Medicare Advantage Plans Reviewing Options for Pharmaceutical Lawsuits

In a related case reported in mid-April of this year, Bloomberg News reported that the U.S. Supreme Court left intact a ruling that lets insurers including UnitedHealth Group Inc. and Humana Inc. sue GlaxoSmithKline (GSK) to recoup benefits they pay under the Medicare Advantage program, which covers approximately 13 million people.

This is another example for drug and device manufacturers of the subsequent and parallel civil and state liability companies face after settling with the federal government and federal health agencies.

Specifically, the Supreme Court rejected an appeal by GSK, which argued unsuccessfully that the Medicare Advantage program doesn’t give insurers the power to file lawsuits. “The dispute stems from Glaxo’s Avandia diabetes drug, a medicine that has been linked to heart attacks and strokes. Glaxo has paid as much as $2.3 billion in settlements with 40,000 people who took Avandia” and “already has paid more than $460 million to settle thousands of lawsuits claiming that Avandia caused personal injury,” reported FierceHealthPlayer.

A Humana unit is suing GSK, saying that at least several dozen of those people were its Medicare Advantage customers.

As Bloomberg explained, “Medicare Advantage is an alternative to standard Medicare, the federal health program that covers the elderly and disabled. Humana receives 66 percent of its revenue and 58 percent of its profit from Medicare Advantage, leading the industry, according to estimates by Cowen & Co. analysts.”

“With the standard Medicare program, the federal government has the ability to sue third parties who are responsible for a beneficiary’s illness or injury.” Specifically, Humana is suing GSK under the federal Medicare Secondary Payer Act, which it says gives it and other private insurers a right to sue for reimbursement. The law lets the government collect double damages. Humana also would be eligible to collect double damages should it win its lawsuit.

In the Humana-Glaxo case—a class-action—the Philadelphia-based Third Circuit Court of Appeals ruled that Medicare Advantage insurers can file similar lawsuits, Bloomberg reported. The case is GlaxoSmithKline v. Humana Medical Plans, 12-690.

Interestingly, the Food and Drug Administration (FDA) recently announced that it will hold a public advisory committee meeting on June 5-6, 2013, to once more review the heart risks of Avandia. The FDA Endocrinologic and Metabolic Drugs Advisory Committee and Drug Safety and Risk Management Advisory Committee will focus on the results of a recent re-adjudication of GSK’s much-maligned RECORD trial supporting Avandia.

In discussing the original filing of the lawsuit back in January of this year, Medcity News quoted David Farber of Patton Boggs, who filed an Amicus brief on behalf of the Medicare Advocacy Recovery Coalition, or MARC, supporting the petition filed on behalf of GSK. Farber pointed out that the battle against the Third Circuit’s decision has aligned the interests of lawyers for pharmaceutical companies, plaintiffs, retailers and insurers, something he says rarely happens.

“It’s deeply ironic that in situations where beneficiaries and businesses small and large businesses alike want to settle, the Third Circuit’s decision will stand in the way of settling claims. They will shut down settlements which would cause hardship to all involved.”

The Pharmaceutical and Research Manufacturers of America (PhRMA) and the Washington Legal Foundation (WLF) also filed Amicus briefs.

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