The Kentucky Supreme Court issued an opinion Aug. 21, 2014, (Tibbs v. Bunnell, Ky., No. 2012-SC-000603-MR)  in which it held that the incident report developed by the University of Kentucky Hospital (“hospital”), through the hospital’s Patient Safety Evaluation System (“PSES”), following the death of a patient, was not protected as patient safety work product (“PSWP”) under the Patient Safety and Quality Improvement Act of 2005 (the “Act”).
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The Patient Protection and Affordable Care Act (ACA) has always faced tremendous challenges due to the sheer magnitude of both the changes it authorized and the people it will impact. Now two different Federal Circuit Courts of Appeal have made the law’s implementation even more difficult by issuing conflicting rulings on the same day.
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The attorney-client privilege applies with equal force to internal investigations today as it did 30 years ago thanks to the D.C. Circuit’s recent decision in In re: Kellogg Brown & Root, Inc., No. 14-5055 (D.C. Cir. June 27, 2014). The appeals court decision vacates the March 6, 2014, district court decision in the same case. At the district court, Judge James Gwin ruled that the attorney-client privilege did not protect documents developed during KBR’s internal investigations of potential fraud relating to its LOGCAP III contract. According to Judge Gwin, KBR’s investigations were not privileged because they were conducted “pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice.”
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Several parts of the America Invents Act (the “AIA”) became law on Sept. 16, 2012, sparking some of the most meaningful changes to patent law seen in decades. One hot provision in the new law is the ability for one to challenge a patent’s validity in a new inter partes review (“IPR”) process. This legal tool could prove to be very valuable in solving some of the biggest business challenges facing generic pharma. This post addresses the business case for generic pharma using the IPR process.
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The author wishes to thank Andrew M. Hodgson for his assistance in preparing this post. Andrew is an Associate in the Firm’s Chattanooga office. 

As I approach the quarter century mark of my practice as a tort, healthcare and commercial litigator, predominately on the defense side, I reflect on some of the land mines that face the defense bar. These land mines include missing an affirmative defense, failing to join a necessary party, failing to enlist the services of all the expert witnesses needed to combat the plaintiff’s claims, and the list goes on. Even so, I would argue that none of these potential pitfalls can hold a candle to the specter of statutes of limitations and pre-suit requirements facing the plaintiff’s bar. In Tennessee, as in many states, those hurdles are magnified by pre-suit notices and other filings required of the plaintiff in making a healthcare liability claim. In November, the Supreme Court of Tennessee highlighted the importance of “crossing all your t’s and dotting all your i’s” when making such a claim in the case of Stevens v. Hickman Community Healthcare Services, Inc., No. M2012-00582-SC-S09-CV (Tenn. filed Nov. 25, 2013). Importantly, the Stevens court also made instructive rulings as to HIPAA preemption and a defendant’s right to receive records in healthcare liability actions.
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Pfizer, Inc. recently petitioned the Supreme Court, seeking review of three companion decisions from the First Circuit Court of Appeals.  These decisions found against Pfizer and in favor of multiple third-party payors (TPPs)—the Kaiser Foundation Health Plan, Inc. (an HMO), Aetna, Inc. (a health insurer), and a putative class of employer health plans—on civil Racketeer Influenced and Corrupt Organizations Act (RICO) claims for damages suffered due to Pfizer’s fraudulent marketing of off-label uses for the prescription drug Neurontin, an anti-convulsive approved for the treatment of epilepsy.  At the heart of the dispute is causation—the causal chain that runs from a drug manufacturer, such as Pfizer, to third-party payors of prescription drug benefits, such as HMOs, insurers and other health plans.

The First Circuit’s lead opinion—laying the common predicate necessary to understand each of the companion cases—came in the action brought against Pfizer by Kaiser, in which the court affirmed a $142 million jury award to the HMO.

