The Issue The issue in this case is whether Florida Administrative Code Rule 64B16-27.500(6) regarding the negative drug formulary is an invalid exercise of delegated legislative authority within the meaning of Subsection 120.52(8), Florida Statutes (2007).1
Findings Of Fact Levothyroxine Sodium is a drug used to treat Hypothyroidism and Pituitary TSH Suppression. Mylan develops, manufactures, and sells generic pharmaceuticals and is licensed as a non-resident prescription drug manufacturer and an out-of-state prescription drug wholesaler in Florida pursuant to Section 499.01, Florida Statutes. Mylan has received approval from the United States Food and Drug Administration (FDA) to market 12 strengths of generic Levothyroxine Sodium tablets, which the FDA has determined to be bioequivalent and therefore therapeutically equivalent to corresponding strengths of four reference listed drugs2: Unithorid® tablets, Synthroid® tablets, Levoxyl® tablets, and Levothroid® tablets. Abbott is the manufacturer of Synthroid®, a Levothyroxine Sodium product marketed in Florida and other places. The Board of Pharmacy “has authority to adopt rules pursuant to ss. 120.536(1) and 120.54 to implement the provisions of [Chapter 465] conferring duties upon it.” § 465.005, Fla. Stat. Subsection 465.025(6), Florida Statutes, provides: The Board of Pharmacy and the Board of Medicine shall establish by rule a formulary or generic drug type and brand name drug products which are determined by the boards to demonstrate clinically significant biological or therapeutic inequivalence and which, if substituted, would pose a threat to the health and safety of patients receiving prescription medication. Subsection 465.025(1)(a), Florida Statutes, defines “brand name” as “the registered trademark name given to a drug product by its manufacturer, labeler, or distributor.” “Generically equivalent drug product” is defined in Subsection 465.025(1)(b), Florida Statutes, as “a drug product with the same active ingredient, finished dosage form, and strength.” Subsection 465.025(2), Florida Statutes, provides: A pharmacist who receives a prescription for a brand name drug shall, unless requested otherwise by the purchaser, substitute a less expensive, generically equivalent drug product that is: Distributed by a business entity doing business, and subject to suit and service of legal process, in the United States; and Listed in the formulary of generic and brand name products as provided in subsection (5) for the brand name drug prescribed unless the prescriber writes the words “MEDICALLY NECESSARY,” in her or his own handwriting, on the face of a written prescription; unless, in the case of an oral prescription, the prescriber expressly indicates to the pharmacist that the brand name drug prescribed is medically necessary; or unless, in the case of a prescription that is electronically generated and transmitted, the prescriber makes an overt act when transmitting the prescription to indicate that the brand name drug prescribed is medically necessary. When done in conjunction with the electronic transmission of the prescription, the prescriber’s overt act indicates to the pharmacist that the brand name drug prescribed is medically necessary. Subsection 465.025(5), Florida Statutes, provides: Each community pharmacy shall establish a formulary of generic and brand name drug products which, if selected as the drug product of choice, would not pose a threat to the health and safety of patients receiving prescription medication. In compiling the list of generic and brand name drug products for inclusion in the formulary, the pharmacist shall rely on drug product research, testing, information, and formularies compiled by other pharmacies, by states, by the United States Department of Health, Education, and Welfare, by the United States Department of Health and Human Services, or by any other source which the pharmacist deems reliable. Each community pharmacy shall make such formulary available to the public, the Board of Pharmacy, or any physician requesting same. The formulary shall be revised following each addition, deletion, or modification of said formulary. If a brand name drug or a generic drug type drug product is listed on the negative drug formulary established by the Board of Pharmacy and Board of Medicine, a pharmacist is prohibited from substituting a generically equivalent drug product for a prescribed brand name drug product. § 465.025(6)(b), Fla. Stat. The Board of Pharmacy has adopted a negative drug formulary which is contained in Florida Administrative Code Rule 64B16-27.500, and Levothyroxine Sodium is listed on the negative drug formulary. Thus, Mylan’s