How Rival Opioid Makers Sought To Cash In On Alarm Over OxyContin’s Dangers

As Purdue Pharma faced mounting criticism over deaths linked to OxyContin, rival drugmakers saw a chance to boost sales by stepping up marketing of similarly dangerous painkillers, such as fentanyl, morphine and methadone, Purdue internal documents reveal.

Purdue’s 1996-2002 marketing plans for OxyContin, which Kaiser Health News made public this year for the first time, offer an unprecedented look at how that company spent millions of dollars to push opioids for growing legions of pain sufferers. A wave of lawsuits demanding reimbursement and accountability for the opioid crisis now ravaging communities has heightened awareness about how and when drug makers realized the potential dangers of their products.

The Purdue documents lay out how the company and its biggest competitors were jockeying for market share. Some of those drugmakers’ sales promotions downplayed or ignored the risks of taking opioids, or made false claims about their safety, federal regulators have asserted in warning letters to the companies.

Purdue first offered OxyContin as a remedy for moderate to severe cancer pain in 1996. Within three years, the company viewed the cancer market as too limited, with $261 million in potential annual sales versus $1.3 billion for a broader range of chronic pain care, the company’s marketing reports said.

“That was a pretty good recipe for a blockbuster,” said Andrew Kolodny, who directs Physicians for Responsible Opioid Prescribing, an advocacy group critical of drug industry marketing.

Purdue has become the most high-profile drugmaker linked to the surging opioid crisis. But other opioid manufacturers didn’t sit by idly as sales of OxyContin skyrocketed, topping $1 billion in 2000, despite reports of overdose deaths and addiction.

Purdue’s marketing reports indicate the company was worried about losing business to fentanyl-laced patches called Duragesic, as well as morphine pills and, to a lesser degree, methadone — which some managed-care groups and Medicaid health plans preferred because it cost much less than OxyContin. Methadone and morphine are made by a variety of drug companies.

In its 1999 marketing report, Purdue noted that Janssen Pharmaceuticals, an arm of drug giant Johnson & Johnson, was making “slow but steady” progress in promoting its Duragesic patches. The patches, which users attach to their skin, deliver a dose of fentanyl, an opioid drug about 50 to 100 times more powerful than morphine, according to the Drug Enforcement Administration.

Purdue estimated that Janssen would spend about $4 million in 1999 on medical journal advertising to persuade doctors to prescribe the patches for “early treatment of non-cancer pain and pain in the more frail elderly.” That is more than triple what Janssen spent the year before, according to the 2000 Purdue marketing report. In a statement to KHN, a Janssen spokesman said the company quit “actively marketing” Duragesic in 2008.

Purdue also spent millions on medical journal ads — and like Janssen, it drew criticism from the Food and Drug Administration for minimizing the dangers of opioids, government records show.

In 2000, the Food and Drug Administration criticized Purdue for exaggerating the benefits of using OxyContin to treat arthritis, while in 2003 the agency found that some other ads had “grossly overstated” OxyContin’s safety.

Janssen also drew the ire of the FDA. In March 2000, the agency called some claims made for Duragesic “false or misleading,” including the suggestion that the drug “has less potential for abuse than other currently available opioids.”

In September 2004, the FDA told Janssen to “immediately cease” making “false or misleading” claims, including saying that Duragesic was “less abused than other opioid drugs.” In its statement to KHN, Janssen said its marketing actions were “appropriate and responsible,” adding that it “acted quickly to investigate and successfully resolve FDA’s inquiries.”

The Purdue marketing reports are part of a cache of documents the company provided to the Florida attorney general’s office in 2002. The Florida attorney general released them to two Florida newspapers in 2003 after Purdue lost a court battle to keep them under wraps.

More than 1,500 groups, mostly cities, counties and states, are suing Purdue Pharma, Janssen and several competitors and drug distributers in federal court in Cleveland demanding reimbursement for treatment costs and other compensation. In a statement to KHN, Purdue said: “We vigorously deny these allegations and look forward to the opportunity to present our defense.”

The growing cluster of lawsuits argue that drugmakers set out to deceive doctors and the public by claiming their products presented little risk.

For its part, Purdue accused Janssen of trying to exploit public alarm over OxyContin-linked deaths to spark new sales of Duragesic.

“It has been reported that Janssen sales representatives are using improper techniques to capitalize on the negative press surrounding OxyContin Tablets and the issue of abuse and diversion,” reads the 2002 Purdue marketing plan.

In fact, opioids made by Purdue’s rivals also contributed to overdose deaths in those years and have continued to do so. In 2016, more than 42,000 people died nationwide from opioid-related causes, according to the Department of Health and Human Services.

Florida was one of the early states to see a rise in overdose deaths tied to prescription drugs. Florida medical examiner’s toxicology reports in 2002 detected oxycodone, the active ingredient in OxyContin, in hundreds of overdose fatalities. Abusers realized they could crush the pills and inject or snort the powder to get high. Many others died after mixing the pills with sedatives also prescribed by their doctors.

Florida medical examiner files also showed that abuse of fentanyl pain patches, methadone and morphine took many lives. Some abusers had figured out how to drain the Duragesic patch of its liquid fentanyl and inject it like heroin, or otherwise ingest it.

In July 2005, the FDA warned health care professionals about abuse of fentanyl patches. In December 2007, FDA cited reports of deaths and “life-threatening adverse events” when the fentanyl patch “was used to treat pain in opioid-naïve patients and when opioid-tolerant patients have applied more patches than prescribed, changed the patch too frequently and exposed the patch to a heat source.”

Purdue also kept an eye on methadone, noting in a 1999 marketing plan that “market research as well as reports from the sales force indicates that methadone use is increasing in both the management of cancer pain and non-malignant pain due to its low cost.” But as methadone won acceptance for treating pain, it also began to kill with alarming frequency.

