Health Care & Reproductive Rights

SAN FRANCISCO -- Attorney General Kamala D. Harris announced today that California joined 28 other states in a $151 million settlement with one of the nation’s largest drug wholesalers to resolve allegations the company inflated the price of prescription drugs by as much as 25 percent, causing the states’ Medicaid programs to overpay millions of dollars in pharmacy reimbursements.

California’s recovery of the settlement with San Francisco-based McKesson Corporation is $23,585,849.

“In these difficult budget times, it is crucial that California’s scarce public resources support the urgent needs of our state,” said Attorney General Harris. “We cannot allow dollars meant for patients to be diverted to inflate corporate profits.”

Today’s settlement resolves allegations that McKesson Corporation deliberately inflated the Average Wholesale Prices (AWPs) it reported to First Data Bank, a publisher of drug prices, causing California to overpay on branded prescription drugs from August 1, 2001 through December 31, 2009. Medi-Cal sets the reimbursement rates for pharmacies for many of the drugs dispensed to Medi-Cal patients based on the AWP.

The Medicaid program, which is known as Medi-Cal in California, is funded jointly by the federal government and the State of California.

The settlement is based on a 2005 qui tam case filed under the false claims statutes of the federal government, as well as California and other states.  In April 2012, the federal government settled the federal portion of the lawsuit for more than $187 million.

A team of attorneys and investigative auditors from the California Attorney General’s Office and the New York Attorney’s General Office were appointed by the National Association of Medicaid Fraud Control Units to investigate and conduct the settlement negotiations with McKesson on behalf of the participating states.

Joining California and New York in the settlement are the District of Columbia and the following 27 states: Arkansas, Colorado, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Maine, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Pennsylvania, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming.

The Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse investigates and prosecutes claims of Medi-Cal civil and criminal fraud, as well as allegations of elder abuse, such as physical assaults or financial theft.

A copy of California’s settlement agreement is attached to the online version of this release at http://oag.ca.gov/.   

SAN FRANCISCO -- Attorney General Kamala D. Harris, joined by other attorneys general and the U.S. government, today announced a $3 billion settlement with GlaxoSmithKline (GSK) to resolve allegations the company engaged in various illegal schemes related to the marketing and pricing of drugs it manufactures. 

Today’s action is the largest healthcare fraud settlement in history. California will receive more than $46 million. The $3 billion settlement includes $2 billion in damages and civil penalties to compensate state and federal healthcare programs, including California’s Medi-Cal program, for harm allegedly suffered as a result of the illegal conduct. In addition, GSK has agreed to plead guilty to federal criminal charges related to drug labeling and FDA reporting and pay a $1 billion criminal fine. 

“Californians have the right to expect that their health and well-being – and not profit – drives decisions about their care,” said Attorney General Harris. “This settlement protects consumers and puts an end to unscrupulous marketing practices, kickbacks and illegal labeling of prescription drugs.”

California, along with 44 other states and the federal government, alleged that GSK engaged in a pattern of unlawfully marketing certain drugs for uses for which they were not approved by the Food and Drug Administration (FDA); making false representations regarding the safety and efficacy of certain drugs; offering kickbacks to medical professionals; and underpaying rebates owed to government programs for various drugs paid for by Medicaid and other federally-funded healthcare programs.

Specifically, the government alleged that GSK engaged in the following activities:

• Marketing the depression drug Paxil for off-label uses, such as use by children and adolescents; 
• Marketing the depression drug Wellbutrin for off-label uses, such as for weight loss and treatment of sexual dysfunction, and at higher-than-approved dosages;
• Marketing the asthma drug Advair for off-label uses, including first-line use for asthma;
• Marketing the seizure medication Lamictal for off-label uses, including bipolar depression, neuropathic pain, and various other psychiatric conditions;
• Marketing the nausea drug Zofran for off-label uses, including pregnancy-related nausea;
• Making false representations regarding the safety and efficacy of Paxil, Wellbutrin, Advair, Lamictal, Zofran, and the diabetes drug Avandia;
• Offering kickbacks, including entertainment, cash, travel, and meals, to healthcare professionals to induce them to promote and prescribe Paxil, Wellbutrin, Advair, Lamictan, Zofran, the migraine drug Imitrex, the irritable bowel syndrome drug Lotronex, the asthma drug Flovent, and the shingles and herpes drug Valtrex; and,
• Submitting incorrect pricing data for various drugs, thereby underpaying rebates owed to Medicaid and other federal healthcare programs. 

