Fed court nixes CMS overpayment rule in big win for Medicare Advantage insurers

Medicare Advantage insurers scored a significant legal victory on Friday when a D.C. federal court struck down a 2014 rule requiring payers to report and return overpayments.

The judgment could have significant implications for fraud cases involving Medicare Advantage diagnosis codes.

In her ruling (PDF), U.S. District Judge Rosemary Collyer in D.C. sided with UnitedHealth, which argued the rule that requires MA plans to return overpayments based on an analysis of its members’ health status was “wholly inconsistent” with Medicare fee-for-service requirements.

UnitedHealth sued the agency in 2016. Last year it asked the court to scrap the rule entirely.

Collyer granted UnitedHealth’s motion for summary judgment, indicating the rule “violates the statutory mandate of ‘actuarial equivalence’ and constitutes a departure from prior policy that the government fails adequately to explain.”

The rule specified that any incorrect diagnostic code that isn’t properly documented in a patient chart classifies as an overpayment, but dozens of UnitedHealth insurers argued CMS doesn’t apply that same level of scrutiny to its traditional Medicare program, which they said is riddled with errors.

The standard is compounded by the fact that under the Affordable Care Act, overpayments must be returned within 60 days after being identified.

The court sided with that reasoning, ruling that actuarial equivalence is impossible to achieve since traditional Medicare pays for all diagnostics codes, erroneous or otherwise.

“The effect of the 2014 Overpayment Rule, without some kind of adjustment, is that Medicare Advantage insurers will be paid less to provide the same healthcare coverage to their beneficiaries than CMS itself pays for comparable patients,” Collyer wrote.

A CMS spokesperson said the agency is evaluating the court’s decision.

“Today’s ruling sets an important precedent and affirms the government must apply its actuarial standards equally to Medicare Advantage plans and fee-for-service Medicare,” UnitedHealth spokesperson Matt Burns said in an emailed statement to FierceHealthcare.

The decision could have a huge effect on an ongoing fraud case against UnitedHealth in which the government alleges the insurer knowingly submitted inaccurate diagnosis codes.

Federal prosecutors abandoned a second MA fraud case against UnitedHealth last year.

The feds are also in the midst of a similar investigation into Anthem’s MA plans, which is focused on many of the same issues raised in the UnitedHealth case around the accuracy of diagnosis codes and retrospective chart reviews.

Last month, the DOJ took Anthem to court to compel testimony about its program, but the insurer has fought back, claiming it tried to meet nearly a dozen times with prosecutors resolve the scope of the request.

https://www.fiercehealthcare.com/payer/cms-federal-court-medicare-advantage-diagnosis-codes-overpayments-fraud

Clock ticking on Teva migraine drug, analyst expresses doubt for approval

Teva executives continue to express confidence the drugmaker’s novel migraine drug will get an FDA nod next week, but with questions lingering about the Celltrion manufacturing plant that will produce it, at least one analyst is writing it off for now.

Teva CEO Kåre Schultz in a meeting earlier this month with analysts at EvercoreISI indicated it was “more likely than not” that fremanezumab, which has already been pushed back three months, would get approved on its Sept.16 PDUFA date, analyst Umer Raffat wrote in a note. But Schultz and other Teva execs acknowledged “it could be approved or not,” Raffat wrote.

Today, with the date a week off, Credit Suisse analyst Vamil Divan is less confident of Celltrion’s ability to get everything wrapped up at the plant than he was when a July reinspection resulted in a Form 483 with eight observations. He told his clients today that it appears issues raised by the FDA about the Celltrion biologics plant are unresolved.

He said Credit Suisse is downgrading its shares to neutral on “what we see as … an unattractive risk/reward ahead of the Sept. 16 FDA Action Date for key pipeline product fremanezumab.” Instead of a fourth-quarter launch of the drug by Teva, Divan is expecting an approval and launch in the the second half of 2019.

“Teva continues to believe fremanezumab will be approved in mid-Sept and expect to launch the product immediately thereafter. However, with the FDA observations made recently at Teva’s partner Celltrion’s manufacturing site still not resolved, we believe an approval within the next 10 days is increasingly unlikely,” Divan wrote to clients Friday. “In addition, we believe expectations on fremanezumab’s commercial potential may be too high given market dynamics in the CGRP space and possibly more attractive offerings from companies such as Amgen/Novartis.”

The FDA reinspected the Celltrion plant in South Korea in July as a follow-up to a warning letter issued earlier in the year. The letter was not directed at the portion of the plant producing the API of Teva’s drug candidate. However, the July visit also served as a preapproval inspection for Teva’s promising migraine drug. It resulted in an FDA Form 483 (PDF) with eight observations.

Celltrion said the citation contained eight “manageable and correctable inspection observations” and that it expects outstanding observations to be lifted soon.

If it is not approved, it will be a disappointing stumble for Schultz, who has received high marks from analysts, particularly for his engineering of a massive restructuring that is slated to cut 14,000 jobs and save $3 billion annually for the Israel-based drug company. The company has said it expects the med “could drive meaningful upside to EBITDA and cash flow for speedier debt repayment”—particularly if it launches this fall.

https://www.fiercepharma.com/pharma/clock-ticking-teva-migraine-drug-analyst-expresses-doubt-for-approval

Pre-Brexit, top UK insulin provider Novo Nordisk plans to double its stockpile

One by one, drugmakers have disclosed plans to prepare for Brexit, which could leave British patients vulnerable to shipping delays and unable to access critical drugs. Novo Nordisk, the largest insulin supplier to the U.K., now says it’ll more than double its stockpile to prepare for the historic move.