generic products currently cannot be substituted where a prescription is written for a brand name Levothyroxine Sodium product. Mylan has challenged Florida Administrative Code Rule 64B16-27.500(6), which provides: The negative drug formulary is composed of medicinal drugs which have been specifically determined by the Board of Pharmacy and the Board of Medicine to demonstrate clinically significant biological or therapeutic inequivalence and which, if substituted, could produce adverse clinical effects, or could otherwise pose a threat to the health and safety of patients receiving such prescription medications. Except where certain dosage forms are included on the negative drug formulary as a class, all medicinal drugs are listed by their official United States Pharmacopoeia Non-Proprietary (generic) name. The generic name of a drug shall be applicable to and include all brand-name equivalents of such drug for which a prescriber may write a prescription. Substitution by a dispensing pharmacist on a prescription written for any brand name equivalent of a generic named drug product listed on the negative drug formulary or for a drug within the class of certain dosage forms as listed, is strictly prohibited. In cases where the prescription is written for a drug listed on the negative drug formulary but a name brand equivalent is not specified by the prescriber, the drug dispensed must be one obtained from a manufacturer or distributor holding an approved new drug application or abbreviated new drug application issued by the Food and Drug Administration, United States Department of Health and Welfare permitting that manufacturer or distributor to market those medicinal drugs or when the former is not applicable, those manufacturers or distributors supplying such medicinal drugs must show compliance with other applicable Federal Food and Drug Administration marketing requirements. The following are included on the negative drug formulary: * * * (6) Levothyroxine Sodium. Subsection 465.0251(1), Florida Statutes, provides: The Board of Pharmacy and the Board of Medicine shall remove any generic named drug product from the formulary established by s. 465.025(6), if every commercially marketed equivalent of that drug is “A” rated as therapeutically equivalent to a reference listed drug or is a reference listed drug as referred to in “Approved Drug Products with Therapeutic Equivalence Evaluations” (Orange Book) published by the United States Food and Drug Administration. The Orange Book identifies drug products approved on the basis of safety and effectiveness by the FDA under the Federal Food, Drug, and Cosmetic Act. It also includes therapeutic equivalence evaluations for approved multisource prescription drug products. The Orange Book is updated annually and is supplemented with monthly cumulative updates. Additionally, the FDA has a website containing an electronic version of the Orange Book, which is also updated. The Orange Book used in 2007 is the 27th Edition. The Orange Book in effect at the date of the enactment of Section 465.0251, Florida Statutes,3 was the 21st Edition. Generally, approval by the FDA is required before a prescription drug product may be marketed, distributed, or sold in the United States. See 21 U.S.C. § 355(a). When a product contains a new active ingredient or otherwise differs significantly from previously approved products, the sponsor must provide the FDA with data demonstrating the product’s safety and effectiveness for the intended use. See, e.g., 21 U.S.C. § 355(b). When a product is a copy of a previously approved product—-what is commonly called a “generic” version of the original drug—-proof of safety and effectiveness is not required. Instead, the FDA requires a showing that, with regard to certain characteristics, the proposed generic product is essentially the same as the approved product it purports to copy, which is called the “reference listed drug.” See 21 U.S.C. § 355(j). The FDA’s previous finding that the reference listed drug is safe and effective is then imputed to the generic product. In general, the generic product must contain the same active ingredient in the same strength, and it must be in the same dosage form (e.g., tablet, capsule, solution) as the reference listed drug. See 21 U.S.C. § 355(j). Products that share these characteristics are considered “pharmaceutical equivalents” by the FDA. Orange Book, 27th Ed., at v-vi (Jan. 2007). Subsection 465.025(1)(b), Florida Statutes, uses the term “generically equivalent drug products” to describe such products. “Drug products are considered to be therapeutic equivalents only if they are pharmaceutical