As part of the settlement, GSK has also agreed to plead guilty to criminal charges that it violated the federal Food, Drug, and Cosmetic Act (“FDCA”) in connection with certain activities.  The government alleges that GSK introduced Wellbutrin and Paxil into interstate commerce when the drugs were misbranded, meaning containing labels that were not in accordance with their FDA approvals, and that GSK failed to report certain clinical data regarding Avandia to the FDA.

The settlement is based on four qui tam actions brought by private individuals pursuant to state and federal false claims acts and filed in or transferred to the United States District Court for the District of Massachusetts, as well as investigations conducted by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Frauds Division of the U.S. Department of Justice, and a team of attorneys from the Medicaid Fraud Control Units of California (a unit within the Attorney General’s Office), Colorado, Massachusetts, New York and Ohio.

SAN FRANCISCO -- Attorney General Kamala D. Harris today issued the following statement regarding the U.S. Supreme Court’s decision on the Affordable Care Act:

“Today’s decision is a historic victory for Californians, for the President, and for the country. The Affordable Care Act repairs a healthcare system badly in need of reform and ensures that every American has access to affordable health care. We never doubted the constitutionality of this law, and it is already making a difference in the lives of millions of Californians.”

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced two historic settlements with Abbott Laboratories over the illegal off-label marketing of its Depakote drug.

California joined other states and the federal government in a $1.5 billion civil and criminal settlement with Abbott Laboratories. The second largest recovery ever from a pharmaceutical company, this settlement resolves false claims made by Abbott Laboratories to Medicaid and other federal healthcare programs. The second settlement, a $100 million civil consumer protection settlement, is the largest consumer protection settlement ever reached with a pharmaceutical company.

As a result of the settlements, Abbott Laboratories will be restricted from marketing the drug for off-label uses not approved by the U.S. Food and Drug Administration.

“This company put people in harm’s way through the deceptive off-label uses of its drug,” Attorney General Harris said. “Californians should be able to trust the companies that produce pharmaceuticals and the magnitude of this settlement shows the seriousness of the offenses.”

As part of the $1.5 billion settlement, Abbott Laboratories will pay the states and the federal government $800 million in civil damages and penalties to compensate Medicaid, Medicare, and various federal healthcare programs for harm suffered as a result of its conduct. The California gross share recovery is $52 million plus 2.5 percent annual interest, which will be split among various parties, including the U.S. Department of Health Care Services, the whistleblowers the California Department of Health Care Services and the California False Claims Act Trust.

Abbott Laboratories also pled guilty this morning to a violation of the Food, Drug, and Cosmetic Act (FDCA) and agreed to pay $700 million in criminal fines. Further as a condition of the settlement, Abbott Laboratories will enter into a Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of the Inspector General.

“We are pleased that this settlement retrieves scarce Med-Cal funds that should be used for the care of vulnerable Californians,” said California Department of Health Care Services Director Toby Douglas. “Protecting the fiscal integrity of Medi-Cal remains a top priority for this department.”

The $1.5 billion settlement includes 49 states and the District of Columbia and is based on four qui tam cases filed under federal and California false claims statutes. A team appointed by the National Association of Medicaid Fraud Control Units participated in the investigation and conducted the settlement negotiations with Abbott on behalf of the participating states. Team members from the Attorney General Harris’ Bureau of Medi-Cal Fraud and Elder Abuse include Investigative Auditor Martha Valdez, Special Agent Supervisor Cynthia Bentley and Deputy Attorneys General Matt Kilman and Carlotta Hivoral.

The second settlement announced today included 44 other states and the District of Columbia. The $100 million consumer protection settlement included $6.7 million for California, the largest share of any state.

In the complaint filed today with the settlement agreement, the states alleged that Abbott engaged in unfair and deceptive practices when it marketed Depakote for off-label uses. Depakote is approved for treatment of seizure disorders, mania associated with bipolar disorder and prophylaxis of migraines, but the attorneys general alleged Abbott marketed the drug for treating unapproved uses, including schizophrenia, agitated dementia and autism.

As a result of the states’ investigation, Abbott has agreed to significantly change how it markets Depakote and to cease promoting off-label uses.

Under the consumer protection settlement, Abbott Laboratories is:
-Prohibited from making false or misleading claims about Depakote
-Prohibited from promoting Depakote for off-label uses
-Required to ensure financial incentives on sales do not promote off-label uses of Depakote

In addition, for a five-year period Abbott must:
-Limit responses to requests by physicians for non-promotional information about off-label uses of Depakote
-Limit dissemination of reprints of clinical studies relating to off-label uses of Depakote
-Limit use of grants and continued medical education
-Disclose payments to physicians
-Register and disclose clinical trials

Joining California in the consumer protection settlement are the Attorneys General of the District of Columbia and the following states: Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin.