The FDA in November 2006 warned of deaths and dangerous side effects among patients “newly starting methadone for pain control and in patients who have switched to methadone after being treated for pain with other strong narcotic pain relievers.”

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

No One Knows How Many Lose Coverage From Healthy MI Work Reqs

The state still doesn’t have an exact figure on the number of Healthy Michigan recipients who could lose health coverage because of the work requirements recently enacted by the Legislature.

However, the Michigan Department of Health and Human Services said it doesn’t expect more than 400,000 of the roughly 680,000 Healthy Michigan recipients to be affected by the 80 hours-per-month requirement that came with Sen. Mike Shirkey’s (R-Clarklake) SB 0897, signed into law by Gov. Rick Snyder in June.

That 400,000 number is based on subtracting from the total program population the number of people who are already meeting those hours, or are exempt from other work requirements posed by food assistance and cash assistance programs, DHHS spokesperson Bob Wheaton said.

Yet, Wheaton said the number impacted by the requirements could still be less than 400,000, because some may be exempt from the work requirements and some may already be working.

But the DHHS hasn’t been able to calculate how many people might be kicked off their health coverage for not complying with work requirements, a question posed to the state by House Minority Leader Sam Singh (D-East Lansing) July 31 during a public hearing on the DHHS’ proposed Healthy Michigan waiver.

Singh argued that because the state doesn’t have that data—or on how the work requirements would affect uncompensated care levels or how much it will cost the state to implement the changes, two other questions Singh posed to the state—the program changes don’t live up to their stated goals.

“The goals of this amendment really is supposedly, to improve access to healthcare for uninsured or underinsured low-income Michigan residents, also that we’re going to reduce uncompensated care,” Singh said to DHHS official Jackie Prokop, who gave a presentation on the waiver.

Prokop said DHHS staff is working on that and trying to get to a number. But Singh said that Prokop’s presentation and answers to his questions show that “Both of those things are not actually going to improve, they’re actually going to go in the opposite direction.”

Rep. Tom Cochran (D-Mason) also was at the hearing and spoke against the work requirements, which he called “social engineering.” And Rep. Christine Greig’s (D-Farmington Hills) name made it onto a letter sent to the state about House Democrats’ concerns over the waiver, according to a press release.

The DHHS is required by SB 0897 to submit a waiver to the feds outlining changes to Healthy Michigan that implement the work requirements and other requirements for some beneficiaries who have been on the program for 48 months.

If the feds reject the waiver, or the waiver is determined to be noncompliant with the state law, then the entire Healthy Michigan program will die, per state law, which was referred to as the program’s “kill switch” by some of the groups.

Other groups that spoke out included the Center for Civil Justice, the Michigan affiliate of the American Lung Association, the Michigan League for Public Policy and the Michigan Protection and Advocacy Service, all of which raised concerns of one degree or another with the changes to Healthy Michigan in the proposed waiver.

Under the proposed DHHS waiver, the work requirements wouldn’t be implemented until Jan. 1, 2020, and would require all Healthy Michigan beneficiaries aged 19 to 62 who aren’t already exempt to log an average of 80 hours a month of qualified work activities.

Among those qualified activities include education related to employment, job training, vocation training, internships, participation in a substance abuse disorder treatment program, and community service with a nonprofit, although the community service can only count for three months of work activity in a 12-month period.

There are a number of exemptions to the work requirements, including caretakers of a family member under age 6, pregnant women, beneficiaries of temporary or long-term disability benefits, the medically frail and people who had been incarcerated in the past six months, among other categories.

Beneficiaries will be expected to self-report these hours, and are allowed three months of noncompliance in a 12-month period. After that, the beneficiary’s eligibility would be suspended, and if anyone misrepresents his or her compliance with work requirements, they’d be barred from Healthy Michigan for a one-year period.

Yet Singh said he is “deeply concerned” about the waiver process, and that fears that this is “a backdoor way of kicking people off healthcare because they couldn’t do it in Washington, D.C.” a reference to congressional Republicans and President Donald Trump’s failed attempt to repeal the Affordable Care Act.

Singh and others at the hearing also mentioned a lawsuit that involved a judge throwing out a program waiver Kentucky submitted to the feds that had implemented work requirements on Medicaid.

While the Centers for Medicare and Medicaid Services approved the waiver, a federal judge said the administration acted in an “arbitrary and capricious” manner.

The argument from some is that Michigan’s waiver could face a similar legal fate if it follows through with the work requirements.

“Now that we have this information which could now jeopardize the entire program for all 655,000 people that are enrolled today, to me that’s something that this group needs to come back and let the Legislature know,” Singh said.

The new law and the waiver also put in requirements for Healthy Michigan beneficiaries above the federal poverty line who have been on the program for a cumulative 48 months.

They’d have to meet requirements for healthy behaviors and must meet cost-sharing requirements—which amounts to 5 percent of their income—or get kicked off coverage, effective July 1, 2019.

Also, the new law takes away the option of sending Healthy Michigan beneficiaries above the poverty line who had not completed a healthy behavior to the marketplace for insurance.

The state had notified thousands of people this may happen earlier this year, but didn’t end up sending anyone to the marketplace, Prokop said.

Because of how the law had been structured, that would’ve cost the state even more money than keeping them on Healthy Michigan.

This story presented in cooperation with MIRS, a Lansing-based news and information service.

Physician Practices Should Incubate Future Physicians

In the waning days of summer, I allow myself to meander at bit, including in my columns.

First off is an issue that has a bit of a back to school connection, and that is that primary care physician practices and their teams should be incubators for future physicians. While training in an ambulatory setting is preferable to a hospital setting, such an environment generally doesn’t reflect the value of the ongoing relationship that is developed between the PCP and patient—a relationship that can reinforce healthy behaviors and provide health strategies that help prevent or manage chronic conditions and co-morbidities.