equivalents and if they can be expected to have the same clinical effect and safety profile when administered to patients under the conditions specified in the labeling.” Orange Book, 27th Ed. at vi. The FDA classifies as therapeutically equivalent those products that meet the following criteria: they are approved as safe and effective; they are pharmaceutical equivalents in that they (a) contain identical amounts of the same active drug ingredient in the same dosage form and same route of administration, and (b) meet compendial or other applicable standards of strength, quality, purity, and identity; (3) they are bioequivalent in that (a) they do not present a known or potential bioequivalence problem, and they meet an acceptable in vitro standard, or (b) if they do present such a known or potential problem, they are shown to meet an appropriate bioequivalence standard; (4) they are adequately labeled; (5) they are manufactured in compliance with Current Good Practice Manufacturing Practice regulations. Id. These criteria are essentially the same criteria that existed in 2001 as shown in the final staff analysis of HB69, which was passed and became Chapter 2001-146, Laws of Florida, now codified as Section 465.0251, Florida Statutes. Drug products that have been relied on as reference listed drugs are so identified in the Orange Book, and products that are therapeutically equivalent to each other are identified by a shared therapeutic equivalence evaluation code (TE code). These are primarily, but not exclusively, reference listed drugs and the generic drugs approved on the grounds of pharmaceutical equivalence and bioequivalence to those reference listed drugs. Generally, the FDA uses a two-letter TE code, with a code of “AB” given to solid oral dosage form products that have demonstrated therapeutic equivalence. Orange Book, 27th Ed. at xii-xiii. For the vast majority of most multi-source drugs, there is one product that is the reference listed drug and one or more generic versions of that product, and all the products share a TE code of AB. However, there are situations in which there is more than one reference listed drug. These situations are discussed in the Orange Book, 27th Ed. at xiv. In certain instance, a number is added to the end of the AB code to make a three character code ( i.e., AB1, AB2, AB3, etc.). Three-character codes are assigned only in situations when more than one reference listed drug of the same strength has been designated under the same heading. Two or more reference listed drugs are generally selected only when there are at least two potential reference drug products which are not bioequivalent to each other. If a study is submitted that demonstrates bioequivalence to a specific listed drug product, the generic product will be given the same three-character code as the reference listed drug it was compared against. . . . Drugs coded as AB under a heading are considered therapeutically equivalent only to other drugs coded as AB under that heading. Drugs coded with a three-character code under a heading are considered therapeutically equivalent only to other drugs coded with the same three- character code under that heading. The FDA first officially described the three-character code rating system in the 16th edition of the Orange Book in 1996. Levothyroxine Sodium tablets are a drug product for which there are multiple reference listed drugs. Currently the Orange Book identifies seven Levothyroxine Sodium products approved for sale in the United States: Synthroid®, Levo-T®, Levoxyl®, Levothroid®, Unithroid®, a generic-named product manufactured by Genpharm, and a generic manufactured by Mylan. The current Orange Book also contains the following levothyroxine sodium products in a section identifying “Discontinued” products that, although approved for distribution in the United States, are not being marketed: Novothyrox, Levolet, and Tirosint. The following drug products are currently identified in the Orange Book as reference listed drugs: Synthroid®, Levo-T®, Levoxyl®, Levothroid®, and Unithroid®. In the case of Levothyroxine Sodium products, not all the reference listed drugs are considered therapeutically equivalent to one another. The Orange Book discusses this situation and explains the therapeutic evaluations for Levothyroxine Sodium products as follows: Because there are multiple reference listed drugs of levothyroxine sodium tablets and some reference listed drugs’ sponsors have conducted studies to establish their drugs’ therapeutic equivalence to other reference listed drugs, FDA has determined that its usual practice of assigning two or three character TE codes may be potentially