CreakyJoints Under Scrutiny for Ties to Drug Makers 

By Pat Anson, PNN Editor

Patient advocacy groups are coming under scrutiny again for their financial ties to drug companies. The latest is the Global Healthy Living Foundation (GHLF), a non-profit charity that created CreakyJoints, a website and social media platform that raises awareness about arthritis and other chronic illnesses. 

According to Bloomberg News reporter Ben Elgin, the foundation and CreakyJoints have long had a cozy relationship with Pfizer, Amgen, Johnson & Johnson and other corporate donors. Pfizer has donated nearly $1 million to the foundation over the past decade and one of its vice-presidents even serves on GHLF’s board of directors.

In a speech to drug makers in 2010, GHLF president Seth Ginsberg reportedly sought their donations -- while at the same time promising the companies “higher profits” and “sales rep participation in our programs.”

Ginsberg, who was diagnosed with spondyloarthritis as a teenager, co-founded GHLF in 1999 with marketing executive Louis Tharp.

In addition to CreakyJoints, GHLF has two other “grassroots” programs, Fail First Hurts and the 50-State Network, which advocate for healthcare policies that often align with the interests of its donors.  

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According to GHLF’s 2017 tax return, the foundation had over $5 million in annual revenue. Ginsberg was paid a salary of $384,000, while Tharp received $220,000 as Executive Director.  Nearly $300,000 was also paid to a for-profit marketing company established by the two men, although it’s unclear what the payment was for.

Bloomberg reported that GHLF’s tax returns “reflect errors and unexplained entries that have obscured the amounts of money flowing to its cofounders.”

“Are they operating in a way that is extremely transparent? It’s safe to say they’re not,” Brian Mittendorf, a professor of accounting at Ohio State University told Bloomberg. “From looking at their disclosures, you have no idea how closely they’re related to some of the entities it pays.”

At least one GHLF board member and several patient volunteers reportedly left the organization because they were troubled by its relationships with donors.

GHLF did not grant an interview to Bloomberg, but replied to questions in writing.

“The only time we engage in advocacy is when it helps patients. If it doesn’t help patients, we don’t do it,” the foundation said in a statement. “Our mission is to engage in patient-centered research, provide advocacy for access-to-care, and to support people living with chronic disease by providing a supportive environment and accessible education.”

In a related story, Bloomberg reported that several other recently formed non-profits – such as the U.S. Rural Health Network --  appear to be little more than front organizations for the pharmaceutical industry.

“There are a number of groups created by pharma companies that look and act like patient organizations, but they’re 100 percent funded by industry,” said Marc Boutin, chief executive officer of the National Health Council. “They sound and look like patient organizations, but they take positions that industry wants.”

Drug Companies Fined for Co-Pay Programs

Last week two drug companies agreed to pay $125 million in fines to settle allegations that they used charitable foundations as front organizations to bilk Medicare.

Amgen and Japanese drug maker Astellas Pharma paid the foundations to establish co-pay prescription drug programs for Medicare patients. Federal prosecutors say the programs were primarily designed not to help patients, but to illegally pay their co-pays for Astellas and Amgen products.

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Federal anti-kickback laws prohibit pharmaceutical companies from making any kind of payment to induce Medicare patients to purchase their drugs. The prohibition includes co-pays.

“The companies’ payments to the foundations were not ‘donations,’ but rather were kickbacks that undermined the structure of the Medicare program and illegally subsidized the high costs of the companies’ drugs at the expense of American taxpayers,” U.S. Attorney Andrew Lelling said in a statement.

“When pharmaceutical companies use foundations to create funds that are used improperly to subsidize the co-pays of only their own drugs, it violates the law and undercuts a key safeguard against rising drug costs,” said U.S. Assistant Attorney General Jody Hunt.

Last year, Pfizer paid nearly $24 million to settle allegations that it also used a co-pay program to pay Medicare for the company’s prescription drugs.

U.S. Pain Foundation Co-Pay

The U.S. Pain Foundation is under investigation by the U.S. Senate Finance Committee for a similar co-pay program established with Insys Therapeutics, a controversial Arizona drug company. Insys makes Subsys, an expensive and potent fentanyl spray blamed for hundreds of overdose deaths.

U.S. Pain received $2.5 million from Insys to launch the “Gain Against Pain” program, which ostensibly helped Medicare patients pay for drugs prescribed for breakthrough cancer pain. Critics say the program was primarily used to increase prescriptions for Subsys, which can cost $24,000 for just a four-day supply.

Former U.S. Pain CEO Paul Gileno initially defended the co-pay program, saying the money from Insys “does not influence our values,” but later resigned over allegations that he misappropriated $2 million from his own charity.

The Gain Against Pain program was subsequently shutdown in August 2018 and U.S. Pain said it would no longer accept funding from Insys.

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Sen. Ron Wyden (D-OR), the ranking member of the Senate Finance Committee, sent a lengthy letter last December to U.S. Pain interim CEO Nicole Hemmenway asking a series of questions about the Insys co-pay program. According to the senator’s office, Wyden has still not gotten a full response.  