When residents are trained day in and day out in this setting, they are also afforded a unique mentoring experience, with “teacher” and “student” not only jointly providing care, but with the resident learning communication (listening) skills with the patient and the patient’s family from the physician mentor. Such practice-based training is also imperative for population health, with residents seeing patients in their medical home, rather than in acute situations in a hospital setting.

Now I want to revisit a training approach that does not take place in a physician’s office, or even a traditional health setting, but is primary care training, nonetheless. I think it merits attention here because it is such an impactful and humane program.

Wayne State University has a Street Medicine Detroit program started in 2012 that does outreach to the homeless population in the community. Open to MD and DO medical students regardless of their future specializations, it is a primary care initiative meeting the underserved physical and psychosocial needs of the homeless on the streets and in shelters and soup kitchens. While providing care and learning about healthcare in the real world, the program also reinforces to medical students the humanity of all patient populations, not to mention the need for solutions to the country’s growing number of homeless adults and children.

Were programs such as this to be implemented more widely, with care offered at permanent sites, this approach would have even greater impact on even more patients—and more primary care learning opportunities for residents. I know, there’s a not-so-small matter of funding that limits such city-based care…in the meantime, hats off to WSU for their Street Medicine Detroit program, its medical director Richard Bryce, DO—and congrats to the university on its 150th anniversary.

It’s not just the cities, though, where PCPs should be trained. Suburbanites are aging alongside city dwellers and are also in need of more primary care access for prevention and treatment of chronic conditions as well as the physical realities of aging. Some progressive developers and builders, notably in Oakland County, are establishing partnerships with health systems to serve independent and assisted living communities for seniors that have lots of green space.

The model of one or two physicians seeing an entire senior residence will not work for the larger senior communities. Why not bring in residents in family practice, internal medicine and geriatrics to see first-hand the needs of this burgeoning population? (I just read in a Wall Street Journal article—“U.S. is Running out of Caregivers” that 10,000 people turn 65 every day in the U.S., and in 2020, there will be 56 million people 65 and older, up from 40 million in 2010. So we lack caregivers in addition to PCPs in the geriatric space. So many challenges for the healthcare community to resolve!)

Now, on to the topic of family medicine residency programs, which require three years of training in ambulatory, community and inpatient settings. In recent years, the community emphasis has increased, which is good, but we need to turn to our experienced, senior physicians as well, many of whom welcome the opportunity to train primary care residents in their private practices. Progressive OB/GYNs and pediatricians, for example, are checking for post-partum depression during the newborn visit and in the weeks following the baby’s birth. This is the type of behavioral health approach so critical to whole person primary care—and when possible it’s best offered in the mother’s medical home, where she has a trusted confidant in her physician. Think of the opportunity for a resident to learn the intricacies of treating the physical and emotional health of potentially vulnerable patients! Think of the end result!

COMPLIANCE CORNER: Private Equity In MI Healthcare Entities

Michigan healthcare providers contemplating a relationship with private equity investors must be aware of various legal considerations relative to such arrangements. Increasingly, private equity investors are becoming more interested in investing in healthcare entities. Such investments often present lucrative opportunities for healthcare providers, yet these arrangements implicate a myriad of legal issues. This article will focus on health law issues, however other legal issues including, without limitation, corporate, tax and real estate matters, must be considered when evaluating private equity investment in healthcare entities.

Michigan laws include a legal doctrine commonly referred to as the corporate practice of medicine (CPOM) doctrine. CPOM laws restrict who can own and control certain healthcare entities and employ certain healthcare providers. Specifically, Michigan law requires entities that provide professional medical services to be organized as professional corporations (PCs) or professional limited liability companies (PLLCs). Michigan PCs and PLLCs engaged in the practice of medicine may only be owned by individuals licensed to provide the professional medical services rendered by the entity, or by entities directly or indirectly solely owned by such licensed individuals (1). Further, all officers of PCs and managers of PLLCs must be licensed to provide the professional medical services rendered by the entity. Accordingly, a medical practice through which physicians perform professional medical services cannot be owned or controlled by non-physicians (with the exception of ownership by a non-profit hospital). Thus, Michigan’s CPOM laws do not generally permit a physician practice to be owned or controlled by non-physician private equity investors. Accordingly, relationships with private equity investors must be structured so that the providers retain ownership of the professional entity (2) when required by the Michigan CPOM laws. The result is usually a complex organizational structure that involves holding companies and management companies, some of which may include joint-ownership opportunities for the providers. Such structural considerations must also address any entities that are related to the professional practice but that are not governed or restricted by Michigan’s CPOM laws, as ownership of these entities may be transferred to private equity investors in certain cases, subject to federal and state fraud and abuse laws.

Federal fraud and abuse laws include, without limitation, the Anti-Kickback Statute (“AKS”) and the physician self-referral prohibition commonly referred to as the “Stark law.” (3) The AKS prohibits a person or entity from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward the: (a) referral of an individual for the furnishing of any item or service that may be reimbursed under a federal health care program, or (b) purchase, lease, ordering or arranging for or recommending the purchasing, leasing or ordering of any item, facility or service that may be reimbursed under a Federal Healthcare Program (4). Protection of an arrangement under an AKS exception or safe harbor avoids treatment as a criminal offense under the AKS. Stark contains a ban on physician self-referral which generally makes it unlawful for a physician to refer Medicare or Medicaid patients (or present claims for payment to Medicare or Medicaid) for designated health services (DHS) to an entity with which the physician (or an immediate family member) has a financial relationship (5). If Stark is implicated, the arrangement must satisfy all elements of a Stark exception in order to comply with Stark. These laws must be evaluated by the parties to ensure previous and future compliance, particularly since the relationship between the healthcare entity and private equity investors often results in organizational restructuring involving multiple entities. For example, if the resulting organizational structure involves a management company and private equity ownership of related entities, the relationship between these entities and the professional healthcare entity must be evaluated for compliance under the AKS and Stark.