confusing and inadequate for these drug products. Accordingly, FDA provides the following explanation and chart of therapeutic equivalence evaluations for levothyroxine sodium products. Levothyroxine Sodium (Mylan ANDA 76187) tablets have been determined to be therapeutically equivalent to corresponding strengths of Unithroid (Jerome Stevens NDA 021210) tablets. Levo-T (Alara NDA 021342), Levothyroxine Sodium (Mylan ANDA 76187), Unithroid (Jerome Stevens NDA 021210) and Levothyroxine Sodium (Genpharm ANDA 76752) tablets have been determined to be therapeutically equivalent to corresponding strengths of Synthroid (Abbott NDA 021402) tablets. Levo-T (Alara NDA 021342), Unithroid (Jerome Stevens NDA 021210), Levothyroxine Sodium (Mylan ANDA 076187) and Levothyroxine Sodium (Genpharm ANDA 76752) tablets have been determined to be therapeutically equivalent to corresponding strengths of Levoxyl (King/Jones Pharma NDA 021301) tablets. Levothyroxine Sodium (Mylan ANDA 76187) tablets have been determined to be therapeutically equivalent to corresponding strengths of Levothroid (Lloyd NDA 021116) tablets. Novothyrox (Genpharm NDA 021292) requires further investigation and review to establish therapeutic equivalence to corresponding strengths of any other Levothyroxine Sodium drug products and is rated BX. Levolet (Vintage NDA 021137) requires further investigation and review to establish therapeutic equivalence to corresponding strengths of any other Levothyroxine Sodium drug products and is rated BX. The chart outlines TE codes for all 0.025mg products with other products being similar. Therapeutic equivalence has been established between products that have the same AB+number TE code. More than one TE code may apply to some products. One common TE code indicates therapeutic equivalence between products. Trade Name Applicant Potency TE CODE Appl No Product No UNITHROID STEVENS J 0.025mg AB1 21210 001 LEVOTHYROXINE SODIUM MYLAN 0.025mg AB1 76187 001 LEVOXYL JONES PHARMA 0.025mg AB1 21301 001 SYNTHROID ABBOTT 0.025mg AB1 21402 001 SYNTHROID ABBOTT 0.025mg AB2 21402 001 LEVOTHYROXINE SODIUM MYLAN 0.025mg AB2 76187 001 LEVO-T ALARA PHARM 0.025mg AB2 21342 001 UNITHROID STEVENS J 0.025mg AB2 21210 001 LEVOTHYROXINE SODIUM GENPHARM 0.025mg AB2 76752 001 LEVOXYL JONES PHARMA 0.025mg AB3 21301 001 LEVO-T ALARA PHARM 0.025mg AB3 21342 001 UNITHROID STEVENS J 0.025mg AB3 21210 001 LEVOTHYROXINE SODIUM MYLAN 0.025mg AB3 76187 001 LEVOTHYROXINE SODIUM GENPHARM 0.025mg AB3 76752 001 LEVOTHROID LLOYD 0.025mg AB4 21116 001 LEVOTHYROXINE SODIUM MYLAN 0.025mg AB4 76187 001 NOVOTHYROX GENPHARM 0.025mg BX 21292 001 LEVOLET VINTAGE PHARMS 0.025mg BX 21137 001 Orange Book, 27th Ed. at xix-xx. In the Orange Book, 21st Ed. (Cumulative Supplement 6, June 2001), only two Levothyroxine Sodium tablet products were listed, Levoxyl® and Unithroid®, and both were rated as BX, meaning that the data that had been reviewed by FDA was insufficient to determine therapeutic equivalence. There were also 12 additional Levothryroxine Sodium products that were being commercially marketed in the United States and were not listed in the Orange Book.
Findings Of Fact Section 465.025(2), Florida Statutes, states that, when filling prescriptions for medication, Florida pharmacists must substitute less expensive generically equivalent drugs for the physician-prescribed medication, unless the physician or patient requests otherwise. A "generically equivalent drug product" is defined at section 465.025(1)(b), Florida Statutes, to mean the same active ingredient, finished dosage form, and strength. For a physician to indicate that the prescription should be filled as written, the statute provides at section 465.025(2), Florida Statutes, that the doctor must write the words "medically necessary" on the prescription, or in the case of an oral prescription, so indicate to the dispensing pharmacist. Section 465.025(6), Florida Statutes, provides for the establishment of a "negative drug formulary." The formulary is a list of drug products which are determined by the Boards of Pharmacy and Medicine "to demonstrate clinically significant biological or therapeutic inequivalence and which, if substituted, would pose a threat to the health and safety of patients receiving prescription medication." Substitution by a pharmacist of a generic drug for a physician- prescribed brand name drug is prohibited in cases where the drug is included in the negative formulary. The Boards have established the formulary by Rule 215- 5.001 Florida Administrative Code. Neither the statute nor rule provide a definition of "clinically significant biological or therapeutic inequivalence." In the case