“The U.S. Pain Foundation has yet to provide a substantial amount of the information that Senator Wyden requested in his letter. Staff is in communication with the organization in order to get to the bottom of the organization’s financial relationship with pharmaceutical manufacturers, including Insys, and its compliance with applicable federal laws,” a Wyden spokesperson said in a statement to PNN.

A federal jury in Boston is currently in its third week of deliberations in a criminal case against Insys founder John Kapoor and four former executives of the company, who are accused of bribing doctors to boost sales of Subsys. 

U.S. Pain also remains under investigation by the Connecticut Attorney General’s office for financial irregularities that led to Gileno’s resignation.

Feds Bust Operators of Bogus Medical Clinics

By Pat Anson, Editor

Hardly a day goes by without the U.S. Drug Enforcement Administration announcing a new drug bust or the sentencing of someone for drug trafficking. The announcements have become so routine they’re often ignored by the news media.

But a drug bust in Los Angeles this week is worth sharing, if only because it shows that the underground market for prescription painkillers is booming and criminals are eager to take advantage of it.

The DEA announced the indictment of 14 defendants and released details of a brazen scheme that involved a string of sham medical clinics, fake prescriptions and kickbacks to doctors who were paid “for sitting at home.”

The feds estimate that at least two million prescription pills – most of them painkillers – were diverted and sold to customers looking for pain relief or to get high.

Indictments by a federal grand jury allege the suspects established seven bogus medical clinics in the Los Angeles area. The clinics would periodically open and then close, after illegally obtaining large quantities of oxycodone, hydrocodone, alprazolam (Xanax) and other prescription drugs from pharmacies using fake prescriptions. The drugs were then sold to street level drug dealers.

Prosecutors say the ringleader of the scheme -- Minas Matosyan, aka “Maserati Mike” -- hired corrupt doctors to write fraudulent prescriptions under their names in exchange for kickbacks.

“This investigation targeted a financially motivated racket that diverted deadly and addictive prescription painkillers to the black market,” said David Downing, DEA Special Agent in Charge of the Los Angeles Division.

“The two indictments charge 14 defendants who allegedly participated in an elaborate scheme they mistakenly hoped would conceal a high-volume drug trafficking operation,” said Acting U.S. Attorney Sandra R. Brown.

The indictments describe how Matosyan would “rent out recruited doctors to sham clinics.”  In one example described in court documents, Matosyan provided a corrupt doctor to a clinic owner in exchange for $120,000. When the clinic owner failed to pay the money and suggested that Matosyan “take back” the corrupt doctor, Matosyan demanded his money and said, “Doctors are like underwear to me. I don’t take back used things.”

In a recorded conversation, Matosyan also discussed how one doctor was paid “for sitting at home,” while thousands of narcotic pills were prescribed in that doctor’s name and Medicare was fraudulently billed more than $500,000 for the drugs.

Prosecutors say the identities of doctors who refused to participate in the scheme were sometimes stolen. In an intercepted telephone conversation, Matosyan offered one doctor a deal to “sit home making $20,000 a month doing nothing.” When the doctor refused the offer, the defendants allegedly created prescription pads in the doctor’s name and began selling fraudulent prescriptions for oxycodone without the doctor’s knowledge or consent. 

The conspirators also issued fake prescriptions and submitted fraudulent billings in the name of a doctor who was deceased.

The indictment alleges that criminal defense attorney Fred Minassian tried to deter the investigation. After a load of Vicodin was seized from one customer, Matosyan and Minassian allegedly conspired to create fake medical records to throw investigators off track.

Matosyan, Minassian and 10 other defendants were arrested and arraigned in federal court. Authorities are still looking for the two remaining fugitives.

While the DEA continues to bust drug dealers and unscrupulous doctors, the diversion of opioid medication by patients is actually quite rare. A DEA report last year found that less than one percent of legally prescribed painkillers are diverted. The agency also said the prescribing and abuse of opioid medication is also dropping, along with the number of admissions to treatment centers for painkiller addiction.

Patients ‘Treated Like Livestock’ in Kickback Scheme

By Pat Anson, Editor

Federal prosecutors have charged five people, including a former hospital executive and two orthopedic surgeons, with fraud in a $580 million kickback scheme involving thousands of spinal surgeries at two southern California hospitals.

The alleged scheme included tens of millions of dollars in illegal kickbacks paid to chiropractors, doctors and other health care providers over an eight year period.  As a result of the payments, thousands of patients were referred to Pacific Hospital in Long Beach for spinal surgeries that were paid for by Medicare or California worker’s compensation system.

“Medical referrals should be based on what’s best for the patient – not what’s best for the doctor’s bank account,” said IRS Special AgentErick Martinez. “In paying the kickbacks and submitting the resulting claims for spinal surgeries and medical services, the defendants acted with the intent to defraud workers’ compensation insurance carriers and to deprive the patients of their right to honest services.”

Two of the defendants have already pleaded guilty, and three others have agreed to plead guilty in the coming weeks. Prosecutors say all five have agreed to cooperate in the government’s ongoing investigation.

