Over the weekend there was significant coverage (Washington Post, Wall Street Journal, New York Times) of new court filings made by the plaintiffs in the opioid multidistrict litigation (MDL) ahead of bellwether trials in Summit County (OH) and Cuyahoga County (OH) scheduled to begin in October. The purpose of the filing that was most frequently cited in the incremental coverage is to seek partial summary judgement on defendants’ compliance with their duties under the Controlled Substances Act (CSA) to report and not ship suspicious orders. Given that this is the primary argument for distributor culpability (vs. misrepresentation of addiction risk for manufacturers), we see this filing as an important document to review and understand. If granted, this judgement would allow the plaintiffs to “streamline” the presentation of RICO and public nuisance / negligence claims at the bellwether trials. We have included some interesting excerpts from the filing as well as the entire company-specific discussion for ABC, CAH and MCK. Please email us for a copy of the filing.
Search Coverage List, Models & Reports
Search Results1-10 out of 76
Yesterday federal prosecutors filed charges against Miami-Luken, a small drug distributor, and two of its executives for its actions as a distributor of opioids. We have reviewed the indictment - the charges allege failure to maintain effective controls against diversion, failure to report suspicious orders to the Drug Enforcement Administration (DEA), continuing to fill orders reported as suspicious to the DEA, regularly exceeding internal order thresholds, and failure to conduct customer due diligence. Interestingly, two of the pharmacies cited in the indictment (Tug Valley Pharmacy in Williamson, WV and Westside Pharmacy in Oceana, WV) were both featured in an extensive House Energy and Commerce Committee investigation into opioid distribution and enforcement in the state – see below for color on other distributors’ relationships with these pharmacies. Please email us for a copy of the indictment. Miami-Luken has already discontinued operations as the result of previous DEA actions
Today (7/16/2019) CAH named Stephen Mason the new CEO of the Medical segment. He will succeed current Medical CEO Jon Glacomin who will remain with the company until mid-August and then assume a CEO position with a private company. CAH disclosed that it expects to hit at least the midpoint of FY 2019 EPS guidance, which is currently $5.10 vs. WR/Consensus EPS estimate of $5.12/$5.10. We note that CAH’s leadership team has seen significant change over the past year and now has relatively new leaders in both the Medical and Pharma businesses, in addition to having a CEO who will be serving as interim CFO post Q4 results in August.
We are introducing a new report that will review proxy statements across our coverage, with a focus on CEO pay and compensation drivers. We came away somewhat surprised by the disparity in compensation programs, both overall and within each subsector. Here we provide a brief overview of each subsector and some company-specific highlights, with significantly more detail available in the note.
Early this morning Politico and other news sources reported that the Trump Administration has withdrawn its proposal to eliminate existing rebate safe harbor protection within Medicare Part D and Medicaid. Higher government spending was cited as the primary obstacle to implementing the proposal. Overall, we see today’s news as reintroducing uncertainty into the pharma supply chain. As discussed below, Distributors have largely been supportive of the proposed rule. With regards to timing, there was already significant uncertainty about whether the rebate proposal could be effectively implemented for 2020. We now see little to no chance that any follow-up regulation would be implemented before 2021 – after the 11/3/20 general election, although we note that 2021 Medicare open enrollment will likely start 10/15/20. This implies to us that the only remaining vehicle for introducing incremental major policy change on drug pricing prior to the 2020 elections is executive order.
This morning (07/08/19) CAH announced that CFO Jorge Gomez will leave the company on August 9th. Separately, Dentsply Sirona (XRAY) announced this morning that Gomez will become CFO. We note that XRAY’s CEO Don Casey previously ran the Medical business at CAH with Gomez as his CFO.
UnitedHealthcare’s Preferred Laboratory Network (PLN) officially launched on Monday 7/1. We reviewed UnitedHealthcare’s July provider bulletin and spent time exploring the company’s online provider search tool for new information. As expected, PLN labs now have a “Preferred Lab” label when using the provider search tool that seems to have replaced a “Lower Lab Costs” label. See pages 3 and 4 for the current and previous views. We also did not find any change to test cost estimates for DGX or LH. The July provider bulletin summarizes the initial PLN announcement and notes “we’ll work with these distinguished labs to continue our efforts to improve the care provider and member experience”.
- 1 of 8
- next →