Britain is set to leave the European Union in March 2019. By January, Novo Nordisk says it’ll more than double its normal 7-week stockpile to 16 weeks’ worth of insulin. The company supplies more than half of the U.K.’s insulin, according to The Independent. If no deal is established between the U.K. and the European Union, routine shipping and customs between countries could come under long delays.

Novo Nordisk UK Corporate Vice President Pinder Sahota said in a statement that the company’s “first commitment is to ensure that patients treated with our medicines remain unaffected in the event of a ‘no-deal’ Brexit.” The company is “working closely with trade organizations in the UK and the EU to ensure that the interests of our patients are at the forefront of negotiations.”

Additionally, Novo is working with authorities to “ensure continuity of supply, irrespective of the outcome of Brexit negotiations,” Sahota said.

Novo’s fellow insulin maker Sanofi has committed to stockpiling 14 weeks’ worth of drugs to prepare for Brexit fallout. The company also said it’d consider flying flu vaccines into the U.K. because of tight timelines required to deliver the products. If the parties could agree, Sanofi also said it would consider marking trucks to make a fast pass through customs.

Other top players in the pharma industry have been detailing their Brexit plans, as well. Pfizer recently said changes to its supply chain will cost $100 million to ensure supply. British drugmaker GSK has said its Brexit prep work will cost $100 million, while peer AstraZeneca has estimated the bill will be $40 million. Merck, for its part, plans a 6-month drug supply.

Last week, NHS England urged the entire industry to prepare. The agency ordered companies to report by Sept. 10 how they’ll build stockpiles. Officials want at least six weeks’ worth of drug supplies above normal.

https://www.fiercepharma.com/pharma/ahead-brexit-u-k-s-top-insulin-provider-novo-nordisk-more-than-doubles-its-stockpile

SEC files suit against Opko Health, Phil Frost alleging ‘pump and dump’ schemes

In a lawsuit filed in the U.S. District Court for the Southern District of New York, the SEC alleged that Barry Honig, Phillip Frost, OPKO Health, and other defendants engaged in “pump-and-dump” schemes that enriched the defendants and “left retail investors holding virtually worthless shares.” Honig was the primary strategist, calling upon other defendants to buy or sell stock, arrange for the issuance of shares, negotiate transactions, or engage in promotional activity, the SEC lawsuit claims.

https://thefly.com/landingPageNews.php?id=2787515

Nightstar target upped by Leerink

Thinly traded Nightstar Therapeutics (NITE +8.4%) is up on almost double normal volume, albeit on turnover of only 198K shares. Earlier today, Leerink’s Joseph Schwartz raised his fair value target to $30 (40% upside) from $25.

The company develops gene therapies to treat retinal disorders. Lead candidate NSR-REP1 is in Phase 3 development for choroideremia, an inherited condition characterized by progressive vision loss. The initial symptom is night blindness, usually occurring in early childhood.

https://seekingalpha.com/news/3388803-nightstar-therapeutics-8-percent

Departure of Portola’s CCO is a ‘clear positive,’ says Citi

Citi analyst Yigal Nochomovitz said the resignation of Portola Pharmaceuticals’ CCO is a “clear positive” and is not much of a surprise given his lack of experience in commercial operations. The analyst believes Portola can now substantially re-shape top-level management with a new COO with the right operational experience ahead of both the Andexxa and Bevyxxa launches. Norchomovitz rates Portola Pharmaceuticals a Buy with a $50 price target.

https://thefly.com/landingPageNews.php?id=2787453

College 529 plans could be used to pay off student loans in new tax legislation

• Homeschooling, apprenticeship fees — and, most notably, student loans, could all be paid for with 529 plans.
• “Anything that provides families with more flexibility in how they use 529 plans would be beneficial,” said Mark Kantrowitz, the publisher of SavingForCollege.com.

The first round of tax cuts that went into effect this year allowed people to dig into their 529 plans before college to pay for kindergarten through 12th grade private school tuition.

Now, in the second round of tax changes, the list of things the tax-advantaged education accounts can be used for might grow longer still.

Homeschooling, apprenticeship fees — and, most notably, student loans, could all be paid for with 529 plans, according to an updated version of what will be included in the so-called Tax Reform 2.0 provided on Thursday to Republicans by the House Ways and Means Committee.

“Anything that provides families with more flexibility in how they use 529 plans would be beneficial,” said Mark Kantrowitz, the publisher of SavingForCollege.com.

The change is likely to increase awareness about the accounts, he said. The advantages of the plans are notable: If you start saving at your child’s birth, Kantrowtiz said, about a third of the college goal will come from earnings. However, less than one-third of people understand their purpose.

Grandparents saving for their grandchildren’s education could especially benefit, Kantrowitz said.

Currently, a parent’s 529 plan has a minimal impact on their child’s financial aid eligibility, whereas grandparents’ accounts can have a serious one. To workaround that drawback, grandparents could now wait to use their 529 plans until their grandchildren are out of school and in debt. (More than 70 percent of graduates carry student loans.)

Still, the policy’s benefits will be inconsequential, said Steven Bloom, director of government relations for the American Council on Education.

Most people deplete their 529 plans by the time their child is finished with college and so there would be no money left over for them to cover their student debt anyway, Bloom said.

And, he added, “If you’re wealthy enough to have a lot in your 529, you’re probably not going to have student loans.”

There are ways that tax policy can provide relief to the millions of Americans with student debt, he said, such as adding incentives for employers to help their workers with their loans. However, this proposal, “makes it looks like you’re trying to solve a problem,” he said, “when you’re not really solving it.”

Fewer than 1 in 5 children under the age of 18 have a 529 plan, according to SavingforCollege.com. Half of those who do make more than $150,000.

https://www.cnbc.com/2018/09/07/529-plans-could-be-used-for-student-loans-in-new-tax-legislation.html