SAN FRANCISCO -- Attorney General Kamala D. Harris today issued the following statement:

“As Attorney General of California, I am committed to protecting our nation’s landmark federal healthcare reform law.

Today marks the second anniversary of the Affordable Care Act. This historic reform to our healthcare system protects everyone, particularly the most vulnerable among us, including our children and seniors. Californians can no longer lose their health coverage for being ill, and soon they will not be denied coverage on the basis of a pre-existing condition.

Joined by other Attorneys General, my office has vigorously defended the constitutionality of health care reform in the U.S. Supreme Court and federal appellate courts. Our legislature should be commended for passing a robust package of laws to ensure the swift implementation of the Affordable Care Act in California.”

SAN FRANCISCO -- Attorney General Kamala D. Harris has filed a friend-of-the-court brief in the U.S. Supreme Court urging the court to uphold the constitutionality of the landmark federal healthcare reform law’s Medicaid expansion which has helped millions of Americans obtain insurance.

The Patient Protection and Affordable Care Act of 2010 (ACA) increases health care coverage in a variety of ways, including expanding Medicaid eligibility to nearly all non-elderly adults who earn up to 133 percent of the federal poverty line. This is expected to expand health insurance coverage to 11.2 million people nationwide, including 1.9 million Californians. California was one of the first states to begin covering low-income adults, ages 19 to 64, who would not have otherwise qualified for Medi-Cal. As of October 2011, more than 220,000 Californians were covered through the program, which also provides funds for hospital care and public health initiatives.

“Millions of previously uninsured Californians now have access to quality health care due to federal law,” said Attorney General Harris. “Extending Medicaid to all low-income adults is vital to ensuring that every individual has access to affordable and reliable health insurance. Every individual deserves to be treated with dignity and to receive the care they need.”

Attorney General Harris, joined by 11 other attorneys general, argued in the brief filed today in the U.S. Supreme Court that the ACA does not coerce states into action, but maintains the fundamental Medicaid arrangement of a federal-state cooperative program.

The amicus brief argues that Congress has the authority to define the central requirements of the program according to federal objectives and to provide financial incentives for states to comply with these basic requirements. Since Medicaid’s enactment over 45 years ago, Congress has frequently extended coverage to new populations in response to changing policy concerns. The ACA’s Medicaid expansion is no different.

“The Medicaid expansion significantly changes who is eligible for Medicaid, but the ACA does not change the basic structure of the program or how the program is implemented. Medicaid has always been a cooperative partnership between the federal government and the States, and the ACA does not change that. The Act continues the tradition of State flexibility and experimentation that has been the hallmark of cooperative federalism, by allowing the States to apply for federal grants, seek waivers, operate demonstration projects, and otherwise exercise discretion in implementing Medicaid. The ACA thus strikes an appropriate, and constitutional, balance between national requirements that will expand access to affordable healthcare and State flexibility to design programs that achieve that goal,” the amicus brief states.

The federal government is covering the lion’s share of the costs for this expansion, paying 100 percent of the costs until 2016 and 90 percent or more thereafter.

Other states joining California in this brief are Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, Massachusetts, New Mexico, New York, Oregon and Vermont. The brief is also joined by the Governor of Washington.

Attorney General Harris has vigorously defended the constitutionality of federal health care reform. Joined by other attorneys general, she has filed three briefs in the U.S. Supreme Court and five briefs in the federal appellate courts urging the courts to uphold the Patient Protection and Affordable Care Act.

A copy of the amicus is attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced a settlement with the manufacturer of Brazilian Blowout products that will require the company to warn consumers and hair stylists that two of its most popular hair smoothing products emit formaldehyde gas.

The settlement requires GIB, LLC, which does business under the name Brazilian Blowout, to cease deceptive advertising that describes two of its popular products as formaldehyde-free and safe. The company must also make significant changes to its website and pay $600,000 in fees, penalties and costs.

“California laws protect consumers and workers and give them fair notice about the health risks associated with the products they use,” said Attorney General Harris. “This settlement requires the company to disclose any hazard so that Californians can make more informed decisions.”

Today’s settlement is the first government enforceable action in the United States to address the exposures to formaldehyde gas associated with Brazilian Blowout products. It is also the first law enforcement action under California’s Safe Cosmetics Act, a right-to-know law enacted in 2005.

