Stories from the marketplace
Bristol-Myers Will Settle U.S. Government Drug Probe
By Lisa Rapaport and Beth Jinks
Bloomberg.com
September 28, 2007
Bristol-Myers Squibb Co. completed an agreement to pay $515 million to settle U.S. allegations it overcharged the government for drugs and promoted medicines for unapproved uses.
The settlement resolves federal charges the company inflated the average wholesale price of some drugs, and investigations into allegations Bristol-Myers promoted medicines for non-approved uses. The U.S. government uses average wholesale prices, as reported by drugmakers, to set reimbursement rates for medicines used by federal health programs, including Medicare and Medicaid.
Bristol-Myers in 2005 settled a previous probe involving allegations it boosted sales by encouraging distributors to buy more medicine than they could sell.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGFYdv1vtWnU
And…
Court rules Medicare plans can be sued for nonpayment
By Amy Lynn Sorrel
American Medical News
October 8, 2007
The Texas Supreme Court… on Aug. 31 ruled that a group of Texas hospitals can sue Aetna in state court for allegedly failing to reimburse them.
In Christus Health Gulf Coast v. Aetna, five hospital groups had contracted with North American Medical Management of Texas to provide Medicare services to members of an Aetna subsidiary that participated in the Medicare Advantage program. NAMM went bankrupt in 2000 and stopped paying the hospitals, so the facilities turned to Aetna for reimbursement, court records show. Aetna said it already had paid NAMM for the services, and the health plan declined the hospitals’ claims.
The TMA’s Wilcox said the high court decision strengthens an Aug. 27 state trial court ruling holding PacifiCare liable for payment problems.
PacifiCare in the late 1990s contracted with a group of IPAs that eventually went bankrupt and failed to pay thousands of claims owed to doctors under its Medicare Advantage plan, Wilcox said. The insurer argued that it was not responsible for the unpaid claims, so the TMA and several physician groups sued in 2003.
http://www.ama-assn.org/amednews/2007/10/08/gvsd1008.htm
And…
New retail health clinic model puts doctors out front
By Pamela Lewis Dolan
American Medical News
October 8, 2007
While retail-based health clinics generally rely on nurse practitioners and physician assistants to see patients, another model is emerging that staffs entirely with physicians.
Despite the increase in overhead, that new model works, say clinic operators, because of its expanded scope and greater marketing potential. And some big names and deep pockets are jumping behind the concept.
One of the model’s early adopters is Jacksonville, Fla.-based Solantic, which recently expanded its stand-alone clinic chain to include clinics located inside Wal-Mart stores.
Solantic is also gaining attention because of one of the names behind it. Richard Scott, who founded Solantic in 2002, gained notoriety for taking two struggling Texas hospitals and creating, through mergers and acquisitions, the Columbia/HCA Healthcare Corp., which became the largest for-profit hospital chain in the world.
However, a massive Medicare fraud investigation cost Scott his job as Columbia/HCA’s CEO and president. Scott was never charged with wrongdoing, though other executives were, and HCA — which dropped the Columbia name — agreed to pay $1.7 billion in civil penalties and damages to settle the case.
http://www.ama-assn.org/amednews/2007/10/08/bisb1008.htm
And…
Medtronic, Again Questioned Over Payments to Doctors, Is Subject of Senator’s Inquiry
By Reed Abelson
The New York Times
September 27, 2007
Medtronic, which reached a $40 million settlement last year with the federal government over accusations that the company had paid illegal kickbacks to doctors for using its spinal devices, has continued to pay doctors millions of dollars in consulting fees, according to a lawyer representing a whistle-blower involved in the case.
In the case that led to last year’s settlement, the Justice Department accused Medtronic of paying kickbacks through what government officials described as “sham consulting agreements, sham royalty agreements and lavish trips to desirable locations” offered to doctors from 1998 to 2003.
http://www.nytimes.com/2007/09/27/business/27letter.html?ref=health
Comment:
By Don McCanne, MD
What do these stories have in common? They are examples of the marketplace at work, and it is our health care system and those it serves that are the victims.
Much of the current debate on reform centers around the issue of whether the free market or the government would provide the more efficient approach to financing health care.
These stories demonstrate that good business practices, designed to improve profits, are amoral or sometimes even immoral methods of allocating our health care dollars. The health care system is manipulated by businesses to achieve maximal return on investment. The for-profit private insurance industry adheres to these principles.
In contrast, government has the sole responsibility to use its public resources to promote the public good. Taxpayer-funded health insurance programs use their purchasing power to achieve maximal health care value for the beneficiaries of the public program.
If we were to establish our own national health insurance program we would be in a much better position to demand that the health care industry be injected with a heavy dose of business ethics.