract surgeries, cesarean deliveries, coronary-bypass grafts, angioplasty. Not every procedure was performed more frequently, Jha reminded me; hip-replacement rates were slightly lower, and the C-section rate, albeit high, was essentially tied with that of three other countries. On average, though, the United States ranked among the highest in most operations. Many of these procedures cost more in America (an M.R.I. costs $1,150 in the United States and $140 in Switzerland; it’s hard to insist that an American M.R.I. is eight times as good). And some of these procedures inevitably led to complications, and then we paid for those complications. The impact on overall life expectancy was evidently minimal. The United States leads developed nations in what the surgeon and writer Atul Gawande has called an epidemic of “overtesting, overdiagnosis and overtreatment.”
If expensive procedures explain some of the costs accrued by Americans, pharmaceutical prices and spending offer an even more alarming explanation. We spent $1,443 annually per person (yes, you read that number right) on drugs — in part because each medicine costs us more, and in part because we used new drugs that weren’t even available in many other countries. Humira, the treatment for rheumatoid arthritis, was priced at $2,500 per month in the United States versus $980 in Japan and France. Lantus, the long-acting form of insulin, cost us $186 per month, four times the price in France. Adding pharmaceutical insult to injury, many more expensive drugs were invented in America — and yet we paid more than any other rich nation to use them ourselves.
The study’s authors also analyzed the costs of labor, salaries and administration. American doctors and nurses were paid substantially more than their European, Canadian or Japanese counterparts. But as Ezekiel Emanuel, an oncologist and bioethicist, noted in an accompanying editorial in The Journal of the American Medical Association, Americans also have fewer doctors per capita than many other countries, and so these salaries, weighted on a “per patient” basis, are only minimally higher than those in most countries. The administrative burdens were, however, disproportional and unique to American care. In one 2009 survey, the costs associated with doctors and nurses “interacting” with health-insurance plans — a euphemism for those deadly hours spent filling out forms, recording prior authorizations and negotiating with insurers — amounted to more than $23 billion a year.
The three major factors identified by the researchers — administrative waste, pharmaceutical price and procedural cost — may provoke familiar-sounding solutions to the costs of health care. Decrease waste by removing unnecessary and burdensome paperwork. Drive down pharmaceutical prices — through negotiation on costs, for instance, or by enabling the introduction of generic alternatives for patent-expired medicines. And limit the use of high-cost, low-value procedures where possible.
But what of the Khullar conundrum? What can an individual doctor do to fix health care costs? At first glance, the prescriptions prompted by the study’s authors seem dispiriting: The solutions are abstract and political, and they lie outside the realm of medical practice. Yet if you look more closely, this essential quandary of medicine may require a medical solution. Among the problems of American health care is a startling dissociation between “cost” and “value”: We pay more, but we often don’t get more. How might anyone restore the cost-value balance? In part, of course, through legislative and administrative reform, via political and public pressure. But in part, also, by deploying powerful tools that are newly at our disposal — genetics, epidemiology, computational analysis, biochemistry.
We might try to find, say, deep biological markers that would identify the few men and women who will benefit substantially from Brilinta over Plavix (perhaps the man with the heart attack would return for a blood test, or have his genes sequenced, to identify him as a likely responder); to define the subsets of elderly people who won’t benefit from a knee replacement (perhaps some combination of anatomical and physiological features predicts the lack of benefit); to identify women normally asked to have cesarean deliveries who can safely have vaginal births.
These strategies, if successful, will focus treatments on those most likely to benefit, reducing expenditures and complications. The big hope, yet unfulfilled, is that such treatment will ultimately increase value and decrease overall cost (in recent times, the focusing of medicines on subsegments of patients has resulted only in more expensive drugs). It’s the sort of medicine that might treat medicine’s cost crisis. It’s the kind of problem that a young doctor might learn to love.

Largest US drug distributor accused of illegally handling cancer medication

by Lenny Bernstein - The Washington Post - April 6, 2018

The nation’s largest drug distributor is being accused of illegally pooling leftover cancer medication from single-dose vials and selling it to health-care providers, who treated patients with it and often billed government programs for reimbursement.
A lawsuit unsealed Wednesday in New York seeks unspecified damages from McKesson Corp., the fifth-largest U.S. public corporation of any kind.
It says a McKesson subsidiary violated the federal False Claims Act by selling the medication, providing kickbacks by offering the pooled drugs at a discount and repackaging them under non-sterile conditions. That left the drugs open to contamination that could have harmed patients, the lawsuit claims.
A private company filed the lawsuit on behalf of itself, the United States, 31 states, New York City, Chicago and the District. The lawsuit alleges that McKesson repackaged medication from at least 2007 to 2010.
The McKesson subsidiary, US Oncology “repackaged or compounded the oncology drugs in an unlawful manner that was unapproved by the United States Food and Drug Administration and in non-sterile conditions, resulting in false claims being submitted for drugs,” according to the lawsuit.
McKesson said in a statement that “patient safety, compliance with the law and maintaining the trust of our customers are top priorities for us. While we have not yet formally received the complaint, we reject the allegations as they’ve been reported and plan to vigorously defend the company in court if this case moves forward.”
An FDA spokeswoman said the agency does not comment on pending litigation.
The federal government accused one of McKesson’s main competitors, AmerisourceBergen, of a similar scheme last year. That company eventually pleaded guilty to misdemeanor criminal charges and paid nearly $900 million in fines over related allegations involving pre-filled syringes. But it did not admit to the drug-pooling accusations.
Last year, McKesson paid $150 million, the largest fine ever by a distributor of opioid painkillers, to settle federal allegations that it had failed to report suspicious orders of narcotics by drugstores and other providers that diverted them to the black market.
The new allegations center on pre-filled syringes containing drugs for cancer and sideeffects that McKesson produced and sold to oncology centers, hospitals and physicians. The medication typically was sent from manufacturers to the company’s plant in single-dose vials. To ensure that each syringe could be properly filled, each vial contained as much as 10 percent more than would be put in a syringe.
Because the vials contain no preservatives, a single puncture leaves the remaining medication open to contamination, so the distributor is supposed to dispose of them.
But McKesson allegedly “harvested” the leftover medication, producing about one extra syringe for every 10 legitimates ones, according to George Carpinello, one of the attorneys for the plaintiffs.
In some cases, the company put false FDA identification numbers on the unlawfully produced syringes, Carpinello said. Some health-care providers billed Medicare and Medicaid for the treatment they gave patients, an action the lawsuit described as defrauding the government.
It is unclear whether patients were harmed by the alleged practice, Carpinello said. The immune systems of cancer patients are compromised, leaving them prone to infections.
But “at best, McKesson was indifferent” to the possibility of harming patients, he said.
The company encouraged purchase of the pre-filled syringes, rather than the vials, by offering them at a discount, the lawsuit contends. In September 2007, for example, a syringe full of one cancer drug cost $327.42 while a vial of the same medication cost $346.99, according to the lawsuit.
It is difficult to know how many unlawfully prepared syringes were sold, Carpinello said. From 2007 to 2010, the company shipped millions of syringes, and 95 percent of the drugs ordered by the one private company among the plaintiffs came in that form, the lawsuit shows.



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