of carbamazepine, it is clear that clinically significant biological or therapeutic inequivalence between brand Tegretol and the generic formulations would pose a serious threat to the health and safety of patients taking the medication. The rate at which active ingredients are dissolved and absorbed into the blood stream, and the time period during which such ingredients remain at therapeutic levels are critical in terms of properly titrating patient dosage levels. In the case of carbamazepine, the task is further complicated by the fact that carbamazepine affects its own elimination from the human body. On May 1, 1987, the Board of Pharmacy received a request from Ciba- Geigy, a pharmaceutical company, to add carbamazepine to the "negative drug formulary." Carbamazepine is the generic name for an anticonvulsant drug used in the treatment of epilepsy and other disorders. The effect of placing carbamazepine on the negative drug formulary would be to prohibit the substitution of generic carbamazepine for physician-prescribed "Tegretol," a Ciba-Geigy product. Carbamazepine was first marketed under thee brand name Tegretol, the so-called "innovator" form of the medication. Following the expiration of Ciba- Geigy's proprietary rights to the chemical formulation marketed as Tegretol, generic carbamazepine manufacturers began to produce the drug. Tegretol is still manufactured and marketed by Ciba-Geigy. In addition to Ciba-Geigy, there are six manufacturers of generic carbamazepine. Lemmon Company manufactures and markets "Epitol," one of the generic carbamazepine products. Tegretol and Epitol are conceded by the Respondent to be virtually identical. Lemmon Company manufactures and markets innovator and generic drugs distributed in Florida through sales to small independent pharmacies, wholesalers and chain pharmacies. Annual Epitol sales in Florida are estimated to be approximately $560,000. Ciba-Geigy, as justification for the request to add carbamazepine to tide negative formulary, asserts that the biological and therapeutic inequivalence between brand Tegretol and generic carbamazepine causes seizures or other side effects in patients who are switched from Tegretol to generic carbamazepine. However, the evidence does not establish clinically significant differences between Tegretol and generic carbamazepine which would support a finding of biological or therapeutic inequivalence. The evidence does not support a finding that alleged seizures or other side effects, where they have occurred, have resulted from the change in medication. The prohibition against the substitution, by a dispensing pharmacist, of a generic drug for a brand name drug is clearly beneficial to the branded drug's maker and detrimental to the manufacturers of the generic products. Because Tegretol, as the innovator, was the sole available formulation of carbamazepine for an extended period of time, prescribing physicians are more likely to be aware of, and to prescribe, the brand name Tegretol. Prohibition of generic substitutions undoubtedly impacts the sales of such generic drugs; thus Lemmon Company is substantially affected by the action of the Respondent in placing carbamazepine on the negative drug formulary. Following receipt of the Ciba-Geigy request, the Director of the Board of Pharmacy referred the issue to the Negative Formulary Study Committee for review. The study committee includes consultants to the board from the University of Florida Colleges of Pharmacy and Medicine. The review process apparently provides for initial consideration by the study committee which makes recommendations to the Negative Formulary Committee which, in turn, makes recommendations to the Boards of Pharmacy and Medicine. On July 1, 1987, the study committee considered the Ciba-Geigy request, including information submitted by Ciba-Geigy apparently consisting of limited anecdotal data, and thereafter elected not to recommend carbamazepine for inclusion on the negative drug formulary. The rationale for the determination was that the anecdotal information provided by Ciba-Geigy was not persuasive, and that there was no well-controlled clinical evidence demonstrating therapeutic differences between carbamazepine brands. On September 22 and November 25, 1987, the study committee met and again considered the Ciba-Geigy request. Additional anecdotal information had been received, primarily letters from physicians supporting inclusion of carbamazepine on the negative drug formulary. Further, Ciba-Geigy had submitted information related to six European studies purporting to establish the inequivalence of various carbamazepine formulations. The study committee found