Similarly, Michigan fraud and abuse laws must be considered and include, without limitation, state self-referral laws, anti-kickback laws, and fee-splitting laws (6). Michigan’s fraud and abuse laws differ from Stark and the AKS in various ways and as applied to various healthcare providers. Whereas Stark and the AKS only apply to governmental healthcare programs, Michigan fraud and abuse laws also apply to services reimbursed by commercial payors such as Blue Cross Blue Shield of Michigan (BCBSM). Michigan fraud and abuse laws, in conjunction with the CPOM doctrine, may also be implicated in arrangements whereby physicians retain ownership of the professional entity but the private equity firm earns fees generated by professional medical services. In addition to state fraud and abuse laws, Michigan healthcare providers must comply with additional licensure-based laws. Healthcare transactions must also account for rules regarding changes in ownership of licensed healthcare entities, which often require prior or contemporaneous notice to, and approval from, relevant state agencies.

A crucial part of any private equity investment in a healthcare entity is the due diligence process. This process generally involves evaluating all aspects of the healthcare entity’s operations and structure. During the due diligence process, the healthcare entity’s current organizational structure, legal and billing compliance, licensure, operational and legal risks, contractual arrangements, tangible and intellectual property, prior and current litigation, financial information, and other relevant information and documentation is provided to and analyzed by the private equity investors. The due diligence process may reveal a variety of issues that the parties may decide to address prior to, contemporaneous with, or following closing, as appropriate. For example, in the event a non-professional entity owned by the private equity investor will assume the non-clinical assets of the physician practice, the parties may evaluate contractual restrictions (e.g., assignability of a lease) and other concerns related to such assets prior to closing. Typically, either during or after the due diligence process, the parties will begin to draft and negotiate the agreements and supporting documents necessary to effectuate the transaction. Legal review of these documents is imperative in order to protect the rights of the healthcare provider.

While private equity investments offer exciting opportunities for Michigan healthcare providers, these arrangements must be structured properly under federal and state laws. Private equity firms often invest in multiple healthcare providers nationwide and Michigan’s restrictive CPOM doctrine requires private equity investments in Michigan to be structured differently than in many other states. When considering a private equity investment, Michigan healthcare providers may first want to evaluate their current compliance with federal and state law, examine utilization patterns, and otherwise assess their practice in anticipation of the due diligence process and to mitigate compliance concerns that may impact the private equity investment. Once the private equity investor and healthcare provider agree to an investment, the parties must structure the arrangement to comply with complex federal and state laws including, but not limited to, Michigan’s CPOM doctrine, the federal AKS and Stark law, and Michigan fraud and abuse laws governing self-referrals, kickbacks, and fee-splitting. While non-compliance may result in business risk to both parties, healthcare providers face additional risks such as false claims liability, licensure sanctions, and termination from participation in Medicare, Medicaid, and commercial payor networks. Accordingly, a comprehensive legal review of private equity investments is necessary to evaluate compliance with federal and state law in light of the lucrative financial opportunities offered to healthcare providers.

1.MCL § 450.1283(2); MCL § 450.4904(1).
2.MCL § 450.1286; MCL § 450.4905(1).
3.42 USC § 1320a-7b(b); 42 USC § 1395nn.
4.42 USC § 1320a-7b(b).
5.42 USC § 1395nn.
6.See MCL § 333.16221; MCL § 400.604; MCL § 752.1004; MCL § 750.428.


With the ever-growing opioid crisis and the president’s call to action to address that crisis, primary care, pain management and behavioral health providers in particular may be faced with privacy issues dealing with a patient’s family, friends or others in relation to treatment for opioid abuse. What can a provider disclose to others in the aftermath of an overdose in order to assist a patient’s recovery efforts and prevent future incidents? What information can a provider share about a patient’s condition and treatment in such a situation?

The Health Insurance Portability and Accountability Act (HIPAA) prohibits disclosure of a person’s protected health information (PHI) to family members, friends or others involved in the patient’s care (or payment for care) without patient consent except for certain defined situations.

In the event an individual is disoriented, unconscious or otherwise incapacitated, a medical provider may provide information to others without the patient’s permission so long as sharing that information is: (1) in the best interest of the patient; and (2) the information shared is directly related to the patient’s care. Thus, a provider may exercise his or her judgment to advise family or others that an opioid overdose occurred, describe the patient’s condition and how the patient is being treated as a result.

However, when a patient possesses decision making capacity, a provider may only share information without the patient’s consent if sharing that information is for the purpose of avoiding or lessening an imminent threat to the patient’s health or safety. Put another way, a provider may disclose information about the patient’s opioid use or abuse to someone who the provider has a good faith basis to believe could reasonably lessen or prevent further harm from continued opioid use or abuse following the patient’s discharge. For example, a provider may share information with others in order to help prevent a future overdose, decrease ongoing dependence, or to assist in seeking treatment. Other appropriate discussions potentially include alternate treatment for pain management, efforts to break an addictive cycle, explanation and treatment of withdrawal symptoms and relapse prevention strategies. In contrast, a provider should avoid disclosing information about a patient’s history of substance abuse to a family member who the patient may live with but has no involvement in the patient’s care or treatment.