A second kickback scheme encouraged doctors to refer patients to the Tri-City Regional Medical Center in Hawaiian Gardens.

“Injured workers were treated like livestock by doctors and hospitals who paid or accepted kickbacks and bribes in exchange for referrals,” said California Insurance Commissioner Dave Jones. “Injured workers are put at risk when their medical treatment is based on kickbacks and bribes instead of their medical needs.”

The defendants include James Canedo, the former chief financial officer of Pacific Hospital. Canedo pleaded guilty in September to mail fraud, money laundering, paying or receiving kickbacks and other charges.

Orthopedic surgeons Philip Sobol and Mitchell Cohen, chiropractor Alan Ivar, and Paul Randall, a former health care marketer at the two hospitals, also agreed to plead guilty to charges stemming from the kickback scheme. Ivar admitted he was paid a monthly retainer by Pacific Hospital for over a decade to refer patients.  

Prosecutors say the conspirators typically paid a kickback of $15,000 for each lumbar fusion surgery and $10,000 for each cervical fusion surgery. Over 4,400 patients were referred to the hospitals, including some who lived hundreds of miles away.

Under the terms of their plea agreements, Sobol faces a federal prison term of up to 10 years; Canedo, Ivar and Randall could be sentenced to as much as five years; and Cohen faces up to three years in prison. All will be required to pay restitution to the victims of the scheme, which in Canedo’s case will be at least $20 million.

Millennium Wins FDA Contract Despite Fraud Charges

By Pat Anson, Editor

Just days after agreeing to pay $256 million to the federal government to settle fraud and kickback charges, Millennium Health has been selected to provide urine drug tests to the Food and Drug Administration for a clinical trial.

The trial will assess the development of opioid tolerance in patients taking pain medication with an abuse deterrent formula. Millennium could potentially make $1.6 million under the FDA contract.

"Long term opioid treatment can produce positive outcomes when prescribed and used appropriately, but they also carry risks that must be managed. UDT (urine drug testing) plays a critical role in aiding the clinician in evaluating patient safety. Millennium's selection as a service partner in this important initiative reflects our advanced technical and analytic capabilities and commitment to excellence," said Millennium CEO Brock Hardaway.

Millennium -- the nation’s largest drug testing company -- won the contract soon after it agreed to settle fraud charges under the Federal False Claims Act. Millennium was accused of bilking Medicare, Medicaid and other federal health care programs for a large number of medically unnecessary urine drug and genetic tests. The San Diego based firm was also accused of violating federal kickback laws by providing physicians with free urine “point of care” (POC) test cups if they referred more expensive laboratory testing to Millennium.  

“Millennium allegedly promoted indiscriminate and unnecessary testing that increased medical costs without serving patients’ real medical needs,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts.  “A laboratory that promotes and knowingly conducts medically unnecessary drug testing operates unlawfully and squanders our precious federal health care resources.”

Under terms of its settlement with the Department of Justice (DOJ), Millennium will pay $237 million to settle claims for unnecessary urine and genetic tests. Millennium also entered into a corporate integrity agreement with the Department of Health and Human Services, and will pay $19.2 million to the Centers for Medicare and Medicaid Services to resolve issues over its billing practices. The government, in turn, will pay whistleblowers over $30 million for their help in building the case against Millennium.

“Millennium used a variety of schemes to cause physicians, including many of its biggest referrers, to routinely order excessive amounts of UDT (urine drug tests) for all patients (including Medicare and Medicaid patients) regardless of individual patient assessment or need. Millennium’s abusive practices included the use of physician standing order forms to encourage routine, excessive UDT, and the dissemination of false and misleading statements about drug abuse rates and the value of its testing,” the original government complaint said.

"While Millennium may debate some of the merits of the DOJ's allegations, we respect the government's role in health care oversight and enforcement,” said Millennium's Hardaway. “At the end of the day, it was time to bring closure to an investigation that began nearly four years ago. Millennium Health is currently a very different organization than we were in the past. We fully embrace our obligation to both commercial and publicly funded health plans to provide value to the health care system overall and ensure that doctors who order our testing solutions adequately demonstrate that those solutions are clinically necessary.”

After the settlement was reached, Moody's Investors Service downgraded Millennium's Health's corporate debt rating and said its rating outlook was negative.

"The downgrade reflects Moody's expectation that Millennium will complete a distressed debt exchange or file for Chapter 11 bankruptcy in the near term. Moody's is estimating that lenders will suffer material losses in the event of a default," Moody's said in a statement.

Millennium is not the first drug testing company to face fraud and kickback charges. Competitors Amertiox, Calloway Labs, Quest Diagnostics, and LabCorp have all faced similar charges and paid millions of dollars in fines.As a result of these cases, Medicare has proposed lowering its billing rates for diagnostic testing as early as 2016, moving to a flat-rate fee structure to prevent drug-testing companies from charging more by testing for more substances.

As Pain News Network has reported, urine drug testing grew into a lucrative $4 billion industry – what some call “liquid gold” – largely because so many doctors who treat addicts and chronic pain patients require them to submit to urine drug screens. In many cases, point-of-care tests are used, even though many experts consider them unreliable.