Medicine Hat News

Connecticut Attorney General Richard Blumenthal (D) on Thursday filed a lawsuit in U.S. District Court in Boston over allegations that prescription drug distributor McKesson conspired to inflate the average wholesale prices of hundreds of brand-name medications in violation of federal racketeering and state consumer protection laws, the AP/Hartford Courant reports.

According to the lawsuit, McKesson conspired with First DataBank and other companies that publish prescription drug prices to increase, fix and maintain AWPs for 400 brand-name medications at 25% more than wholesale acquisition costs, compared with a previous premium of 20%.

Blumenthal said that, because state and federal health care programs base reimbursement rates for prescription drugs on AWPs, physicians, pharmacies and other health care providers that prescribed or dispensed medications distributed by McKesson could increase their profits. He added that state health care programs and residents overpaid by millions of dollars for prescription drugs because of the "illegal and deceptive practices" used by McKesson. Blumenthal said, "The victims of this surreptitious scheme included the patients and taxpayers who were overcharged by companies seeking higher sales and profits," adding, "McKesson exploited publicly funded programs that serve our most vulnerable citizens."

McKesson officials have not reviewed the lawsuit, according to an e-mail from company spokesperson James Larkin. In addition, he wrote that McKesson does not set AWPs or retail prices for prescription drugs paid by health plans or consumers. McKesson has denied similar allegations in other lawsuits, the AP/Courant reports (Collins, AP/Hartford Courant, 5/29).

State appeals courts in New Jersey and Texas on Thursday reversed two jury verdicts and a judgment on payment of legal fees in lawsuits related to the COX-2 inhibitor Vioxx that would have required Merck to pay about $37 million, Bloomberg/Washington Post reports (Van Voris/Voreacos, Bloomberg/Washington Post, 5/30).

In the New Jersey lawsuit, the state Superior Court Appellate Division reversed part of a 2006 jury verdict that would have awarded $9 million in punitive damages to plaintiff John McDarby, who experienced a heart attack after he took Vioxx for four years (Todd, Newark Star-Ledger, 5/30). The court ruled that the plaintiffs did not prove that Merck violated state consumer fraud laws (Berenson, New York Times, 5/30). The court also reversed a judgment that awarded $2.27 million in legal fees to attorneys for McDarby and a second plaintiff, Thomas Cona, who experienced a heart attack after he took Vioxx for 22 months (Bloomberg/Washington Post, 5/30). However, the court upheld part of the jury verdict that awarded $4.5 million in compensatory damages to the estate of McDarby, who died last year (Gold, AP/Philadelphia Inquirer, 5/30).

In the Texas lawsuit, the state 14th Court of Appeals reversed a 2005 jury verdict that would have required Merck to pay $26.1 million in damages to plaintiff Carol Ernst, whose husband Robert died of arrhythmia after he took Vioxx for eight months. A lower court previously reduced the jury verdict from $253 million to $26.1 million because of a state cap on damages (Flood, Houston Chronicle, 5/30). The appeals court ruled that the plaintiffs had not provided adequate evidence to prove that Vioxx caused the blood clot that led to the death of Robert Ernst (AP/Philadelphia Inquirer, 5/30).

Reaction

In response to the decisions, Bruce Kuhlik, general counsel for Merck, in a statement said, "We are gratified that the Texas appeals court correctly found that Vioxx did not cause Mr. Ernst's death," adding, "In addition, the New Jersey court correctly reversed the awards of punitive damage and consumer fraud. Today's decisions overturn almost $40 million of damages and attorney's fees previously awarded to plaintiffs at trial." Kuhlik said that Merck plans to appeal the decision to uphold the compensatory damages award in the New Jersey lawsuit (Bloomberg/Washington Post, 5/30).

Attorney Mark Lanier, who represents Carol Ernst, said, "It's pretty rare for an appellate court to take the place of the jury and the trial judge like this," adding, "Appellate courts in Texas have a reputation of standing up for corporate executives over and against widows and orphans. I'm sure the champagne corks are popping in New Jersey at Merck." He said that he would appeal the decision, possibly to the U.S. Supreme Court (Houston Chronicle, 5/30).

Attorney Ellen Relkin, who represents McDarby, praised the "robust affirmance" of the compensatory damages award by the New Jersey court. However, she said that she might appeal the decision to reverse the punitive damages award.

The new rulings give Merck a total of 11 victories and three losses amongst trials that reached verdicts. Retrials are pending in a few cases (Gold, AP/Los Angeles Times, 5/30). According to the New York Times, the "major court victories" for Merck move lawsuits related to Vioxx "closer to conclusion" and highlight the "increasing difficulty" for plaintiff attorneys in "winning lawsuits against big drug companies" (New York Times, 5/30). Earlier this month, Merck on agreed to a $58 million settlement with 29 states and the District of Columbia to end investigations over allegations that it downplayed cardiovascular risks caused by Vioxx in direct-to-consumer advertisements dating back to 1999 (Kaiser Daily Health Policy Report, 5/21).