the information to contain "considerable inconsistency" and again elected not to recommend placement of carbamazepine on the negative drug formulary. The study committee suggested deferral of further consideration pending completion of a controlled study (the "Penry" study, which remains in progress) which may provide additional information related to alleged inequivalence of Tegretol and generic carbamazepine. On May 31, 1988, the study committee met and again declined to recommend that carbamazepine be included on the negative drug formulary. The study committee considered information, apparently erroneous, related to the Veteran's Administration Hospital System, but nonetheless chose to await the results of the Penry study. On November 1, 1988, four members of the Negative Formulary Committee, met by telephone conference call. The Negative Formulary Committee includes members of the Boards of Pharmacy and Medicine. At that time, the committee decided to recommend, to both boards, that carbamazepine be included in the negative formulary. There is limited evidence indicating the basis upon which this committee took the action. The committee may have considered the anecdotal information contained in letters submitted by physicians supporting the placement of carbamazepine on the formulary. It may have also considered a prior recall of a substantial number of generic carbamazepine dosages which apparently failed to meet FDA standards for tablet dissolution. The committee may have reviewed copies of adverse drug reports (ADRs) provided by Ciba-Geigy purporting to show adverse patient reactions to generic carbamazepine. At least one member of the committee may have considered telephone conversations with randomly selected physicians in his vicinity. Notice of the intent to add carbamazepine to the negative drug formulary was published in the December 16, 1988 edition of Florida Administrative Weekly. The Board of Pharmacy met on January 10, 1989. The Board of Medicine met on February 5, 1989. Both boards considered essentially the same materials and evidence related to the issue of placing carbamazepine on the negative drug formulary. Both boards elected to place carbamazepine on the negative drug formulary. Materials considered by the boards included physician letters, ADRs, and scientific articles relating to carbamazepine equivalency studies. The boards were aware of the recall of a significant quantity of generic carbamazepine tablets. There was discussion related to FDA standards and testing methods, and concern expressed related to interchangeability between carbamazepine products. There was discussion of Florida's Medicaid program, apparently, at least in part, based upon erroneous information, and on the carbamazepine-related issues being considered in at least one other state. Standards and specifications relating to the quality and purity of drugs available in the U.S. are established by the United States Pharmacopeia (USP), an independent entity, which has established such standards for carbamazepine. There is no evidence which would suggest that USP standards for carbamazepine are inadequate or erroneous. Such standards are found to be reasonable. The U.S. Food and Drug Administration (FDA) has responsibility for evaluation and control of prescription and generic drug products marketed in this country. The FDA utilizes the specifications and standards developed by the USP. As part of this responsibility, the FDA monitors the therapeutic equivalency of innovator and generic drugs marketed in the U.S., and makes specific findings as to such equivalence. Such findings are identified in the publication, Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the "Orange Book." Drug products considered to be therapeutic equivalents by the FDA are pharmaceutical equivalents that can be expected to have the same therapeutic effect when administered to patients under the conditions specified in the labeling. As stated in the Orange Book, the FDA evaluates as therapeutically equivalent those products that meet the following general criteria: they are pharmaceutical equivalents in that they contain identical amounts of the same active drug ingredient in the same dosage form, and meet compendial or other applicable standards of strength, quality, purity, and identity; they are bioequivalent in that they do not present a known or potential bioequivalence problem, and they meet an acceptable in vitro standard, or if they do present such a known or potential problem, they are shown to meet an appropriate bioequivalence standard matching both rate and extent; they are adequately labeled; and they are manufactured in compliance