In November 2010, the Attorney General’s office filed suit against GIB, LLC for violating five state laws, including deceptive advertising and failure to provide consumers with warnings about the presence of a carcinogen in its products.

The settlement covers two products used in a popular salon hair straightening process, the “Brazilian Blowout Acai Smoothing Solution” and the “Brazilian Blowout Professional Smoothing Solution”.

The complaint alleged the two products contained formaldehyde but were labeled “formaldehyde free.”
Proposition 65 requires businesses to notify Californians about certain exposures to chemicals in the products they purchase. Formaldehyde is on the Proposition 65 list of chemicals known to cause cancer.

The complaint alleged that that GIB – the manufacturer of the Brazilian Blowout products – did not inform customers or workers that formaldehyde gas was being released during a Brazilian Blowout treatment, and therefore product users did not take steps to reduce their exposure, such as increasing ventilation. Under the terms of the settlement, GIB is required to:

- Produce a complete and accurate safety information sheet on the two products that includes a Proposition 65 cancer warning; distribute this information to recent product purchasers who may still have product on hand; and distribute it with all future product shipments. The revised safety information sheet -- known as a “Material Safety Data Sheet,” or MSDS -- will be posted on the company’s web site.

- Affix “CAUTION” stickers to the bottles of the two products to inform stylists of the emission of formaldehyde gas and the need for precautionary measures, including adequate ventilation.

- Cease deceptive advertising of the products as formaldehyde-free and safe; engage in substantial corrective advertising, including honest communications to sales staff regarding product risks; and change numerous aspects of Brazilian Blowout’s web site content.

- Retest the two products for total smog-forming chemicals (volatile organic compounds) at two Department of Justice-approved laboratories, and work with DOJ and the Air Resources Board to ensure that those products comply with state air quality regulations.

- Report the presence of formaldehyde in its products to the Safe Cosmetics Program at the Department of Public Health.

- Disclose refund policies to consumers before the products are purchased.

- Require proof of professional licensing before selling “salon use only” products to stylists.

GIB will also pay $300,000 in Proposition 65 civil penalties, and $300,000 to reimburse the Attorney General’s office fees and costs.

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO -- Attorney General Kamala D. Harris today led 10 states in filing a friend-of-the-court brief in the U.S. Supreme Court urging the high court not to invalidate the federal health care reform law in its entirety if that court decides the minimum coverage provision is unconstitutional.

“States have begun to implement substantial portions of the Act, such as prohibiting insurance companies from denying coverage to children with preexisting conditions, allowing States to better regulate insurance rates, and helping States establish high risk pools for their citizens. Today, these reforms are bringing real relief to States, medical providers, and families across the country. The reforms are also helping all States grapple with the serious problem of the high number of uninsured citizens. While the minimum coverage provision unquestionably advances the Congressional goal of comprehensive health care reform in general and private health insurance reform in particular, the minimum coverage provision operates independently of the vast majority of the Affordable Care Act,” the amicus brief states.

In August 2011, a divided United States Court of Appeals for the Eleventh Circuit ruled that the Patient Protection and Affordable Care Act’s minimum coverage provision, which in 2014 will require that adults maintain adequate health insurance, is unconstitutional. The United States government appealed that decision to the U.S. Supreme Court, which will hear oral arguments in the matter in March.

Attorney General Harris, joined by 10 other attorneys general, argued in a brief filed today in the U.S. Supreme Court that the minimum coverage provision is constitutional. If, however, the court decides the minimum coverage provision is unconstitutional, the remainder of the Patient Protection and Affordable Care Act – including measures that have already been implemented – should remain intact.

Since March 2010, when the landmark federal healthcare law was enacted, Californians have benefitted from numerous reforms that have lowered costs and increased health care options. For example, insurance companies can no longer deny coverage to the state’s 2.2 million children with pre-existing conditions. And, as a result of the federal reform, most young people in California can remain on their parent’s insurance until their 26th birthday.

California was one of the first states to begin covering low-income adults, ages 19 to 64, who do not qualify for Medi-Cal. As of October 2011, more than 220,000 Californians were covered through the program, which also provides funds for hospital care and public health initiatives.

California has also received millions in grant funds, including $42.7 million to create a new fund to prevent illness and promote health.

“This important reform is comprehensive and wide-reaching across the healthcare industry. It does everything from encourage Americans to enter the nursing profession to improve the quality of care for Medicare beneficiaries,” Attorney General Harris said. “Its real and lasting benefits have already taken effect in California and are making meaningful differences in the lives of millions of individuals.”