A patient’s decision making capacity is not static and may change during the course of care. For example, a patient may present to an emergency room in an unconscious or altered state such that at the time of admission, the patient lacks sufficient capacity to consent to sharing PHI. Nonetheless, sometime later, the patient may recover sufficiently to be alert enough to make informed decisions. During the initial period of incapacity, a provider may share information with family or others related to the patient’s condition or care without the patient’s consent following the guidance discussed above. Later, after a patient recovers, a provider may share information in order to prevent a future overdose even if the patient does not consent so long as the provider believes disclosure is in the patient’s best interest and the information shared is related to that person’s involvement in the patient’s health care.

Easier to address are situations involving powers of attorney or patient advocate designations involving express authorization to disclose PHI to a particular individual. Such documentation allows a provider to disclose information without fear of violating HIPAA. In addition, parents of minor children are generally considered authorized personal representatives who are entitled to obtain information about a child’s health care.

Also important to consider are state and federal guidelines on confidentiality or rules of medical ethics that would preclude disclosure of a patient’s PHI.

In conclusion, before a nurse, physician or even billing administrator discloses PHI regarding a patient’s opioid use or dependence, care must be taken to comply with HIPAA in the manner discussed above.

For guidance or training on this topic, feel free to contact the author at 248-433-7291 or


Health Org: Prosecuting Lyon Could Cause ‘Threat’ Nationwide
A non-profit organization representing health agencies and public health professionals says holding state Department of Health and Human Services Director Nick Lyon criminally responsible for actions done in his professional responsibility could “cause a threat to public health nationwide.”

A second nonprofit organization disagreed with criticism of criminal accountability for the Flint water crisis.

The two statements came in amicus curiae briefs filed by the Association of State and Territorial Health Officials (ASTHO) and Community Based Organizing Partners (CBOP), respectively, just two days before Lyon learns if he will head to trial on felony criminal charges for decisions he made during Flint’s Legionnaires’ disease outbreaks in 2014 and 2015.

“This prosecution greatly concerns ASTHO and its members, who fear that the criminalization of professional, discretionary decision making will harm, not help, public health,” ASTHO’s attorney Jeffrey Muth, of Grand Rapids, says in a court filing. “. . . In seeking to punish public health officials for their administration of their professional responsibilities, this case could cause a threat to public health nationwide.”

Flint-based CBOP’s brief from East Lansing Attorney Mark A. Totten stated: “Several voices—the well-connected, who neither live in Flint nor experienced this horror—have publicly criticized the idea of criminal accountability for the Flint water crisis. CBOP . . . believes a thorough examination by the criminal justice system is fitting and necessary.”

The prosecution alleges the totality of its evidence shows Lyon had a “willful disregard” someone would get sick or die from Legionnaires’ disease and he failed to promptly notify the public when he first learned about the crisis in late January 2015.

The defense argued Lyon has no “personal, individualized legal duty by statute or otherwise” to notify the public about the outbreaks.

Lyon is charged with two counts of involuntary manslaughter in connection with the deaths of two men and misconduct in office for allegedly misleading and withholding information from Gov. Rick Snyder about the outbreak. He also is charged with a misdemeanor count of neglect of duty.

Flint District Judge David Goggins is expected to announce Wednesday whether Lyon will head to trial.

ASTHO, a national nonprofit organization representing health agencies and public health professionals, argues a cautious approach that considers the circumstances of the outbreak and the type of disease is needed.

CBOP, a nonprofit organization in Flint that includes members from more than 50 local organizations focusing on diverse issues including public health, education and civil rights, filed a brief to “assist the court in understanding the crime of misconduct in office,” and specifically notes the court filing isn’t assessing the prosecution’s evidence nor addressing the other crimes alleged.

CBOP said the crime of misconduct in office hasn’t receives extensive attention by the courts, yet it is a “critical means of government accountability.”

To prove that count, the prosecution must establish that the defendant is a public officer who committed misconduct in the exercise of official duties while acting with corrupt intent. Misconduct can take the form of malfeasance, misfeasance or nonfeasance.

“The offense is broad, covering a wide range of government actors who purposefully commit misconduct, including a failure to carry-out a non-ministerial duty,” Totten said. “As a first-hand witness to the havoc caused by the Flint water crisis, the amicus curiae believe this robust crime must be applied with thoroughness and rigor to determine criminal liability for this crisis.”

Pfizer Scores First ‘Good Jobs For Michigan’ Incentive
The state July 24 pulled the “Good Jobs For Michigan” (GJFM) tool out of its economic development toolbox for the first time since Gov. Rick Snyder signed the legislation in 2017 in an attempt to lure big corporate fish to Michigan.

The Michigan Strategic Fund (MSF) Board today approved a GJFM incentive worth $10.5 million for Pfizer to build a new facility in Portage to manufacture injectable drugs.

Last year, Snyder and a coalition of supporters convinced the Legislature to adopt what was dubbed the GJFM package, which would allow companies awarded the incentive to capture income tax withholdings off the created jobs if they pay above the average regional wage.

It was believed a driving factor behind the legislation was to lure the Taiwan electronics manufacturer Foxconn to Michigan. The company best known for being an Apple product supplier was dangling a facility to U.S. states that would employ thousands of people.

But on the same day Snyder signed the GJFM package, Foxconn announced Wisconsin as its site for its plant.

Under GJFM legislation, if a project creates 250 to 500 jobs, those jobs must pay wages that are 125 percent more than the average regional wage. For projects creating 500-plus jobs, those have to pay 100 percent or more of the average regional wage.

In Pfizer’s case, the company was granted 100 percent withholding capture for 354 new jobs, with the average wage of those jobs landing around $80,000. If the company didn’t end up paying high enough wages, it would affect the incentive it would receive.

The Pfizer project is expected to deliver 450 jobs within the next eight years and generate $465 million in private investment.

“Pfizer’s investment is a major boost to the state’s pharmaceutical industry and further diversifies Michigan’s business environment,” said Snyder in a press release. “I appreciate Pfizer’s long-term commitment and the economic benefits this will bring to the region and the people who live there.”