Consumers Union, the not-for-profit group that publishes Consumer Reports magazine, plans to offer a new online service that will rate hospitals, the Wall Street Journalreports.

The service, which will evaluate an estimated 3,000 hospitals nationwide, will allow users to view graphs that rate the intensity of care provided by the facilities, based on a scale of zero for the most conservative treatment to 100 for the most aggressive treatment. The service will rate hospitals on the intensity of care -- which involves time spent in the hospital and the number of physician visits -- for nine serious medical conditions, including cancer and heart failure, treated during the last two years of life. In addition, the service will provide information on the average out-of-pocket cost for physician visits during the last two years of life for the nine conditions.

The service is based on research conducted as part of the Dartmouth Atlas Project, an initiative developed by Dartmouth College researchers that uses data collected from Medicare. Researchers involved with the project have found that higher intensity of care does not lead to improved patient outcomes in all cases.

According to the Journal, the "new hospital ratings, which are expected to be supplemented with further information later, are the first step in a broader effort to expand" the services offered by Consumers Union in the area of health care. Consumers Union currently rates health plans, medications and some medical treatments and might rate physician groups and elder care in the future (Mathews, Wall Street Journal, 5/29).

Aetna ranked first among 130 large health insurers in efficiency and accuracy in reimbursements to physicians, and Cigna ranked second, according to a report scheduled for release on Thursday by Athenahealth, the Wall Street Journal reports.

The report -- based on data from about 13,000 clients of Athenahealth, which provides physicians with practice management and electronic health record services -- rated health insurers on seven criteria, such as the length of time taken to reimburse physicians, the percentage of claims processed after one submission and the rate of denials of claims.

According to the report, Aetna in 2007 took an average of 27 days to reimburse physicians, processed 96% of claims after one submission and denied 5.9% of claims. Cigna, which ranked second, in 2007 took an average of 33 days to reimburse physicians, processed 96% of claims after one submission and denied 6.6% of claims, the report found. The New York state Medicaid program, which ranked last, in 2007 took an average of 137 days to reimburse physicians, processed 57% of claims after one submission and denied 39% of claims, according to the report.

The report, which Athenahealth began to compile in 2005, highlights the "greater push toward performance measurements and transparency across the health care sector," the Journal reports (Won Tesoriero, Wall Street Journal, 5/29).

More aggressive hospital care -- such as higher numbers of tests and procedures and longer stays -- does not lead to improved patient outcomes in all cases, according to a study released on Thursday, the Seattle Post-Intelligencerreports.

The 2008 Dartmouth Atlas of Health Care study, conducted by Dartmouth College researchers as part of the Dartmouth Atlas Project, examined the records of more than four million Medicare beneficiaries who between 2001 and 2005 received care at an estimated 3,000 hospitals nationwide during the last two years of their lives. Study participants received treatment for nine medical conditions -- congestive heart failure, chronic pulmonary disease, cancer, dementia, coronary artery disease, chronic kidney failure, peripheral vascular disease, diabetes with organ damage and severe chronic liver disease.

The study found that participants who underwent higher numbers of tests and procedures and stayed in the hospital longer had increased risk for medical errors and complications and cost more to treat. In addition, the study found that participants received different intensity of care based on where they lived and from which hospitals they received treatment (Black, Seattle Post-Intelligencer, 5/30). According to the study, hospitals in New York, Los Angeles and Miami provided the most aggressive care (Ostrom, Seattle Times,5/29).

Study co-author David Goodman said, "The general principle is that greater intensity of care is not better, and at the high end can actually be harmful" (Hartocollis/Fessenden, New York Times, 5/30).

Online Service

In conjunction with the study, Consumers Unionlaunched a new online service that will rate an estimated 3,000 hospitals nationwide based on the intensity of care provided for the nine medical conditions. The service will allow users to view graphs that rate the intensity of care based on a scale of zero for the most conservative treatment to 100 for the most aggressive treatment. In addition, the service will include information on out-of-pocket costs for Medicare beneficiaries at the hospitals.

John Santa, director of the Consumer Reports Health Rating Center, said, "When (patients are) in hospitals longer, the longer exposure can lead to hospital-acquired disease; more doctors involved in care can lead to communication problems." He said, "A major reason for more aggressive care is more hospital beds, more MRI machines, more doctors," adding, In order to 'compete' and survive economically, those hospitals and doctors need to do more stuff" (Colliver, San Francisco Chronicle, 5/30).

The study is available online.