News in brief - June 13, 2005

House Democrats offer liability reform alternative - Supreme Court to review ruling on N.H. abortion law - FBI hit over fraud investigation funds - Bill aims to lower federal spending on drugs advertised to consumers - 3-state drug purchasing pool gets government OK - Judge offers final approval to Lupron settlement

House Democrats offer liability reform alternative

A cap on noneconomic damages that adjusts according to inflation is the centerpiece of a medical liability reform measure that several House Democrats unveiled last month.

The legislation uses the $250,000 cap from a seminal 1975 California reform law and applies an economic formula to determine what the money would be worth in current dollars. Bill sponsors estimate that the cap would start at about $878,000 and adjust upward every year.

The American Medical Association supports the original $250,000 limit.

In order to focus the liability protections on physicians, the Democratic bill would exclude pharmaceutical companies and device makers from the list of entities covered by the caps. The legislation also would establish mediation programs, a voluntary medical error reporting system, requirements that liability insurance firms justify rate increases, and sanctions for attorneys who file frivolous lawsuits.

Supreme Court to review ruling on N.H. abortion law

The U.S. Supreme Court in May said it would take up an appellate court decision that struck down a New Hampshire law requiring doctors to notify a minor's parent at least 48 hours before providing an abortion unless the patient had a court waiver or would die before the parental notification could take place.

The 1st U.S. Court of Appeals in Boston struck down the 2003 New Hampshire law because it did not contain an explicit exception for preserving a pregnant woman's health.

The court also said the act is unconstitutional because "it fails to safeguard a physician's good-faith medical judgment that a minor's life is at risk." Some doctors fear that they could be accused of not meeting the law's requirements if they make a medical decision that is later questioned under the act.

New Hampshire's attorney general asked the U.S. Supreme Court to overturn the appellate decision in the case, Ayotte v. Planned Parenthood of Northern New England et al. This is the first time in five years that the high court has agreed to hear a case involving an abortion issue.

FBI hit over fraud investigation funds

The FBI cannot determine whether tens of millions of dollars designated for fighting health care fraud are being used for their intended purposes, a new report says.

The Government Accountability Office said the FBI does not have an adequate system for tracking the money, used to investigate improper uses of Medicare and Medicaid dollars. Senate Finance Committee Chair Charles Grassley (R, Iowa) requested the GAO report amid concerns that some of the funding, which totaled $114 million in 2003, has been shifted to counterterrorism activities.

"It violates federal law to reprogram the dollars specifically allocated by Congress for this purpose, and it's inexcusable that the government cannot account for millions of dollars set aside to fight health care fraud," Grassley said in a statement.

Bill aims to lower federal spending on drugs advertised to consumers

Drug companies would be required to give Medicaid and other programs an extra discount for any drugs for which they run direct-to-consumer advertisements under legislation proposed by Sens. Ron Wyden (D, Ore.) and John Sununu (R, N.H.). DTC advertising increases use of drugs, many of which are among the drivers of rising federal health care spending, the lawmakers argue.

"The government should make smarter use of its purchasing power for drugs advertised directly to ... consumers. The federal government provides a tax break for that advertising, and taxpayers shouldn't have to further subsidize the drug companies' marketing efforts through Medicare and Medicaid," Wyden said in a statement. The measure also requires the Dept. of Health and Human Services to study ways to reduce the amount of tax dollars spent on advertised drugs and to ensure patients are receiving pharmaceuticals based primarily on medical need.

3-state drug purchasing pool gets government OK

The Dept. of Health and Human Services has approved the second multistate purchasing pool to help Medicaid to bring down prescription drug spending. The new pool will consist of Louisiana, Maryland and West Virginia. Together, the states expect to save more than $60 million through their combined negotiating power.

"The ability to purchase drugs at a lower cost will help the participating states continue to provide critical medications to the millions of low-income citizens who depend on the Medicaid program," said HHS Secretary Mike Leavitt.

The first multistate pool was approved in April 2004. It initially consisted of Alaska, Michigan, Nevada, New Hampshire and Vermont. They were later joined by Hawaii, Minnesota and Montana.

Judge offers final approval to Lupron settlement

U.S. District Judge Richard G. Stearns gave final approval last month to a $150 million settlement between TAP Pharmaceutical Products and a class of patients and health plans that had alleged the company overcharged for its prostate cancer drug Lupron.

The settlement includes paying $55 million to certain designated health plans and about $95 million to settle claims of individual consumers and a second class of health plans.

TAP Pharmaceuticals did not admit any wrongdoing. It earlier pleaded guilty to a criminal charge and paid the government about $875 million. Federal officials had accused TAP of giving physicians free Lupron samples that the government was then billed for when the drugs were offered to Medicare patients.