The GJFM coalition, which includes business and economic development, community and labor groups, released a statement today noting that the Pfizer project is “exactly the type of transformational project this latest tool was designed to attract—with hundreds of good-paying jobs and opportunities for Michiganders that will also help bolster communities, advance quality of life and build a strong, resilient economy for current and future generations.”

The $10.5 million awarded via the GJFM incentive comes on top of a $1 million performance-based grant awarded to Pfizer for the same project, also approved by the MSF Board.

Jeff Mason, CEO of the Michigan Economic Development Corp. (MEDC), said Pfizer has 13 facilities around the globe, so this project was competing with its other company sites, which necessitated the use of the GJFM package.

According to the MEDC briefing memo on the Pfizer incentive, for the project to be “cost competitive it must remain financially viable compared to other Pfizer sites, contracted manufacturing sites” and the company’s competitors.

U.S. Rep. Fred Upton (R-St. Joseph) also released a statement celebrating the Pfizer project.

Under the GJFM package, the MSF Board is allowed to execute up to 15 written agreements per calendar year, and the program has a $200 million cap and ends at the end of December 2019.

Lansing Lines is a cooperative feature presented by MIRS, a Lansing-based news and information service and Healthcare Michigan.

ON MEDICINE: The Death Of Private Practice, Maybe Not

Is there any life remaining in the longstanding and cherished method of healthcare delivery by staunchly independent, patient-centric physician entrepreneurs? Do those physicians relishing the autonomy of small businesses aligned around patient care still exist? Are the market and political forces evolving in ways not permitting independence for such physicians, and is their demise inevitable?

When examining the history of healthcare in the United States, at some point predicting that the private practice of medicine would be in peril now seems inevitable. Tax-exempt policy toward employer-based health insurance, the expensive cost-plus Medicare and Medicaid payment policy at the outset of those programs in the 1960s and first-dollar (no deductible) health insurance policies could not help but result in healthcare cost inflation. These are symptoms of what Justice Louis Brandeis dubbed the problem of “Other People’s Money.” With advances in technology and an aging demographic added to the mix, the seeds of healthcare inflation have long been sown.

Of course as these myriad poor decisions stoked inflation, action by the same decision makers who created the problems was deemed necessary. The result was pricing controls disguised within various schemes, a regulatory onslaught, burgeoning numbers of mandates and the two programs delivering the coup de gras, MACRA (Medicare Access and CHIP Reauthorization Act) and the ACA (Patient Protection and Affordable Care Act). Consider the forced incorporation of the EMR (Electronic Medical Record) with its promises of improved care and lower cost. There is little data to show improvements in care, costs have increased, physician productivity has suffered, physician morale has deteriorated and burnout has accelerated. But alas, some have suggested that several decades may need to pass before benefits result. These gifts to physicians have increased practice overhead and complexity without any appropriately commensurate increase in reimbursement.

Organized medicine has failed through its populist, politically correct persona. This has produced controversy avoidance and rendered physician advocacy impotent. The physician “elites” who were in charge of organized medicine when the flames of change first appeared and now their heirs, who have failed to respond or even recognize it, are now unlikely to be called upon to lead this profession.

Healthcare systems have consolidated to dominate markets, increase revenue and monopolize the ownership of ancillaries.

Physician failure to optimize Independent Practice Associations or Physician Organizations has been a huge missed opportunity, which has allowed the Independent Organized Medical Staff—with its critical physician-led oversight for hospital patient care—to languish and become subservient to hospital management.

Physician demographics are also problematic. Older doctors are simply saying “to hell with it” and becoming employees as they transition to retirement. Younger physicians have abysmal economic and business savvy, as there is virtually no educational exposure to business matters, a vital topic in today’s practice environment. Those physicians who previously were entrepreneurial mentors to new graduates are increasingly avoided and thus absent from the medical educational process.

Wow! With all of this appearing as an insurmountable headwind, it is reasonable to conclude that private practice is in its terminal stages and that all physicians will end up employees. But hospitals are tailing off on binge-hiring physicians, and some healthcare systems are even terminating physician employees. It seems the return on investment of generally less productive employed physicians was not as anticipated. If profitability is not there, the strength of employment models for doctors working in hospitals becomes suspect.

Autonomy over business and patient care along with being facile in a rapidly changing healthcare environment are proving to be desirable physician traits, especially when compared to bureaucratic hospital system megaliths with their layers upon layers of management (a 3,000 percent increase since the year 2000). And this is dawning on physicians. They can maintain their focus on outcomes, as they should, rather than be captive to the process obsession indelibly incorporated into the hospital business.

It seems the plausible is morphing into the obvious. The more responsibility physicians take for their futures, the better off they will be. Never will another party have the same concern for physicians than they have for themselves. There are no “white knights” out there dying to solve physicians’ problems and assume all business risk. Organizations, especially those under stress like hospitals, will always put their own interests first.

Private practitioners still exist with that traditional old American entrepreneurial spirit. Consultants are available, business education can be had, differential value can be marketed and innovation can occur. Forward thinking hospitals—unencumbered by the need for power—and other partners experienced in ancillaries are entering the market anxious to partner with physicians. They seek those physicians motivated to engage 100 percent to make their own businesses successful in these newly formed enterprises and reap the rewards for their effort.

Without question, venturing into the healthcare marketplace has risk, but it also has rewards. Albeit, the future challenges to the private practice of medicine are not entirely predictable since politics has increasingly infiltrated and finally infected healthcare. But given the public’s growing concern with the cost of healthcare, it is reasonable to see those major drivers of cost becoming the right targets for reform, first hospitals, then pharma, and then insurance companies. Physicians are not the drivers of cost. It is not the inputs into the system, but the price that is making the cost of healthcare escalate.