The Development and Marketing of Neurontin

Neurontin was developed during the 1980s and early 1990s as an anti-epileptic drug.  In 1993, the Food and Drug Administration approved Neurontin for treatment of partial seizures in adults with epilepsy.  A campaign to market Neurontin for off-label conditions—conditions not included on the official label approved by the FDA—began in 1995.  These off-label conditions included neuropathic pain (pain from nerve damage), migraine headaches, and bipolar disorder.  Neurontin was marketed for treatment of these off-label conditions by way of, among other things:  (1) direct marketing to doctors, which misrepresented Neurontin’s effectiveness for off-label indications; (2) misleading information supplements and continuing medical education programs; and (3) articles published in medical journals that touted Neurontin’s off-label effectiveness but suppressed negative information about the drug. 
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On August 20, the Fifth Circuit Court of Appeals rejected a whistleblower claim by a former employee of Cardinal Health, Inc., affirming dismissal of the former employee’s complaint, which alleged that Cardinal Health sold hospitals run by the U.S. Department of Veterans Affairs defective medical equipment, in violation of the False Claims Act (FCA).

Before her termination from Cardinal Health, the plaintiff marketed Cardinal Health’s “Signature pump”—an electronic device that regulates the rate at which intravenous fluids flow into patients—to various hospitals, including hospitals run by the VA.  The plaintiff alleged that the Signature pump had a dangerous defect, causing air bubbles to accumulate and be released into a patient’s intravenous fluids flow, potentially resulting in serious injury or death.

The plaintiff claimed that she became aware of the defect in late 2000 and discussed it with a Cardinal Health area manager in early 2001.  In mid-2001, Cardinal Health suspended shipment of the Signature pump for three months and undertook a review of the possible defect.  Cardinal Health terminated the plaintiff at the end of the three-month review period.  Cardinal Health suspended production and sale of the Signature pump for independent reasons in 2006.

“Implied False Certification” Theory of FCA Product Liability

The crux of the plaintiff’s FCA claim was that Cardinal Health falsely certified to the VA that the Signature pump was in compliance with the warranty of merchantability in the parties’ contract each time it requested payment from the VA for the pumps—a so-called “implied false certification” theory.
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Are human genes patentable?

Late last week, the U.S. Supreme Court held that isolated segments of naturally occurring DNA are not patent eligible, while synthetically created DNA, such as complementary DNA (cDNA), is patent eligible. In the wake of this decision, patent portfolios should be reviewed to determine whether patents having claims to isolated DNA

In recent months, two federal courts have dismissed lawsuits alleging that branded drug manufacturers’ discounted subsidies—coverage of co-payments—for branded drugs violate federal racketeering and commercial bribery laws.  The two cases are among a number of similar pending suits, largely coordinated by the healthcare consumer advocacy group Community Catalyst, which concern approximately 20 different branded drugs.  Both cases are significant victories for branded drug manufacturers, who face claims that they have defrauded health plans by offering discounted subsidies directly to consumers—nudging those consumers away from cheaper, generic options preferred by the health plans—in order to preserve market share for branded drugs.

The first action, brought by union health plans against the manufacturer Merck & Co. in the United States District Court for the District of New Jersey, was dismissed on April 29, 2013.  Judge Michael A. Schipp dismissed the action on grounds that the health plans lacked standing—that the health plans failed to allege that Merck’s discounted subsidies caused the health plans’ members to be prescribed or to purchase drugs that they would not have been prescribed or have purchased otherwise.

A second action against the manufacturer Bristol-Myers Squibb, also brought by union health plans under similar legal theories, was dismissed on substantive grounds by Judge J. Paul Oetken of the United States District Court for the Southern District of New York on June 6, 2013.

As Judge Oetken summarized the crux of the dispute between health plans and branded drug manufacturers:  “Insurers are keen to control drug costs, while manufacturers are determined to maintain market share while competing with generics and therapeutic alternatives.  In recent years, manufacturers have launched programs through which they offer to cover the cost of co-payment obligations for their branded drugs.  Insurers, which create tiered co-pay obligations to encourage plan members to select cheaper drugs, oppose these programs and argue that they increase overall drug costs.”

In other words, health plans use tiered co-payment plans to incentivize consumers to purchase less expensive, generic equivalents of branded drugs.  And, against these payment arrangements, branded drug manufacturers endeavor to preserve their market share by countering plan incentives with discounted subsidies.
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