Other states joining California in this brief are Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, New Mexico, New York, Oregon and Vermont. The brief is also joined by the District of Columbia and the Governor of Washington.

Attorney General Harris has vigorously defended the constitutionality of federal health care reform. Joined by other attorneys general, she has filed two briefs in the U.S. Supreme Court and five briefs in the federal appellate courts urging the courts to uphold the Patient Protection and Affordable Care Act.

A copy of the amicus is attached to the online version of this release at www.oag.ca.gov.

SACRAMENTO --- Attorney General Kamala D. Harris has filed a friend-of-the-court brief in the U.S. Supreme Court supporting the constitutionality of federal health care reform and urging the high court to uphold the landmark law.

“Though state governments and private actors have taken important and innovative steps to expand access to health care and to restrain the growth of health care costs, no remedy can be fully effective without action on a national level. The Commerce Clause empowers Congress to take such action, and Congress properly employed that power in addressing the nation’s healthcare crisis through the reforms enacted in the Affordable Care Act,” the amicus brief states.

In August 2011, a divided United States Court of Appeals for the Eleventh Circuit ruled that the Patient Protection and Affordable Care Act’s minimum coverage provision, which requires that individuals maintain adequate health insurance, is unconstitutional. The United States government appealed that decision to the U.S. Supreme Court, which will hear oral arguments in the matter in March 2012.

Attorney General Harris, joined by 12 other attorneys general, argued in a brief filed today in the U.S. Supreme Court that the Constitution gives Congress broad powers to regulate interstate commerce, including individual conduct that substantially affects interstate commerce.

The failure of millions of Americans to purchase health insurance has a substantial negative impact on interstate commerce, as well as state economies and budgets. In 2009, the healthcare economy accounted for 17.6% of the nation’s gross domestic product. In 2008, the cost of uncompensated health care — health care provided to those who lacked insurance or some other ability pay — was $43 billion nationally. As a result, providers shift a significant portion of those costs onto insurance companies and other payers. Each American family, on average, pays $1,000 more than necessary in health insurance premiums as a result of the shifting of those costs.

“Health care is one of the fastest growing expenditures in the federal budget, California’s state budget, and the budgets of families across America,” Attorney General Harris said. “Federal health care reform is not only essential to improving access to quality health care in California, it also is central to the long-term health of our economy, as well as state and local budgets.”

The historic health care reform law will reduce the need to shift the cost of uncompensated care of the uninsured or underinsured and will reduce the expenses absorbed by the states and by individuals with health insurance. The Patient Protection and Affordable Care Act is an indispensable aid to the states in their own efforts to tackle the healthcare problems their residents face.

Other states joining California in this brief are Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, New Mexico, New York, Oregon and Vermont. The brief is also joined by the District of Columbia and the Virgin Islands.

A copy of the amicus is attached to the online version of this release at www.oag.ca.gov.

SACRAMENTO -- Attorney General Kamala D. Harris has filed a brief in the United States Court of Appeals for the Eighth Circuit supporting the constitutionality of the Patient Protection and Affordable Care Act and urging the court to affirm the states’ rights to protect the health and safety of their citizens.

“The law strikes an appropriate, constitutional balance between federal and state authority over the health care system,” Attorney General Harris said. “It establishes federal standards, backed by federal funding, to expand access to affordable coverage while conferring considerable latitude on states to design systems that work best for their citizens.”

Attorney General Harris, joined by nine other attorneys general, asserted in the brief that the federal health care law bolsters, rather than usurps, state authority to address problems in the national health care economy that the states cannot solve effectively on their own.

According to the brief, the health care law solves a national problem in a way that gives greater power to states by building on a successful model of cooperative federalism. Further, the brief states that the framework established by the law “empowers states to create enduring solutions to those problems, and to do so with federal support.” The attorneys general also argue that the minimum coverage provision is a constitutional and integral element of Congress’s interstate solution to the health care crisis.

California was joined in this brief along with Connecticut, Delaware, Hawaii, Iowa, Maryland, New York, Oregon, Vermont, and the District of Columbia.

In July, the same group of attorneys general filed a friend-of-the court brief in the United States Court of Appeals for the District of Columbia urging that court to affirm the constitutionality of the federal health care reform law. Attorney General Harris also filed similar briefs in April in the United States Court of Appeals for the Eleventh Circuit, in March in the United States Court of Appeals for the Fourth Circuit, and in January in the United States Court of Appeals for the Sixth Circuit.

The Eighth Circuit case is Kinder v. Geithner, No. 11-1973, United States Court of Appeals for the Eighth Circuit. ###