Can a profession exist at all without having major control over its own fate? In this new era of healthcare, one would assume there exists a desperate and spreading desire among physicians to preserve who and what they are. I, for one, cheer on the traditional physician entrepreneurial spirit.

Trump Loosens Restrictions On Short-Term Health Plans

Insurers will again be able to sell short-term health insurance good for up to 12 months under final rules released Aug. 1 by the Trump administration.

This action overturns an Obama administration directive that limited such plans to 90 days. It also adds a new twist: If they wish, insurers can make the short-term plans renewable for up to three years.

The rule will “help increase choices for Americans faced with escalating premiums and dwindling options in the individual market, said James Parker, a senior adviser to Health and Human Services Secretary Alex Azar.

But the plans could also raise premiums for those who remain in the Affordable Care Act marketplace — and the short-term coverage is far more limited.
“We make no representation that it’s equivalent coverage,” Parker said.

The Trump administration’s approach is expected to please brokers and the insurers that offer the coverage.

“To restore these to 364 days — as originally drafted — is exactly what we are looking for,” said Jan Dubauskas, general counsel for the IHC Group, speaking before the final rule was released. The IHC Group is an organization of insurance carriers headquartered in Stamford, Conn.

She said she expects IHC to offer 12-month versions as soon as the rule goes into effect, which will be 60 days after it is published.

Administration officials estimate plan premiums could be half the cost of the more comprehensive ACA insurance. They predict about 600,000 people will enroll in a short-term plan in 2019, with 100,000 to 200,000 of those dropping ACA coverage to do so.
Just over 14 million people are enrolled in ACA plans this year.

Short-term plans are less expensive because, unlike their ACA counterparts, which cannot bar people with preexisting health conditions, insurers selling these policies can be choosy — rejecting people with illnesses or limiting their coverage.

Short-term plans can also set annual and lifetime caps on benefits, and cover few prescription drugs.
Most exclude benefits for maternity care, preventive care, mental health services or substance abuse treatment.

Some policy experts, including those from the Center on Health Insurance Reforms at Georgetown University, warn that allowing increased use of the skimpier coverage offered by short-term plans could leave some patients in financial or medical difficulty.

“If you get cancer, your plan will not cover oncology drugs, which can cost an average of $10,000 a month” and “if you are pregnant, you will have to find another way to pay for the cost,” averaging about $32,000 for prenatal care and delivery, the center said in a recent post.

Allowing short-term plans to last longer is the latest move to change regulations issued by the Obama administration. In June, the administration released final rules on association health plans, which grants greater leeway to small businesses and sole proprietors to join together to purchase insurance that doesn’t have to meet all the ACA’s requirements, although AHP plans are more robust than short-term plans.

Those changes to Obama-era rules, and other congressional actions, are expected to impact the cost of coverage for individuals in the ACA marketplace.

Premiums for the average benchmark ACA plan rose by 34 percent this year, according to a recent Congressional Budget Office report.

Factors driving the increase include medical inflation, but the CBO also cited the administration’s decision last fall to drop payments to insurers for lowering deductibles for certain low-income policyholders.

That same report expects premiums for ACA plans to increase 15 percent next year, in part because many consumers may be less likely to buy coverage without the threat of a tax penalty. The tax bill approved last year by Congress stops this financial penalty as of 2019.

Short-term plans, if they appeal to many consumers, could also play a role.

By drawing younger or healthier consumers out of the ACA marketplace, the short-term plan expansion will add up to a 1.7 percent increase to premiums next year, according to the industry lobbying group America’s Health Insurance Plans.

Short-term plans have been around for decades, meant as a stopgap for job changers, students and others who found themselves without coverage.

Under the Trump administration directive, insurers also can renew the short-term coverage for the same amount of time as the original plan — maxing out at 36 months.

HHS officials said current law allows the plans to have this longer shelf life, although critics are likely to argue that — when you factor in the renewal option — a plan that lasts three years cannot be considered short-term.

Supporters of the new rules say the short-term plans won’t affect the ACA market as much as critics fear because the plans will mainly appeal to those consumers already sitting on the sidelines, or those who don’t get a subsidy.

Already the vast majority of people who buy ACA coverage through federal or state exchanges qualify for premium subsidies.

Brokers will likely be pushing the plans, as they often pay higher commissions than do ACA plans.

And, for insurers, profit margins tend to be higher for short-term plans compared with ACA coverage. The plans have limits on coverage. Also, insurers are not held to the ACA requirement that they spend at least 80 percent of premium revenue on plan members’ medical care.

Both supporters and critics of short-term plans say consumers who do develop health problems while enrolled could, in theory, hang on until the next open-enrollment period and buy an ACA plan during the sign-up period because the ACA bars insurers from rejecting people with preexisting conditions.

That part of the law is under threat, however, in a case brought by Texas and 19 other states that seeks to declare that provision and two other parts of the ACA unconstitutional.

In early June, the Department of Justice said it would not defend the law against the Texas case, which is on appeal and may eventually end up at the Supreme Court.

Meanwhile, the Trump administration’s new short-term plan rules do not change states’ regulatory authority.

A few, including California, are already considering tighter restrictions than what’s spelled out in the federal directive.

“States do have the authority to regulate,” said Randy Pate, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services. “We do think some states will move to limit them and some will embrace them.”

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

Medicaid Work Requirement Bill Signed

Able-bodied, adult Healthy Michigan recipients would need to work 80 hours a month or be in a job training program after Jan. 1, 2020 in order to keep their Medicaid coverage unless they fall under a handful of exemptions, under legislation Gov. Rick Snyder signed June 22.

Sen. Mike Shirkey’s (R-Clarklake) SB 0897 also strips Healthy Michigan recipients who chronically lie on their monthly work reports to lose their coverage for a year. The Department of Health and Human Services would receive an extra $5 million a year under the bill for the additional auditors needed to track these recipients.

