Teaching Opioid Manufactures a Lesson, or Not

By: Jennifer Jordan 

Last Tuesday, the U.S. Department of Justice announced that Mallinckrodt, one of the largest manufacturers of generic oxycodone, agreed to pay $35 million to resolve allegations that the company violated the Controlled Substances Act by failing to report suspicious orders of controlled substances from 2008 through 2011 . 

According to the Justice Department, Mallinckrodt supplied distributors increasingly excessive amounts of oxycodone over that period of four years without notifying the DEA, which in turn supplied various pharmacies and pain clinics throughout the U.S. Without admitting any wrongdoing, the company’s general counsel stated that the company chose to settle “to eliminate the uncertainty, distraction and expense of litigation and to allow the company to focus in meeting the important needs of its patients and customers.” U.S. Attorney General Jeff Sessions was quoted as saying “Mallinckrodt’s actions and omissions formed a link in the chain of supply that resulted in millions of oxycodone pills being sold on the street. I believe that will prevent drug abuse, prevent new additions from starting and ultimately save lives.” He was also quoted as stating that “the settlement will send a message to other drugmakers that the Justice Department will seek to hold them accountable for their actions amid a national opioid addiction epidemic.”

Yeah, $35 million should make them think twice about selling their products for profit for as long as they can before they’re asked to stop breaking the law. Particularly now that they can focus on the important needs of their patients and clients. Sales in 2016 were $3.38 billion according to the company’s 10-K – think they can comfortably cover $35 million. And mind you this only happened because 33,000 people died in 2015 from opioid abuse and the government couldn’t ignore the problem any longer. As I contemplated  all those other drugmakers running scared, I couldn’t help but wonder what our dear friend Dave DePaolo would have had to say about the government’s coup in the war on opioids here. 

Think about this from the workers’ compensation perspective. An entire decade obligated to pay for these pain management practices now suddenly viewed as excessive. We knew it was excessive years ago but so long as physicians said otherwise, there was nothing comp could do but pay. Besides the rampant prescription drug use, we saw rises from about 2007 through 2012 in recommendations for epidural steroid, botox and other types of injective therapies, spinal cord stimulators and intrathecal pumps, and TENS and other forms of DME just to name a few costly pain management treatments.  If manufactured with the blessing of the FDA and prescribed by a physician under the assumption of medically necessity, workers’ compensation payers had no choice but to meet their legal obligations to make payment for such treatments. And when later deemed dangerous or questionably prescribed, there is no restitution to these payers. The bad actors are allowed to profit for as long as they can until it becomes socially unacceptable to allow the practice to continue and then the government finally intervenes. And when it does, the government recovers in fines, penalties and false claims actions for money paid from its programs.  But not comp. Basically the workers’ compensation industry has been held hostage to the political power of big pharma and an unwavering deference to the Hippocratic oath throughout this crisis and only because people finally died are we seeing action being taken to address opioid abuse. 

While on the topic of people dying from questionable pain management treatment, the owner of the compound drug pharmacy responsible for the nationwide meningitis outbreak in 2012 was finally sentenced last month to nine years in prison (rather than the 30 requested) for basically trying to manufacture product as fast as possible to keep up with the pain management industry’s demand for his product. At the height of the epidural steroid injection fad, his Massachusetts compounding pharmacy killed 76 people and sickened hundreds more when they shipped a batch of contaminated steroids all over the country. The outbreak was traced to multiple sources of contaminates in the facility, including standing water, mold and bacteria found in the air and on workers’ gloved fingertips. They also used expired ingredients and falsified logs to make it appear that clean rooms had been disinfected – whatever it took to push product out the door. NECC and other related companies settled with its victims and their families for $200 million. Now think about how many of those victims received the injection treating their work injury. 

One medical practice that played a part in the increased demand for those steroids and flourished during the ESI fad was investigated and found by the Maryland State Board of Physicians (following complaints by a large comp carrier in the state and a five year investigation) that, among other things, the doctors’ actions and inactions failed to meet appropriate standards for the delivery of quality medical care and showed gross overutilization of health care services. In addition to some continuing education, each physician was placed on a three year probation and imposed a $25,000 fine. Ouch, bet that taught them a lesson. An epidural steroid injection can easily exceed $1,000 and are given in a series of three. One patient among patient files peer reviewed received over 45 injections. 

But to truly appreciate the magnitude of how badly these pain management practices effected workers’ compensation payers, consider all of the cases that were settled during this period involving future medical commutations calculated based upon these treatment patterns and costs, particularly when involving Medicare beneficiaries. Not only did these entities pay for questionable treatment received during the claim period, but that same treatment was projected out over life expectancy and reduced to a pot of gold to support their legalized drug addictions for life. Even better, a recent trend of CMS’s, in its voluntary MSA approval program, was to also provide a lifetime supply of Evzio, a form of Narcan used to reverse respiratory depression and treat opioid overdose symptoms. So not only does CMS recommend a potentially dangerous lifetime supply of drugs be funded in settlement of a work comp claim, but it also wants the carrier to provide the means to treat the reasonably anticipated overdose. 

Think about it. There are at least 10 years worth of MSAs out there calculate based upon these pain management treatment practices that the government is just now questioning. And those carriers are not entitled to a penny of that money back. Remember Actiq? The fentanyl based lollipop FDA approved for opioid tolerant cancer patients with breakthrough cancer pain with a cost of about $65 per dose commonly prescribed in 2007 for chronic work comp related pain? Under the premise that pain is pain, the manufacturer instructed sales reps to market general practitioners for use with patients not opioid tolerant. Cephalon was found to be illegally marketing off-label uses and entered into a plea agreement with the U.S. in September 2008, agreeing to pay about $425 million. A typical monthly cost at that time, at PBM pricing, was around $1,700. An MSA involving a claimant with a prescription for Actiq would commonly exceed a million dollars. 

So I guess that while long overdue, progress is still progress and we should be grateful. We finally put a California physician in jail for killing multiple patients with her prescription pad, Attorney General Sessions announced Thursday that more than 400 people have been charged with taking part in healthcare fraud and opioid scams totaling $1.3 billion in false billing and the FDA finally wants to consider mandatory opioid education for providers.  But having had a hand in legalizing addiction, the government needs to be doing more to treat addiction rather than payers such as workers’ compensation continuing to be held responsible for addiction suffered as a result of treatment of the comp injury.

Although the Trump Administration recently gave HHS $485 million to administer grants to the states to help them “combat opioid addiction,” some states will receive as little as $2 million. With all of the millions noted above in government recoveries, perhaps a little of that could find its way down to the comp industry to alleviate some of the financial burden suffered from the government’s failure to combat the opioid problem sooner. Maybe when forced to share, Mr. Sessions may realize just how pathetic these fines are in the greater scheme of things.