The bill also restates in law a provision that legislative Republicans didn’t get in the original Healthy Michigan waiver to the federal government. It allows people to stay on Healthy Michigan for 48 months, after which they need to set aside 5 percent of their income for healthcare while also pledging to engage in healthy behaviors to stay in the program.

If the President Donald Trump administration doesn’t approve the federal waiver that would be needed to implement these policies, Healthy Michigan would end.

Snyder framed the bill signing as the preservation of his Healthy Michigan program, which has enrolled 670,000 Michiganders as of the most recent numbers.

“I am committed to ensuring the program stays in place and that Michiganders continue to live healthier lives because of it,” Snyder said in a statement.

During the legislative process, the Republicans joined the business community in support of legislation they saw as giving a push to the poor to pursue the training that would get them skilled employment. Shirkey said in response to the bill signing, “I’m glad it’s been signed. Now the real work begins. We will make this successful. It’s good for Michigan and the affected enrollees.”

But Michigan League of Public Policy President & CEO Gilda Jacobs said Snyder’s signature “betrays the plan he helped create.”

That this new law puts into place work requirements for Medicaid recipients, affecting Michigan’s “most vulnerable residents is inexcusable enough, but at the last minute even more disturbing elements—all of them thinly veiled punishments for people with low incomes were added,” she said.

“We are creating poorer people with this policy, people who need that money to pay for rent, gas food and child care,” Jacobs said. “This doesn’t make any sense.”

According to a 2016 State Budget Office report, 80 percent of adult enrollees are below 100 percent of the federal poverty level and 47 percent of adult enrollees are under the age of 35. Roughly 45 percent of all adults with income below 138 percent of federal poverty rules were on Healthy Michigan as of 2016.

House Minority Leader Sam Singh (D-East Lansing) lamented the way “this misguided and malicious legislation” was “rushed through” the House floor over the objections of House Democrats.

“If six years in the legislature taught me anything, it is that the tides turn swiftly and our constituents remember—they will surely remember this,” Singh said.

Democratic gubernatorial candidate Abdul El-Sayed said Snyder and Lt. Gov. Brian Calley “should be ashamed” of legislation he called “heartless and dishonest.”

“This administration is the worst kind of cowardly when it comes to standing up for the poor,” he said. “They get bullied by a strain of ideologues who blame the poor for the GOP’s failure to build a Michigan where Michiganders can find meaningful work in the first place.”

This story presented in cooperation with MIRS, a Lansing-based news and information service.


New Mental Health Parity Proposal

There should be no “discrimination of coverage” between mental health benefits and those paid out by insurance companies for physical health, says Rep. Martin Howrylak (R-Troy).

He introduced two bills in mid June,HB6109, and HB 6191, calling the mental health parity, requiring insurers to offer the same coverage for mental health services as traditional medical care.

“The big picture is that mental health treatment should be not subordinated to physical health because they are inextricably linked,” Howrylak explained. “They both represent heath care needs of individuals.”

He used the example of disorders like bulimia and anorexia. Left untreated, they obviously can lead to very significant health problems later on.

“If I were an insurance company, I would rather nip it in the bud because I would know that I might have to spend a little more money today but in the long run I’m going to save money,” he said. “If people are doing well mentally, they are most likely going to be doing better than they would otherwise physically. It is very antiquated to treat them separately and it is something that is not consistent with modern science.”

The issue is not new in Michigan.

Wendy Block of the Michigan Chamber of Commerce, which has opposed previous such proposals, said parity is already required in the federal Affordable Care Act.

True, said Howrylak, but there is a loophole in the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008. That loophole is that if insurers offer mental health coverage, it has to be on par with physical health coverage. But insurers are not mandated to cover mental health. Howrylak’s bills would close that loophole. Ohio, Indiana and Illinois have passed similar bills, he noted.

“That’s not a parity bill then. That’s a health benefit mandate bill,” said Dominick Pallone, executive director of the Michigan Association of Health Plans.

His organization has not had an opportunity to review the Howrylak proposals yet, but he said similar legislation has been proposed on a variety of benefits, not just mental health. “In any given year there are probably a good dozen health benefit mandate attempts,” he said. Previous attempts to mandate benefits have included oral chemotherapy, prosthetics and autism.

“The federal law very clearly says that if a health benefit is offered, then it must be treated equally as far as cost shares, co-pays, deductibles and the like with physical health services. That’s parity. But the mandate side is whether or not a certain benefit is covered or not,” he said.

Federal law names 10 categories of benefits deemed essential for a health insurance policy, he explained. Mental health is not on the list, but many insurance companies already do include mental health in their coverage. It is then left to the purchaser to decide what level of coverage they want to buy, Pallone said.

He agrees with Howrylak that untreated mental health problems cause worse problems down the line.

“I think treating the whole person is ideal from the health perspective. I certainly agree that there are long-term societal impacts and certainly societal costs to the state if mental health services aren’t provided to individuals who need them. The state plays a crucial role in providing mental health services and paying for those mental health services. Yet we have seen lawmakers in previous years cut mental health funding at the state level,” he said.

“I would welcome any conversation with any lawmaker about the state paying for any health benefit mandate that they wish to promote,” Pallone concluded

Howrylak’s bills come in the wake of the House bipartisan mental health task force, named for its commitment to community, access, resources, education and safety. Task force members traveled throughout the state to listen to mental health experts, families, law enforcement professionals, addiction specialists and more. The group compiled a report containing recommendations about how to improve Michigan’s broken health care system.

HB 6109 and HB 6191 have been referred to the House Health Policy Committee.

This story presented in cooperation with MIRS, a Lansing-based news and information service.