with Current Good Manufacturing Practice regulations. According to the FDA Orange Book, drug products are considered pharmaceutical equivalents if they contain the same active ingredients and are identical in strength or concentration, dosage form, and route of administration, and meet the same or comparable standards, as to strength, quality, purity, and identity. They may differ in characteristics such as color, flavor, shape, scoring configuration, packaging, preservatives; expiration time, and, within certain limits, labeling. Bioequivalent drug products are those which display comparable bioavailability when studied under similar experimental conditions. Bioavailability describes the rate and extent to which the active drug ingredient or therapeutic ingredient is absorbed from a drug product. Drugs are considered to be bioequivalent when the rate and extent of absorption of the test drug do not show a significant difference from the rate and extent of absorption of the reference drug, when such drugs are administered at the same therapeutic ingredient dose under similar experimental conditions. (There are further, unrelated standards by which bioavailabilty may be determined which are not relevant to this proceeding.) The FDA does not compare generic drugs for equivalency between generics, the assumption being that if the generics are biologically and therapeutically equivalent to the innovator reference, they will be equivalent among themselves. The greater weight of the evidence indicates that the assumption is reasonable. The FDA utilizes a series of two letter codes to identify therapeutic equivalency evaluation findings. The first letter of the code identifies whether a drug is considered to be therapeutically equivalent; the second letter identifies the basis for the equivalence evaluation. The drug products are listed in the Orange Book according to active ingredient, dosage form and strength. The FDA Orange Book identifies the 200 mg. oral tablet generic carbamazepine formulations and the 200 mg. oral tablet Tegretol brand carbamazepine, as being "AB" rated. As stated in the Orange Book, the AB evaluation generally denotes products that contain an active ingredient in a dosage form for which the submission of bioavailability or clinical data is required for approval or to permit therapeutic equivalence evaluations, and for which the applicant has provided adequate studies to establish the bioavailability and bioequivalence of its product. Otherwise stated, the generic carbamazepine products and Tegretol meet FDA therapeutic equivalence standards. The FDA finding of bioequivalence is based upon controlled tests performed on healthy live subjects. Such tests measure the maximum drug concentration in the blood stream (the "C-max") and the time required for the drug to reach such concentration levels (the "T-max"). Such statistical information is plotted, with the resulting graphic display (the "AUC," or "area under the curve") visually indicating the therapeutic effect the drug may be expected to provide. The generic drug test results are compared to the innovator brand test results. The suggestion that FDA tests should be performed on unhealthy persons so as to monitor effects in such situations was not supported by the greater weight of the evidence. The purpose of the tests is apparently to evaluate the expected therapeutic effect as measured by the C-max, T-max, and AUC, without complications induced by illness. In light of the purpose of the testing program, such evaluation procedures are reasonable. The FDA guidelines provide that a generic drug is considered bioequivalent when, at least 90% of the time the tests are performed (the "90% confidence interval"), the statistical indicators are within a 20% range of the innovator drug reference point. The permissible variance appears to reflect the use of live subjects for testing purposes and the fact that, even in tightly controlled situations, test results may be affected by factors related to individual body chemistry or metabolism. Even the same formulation may produce differing statistical data depending on extrinsic variables. The greater weight of the evidence establishes that the FDA guidelines utilized in determining therapeutic equivalence are reasonable. Although the FDA is reviewing the means by which determinations of equivalency for generic drugs are made, the evidence does not support a finding that the current FDA conclusions are erroneous or otherwise invalid. The evidence does not support a finding that the manner is which the FDA establishes therapeutic equivalence is unreasonable or inappropriate. The testing program utilized by the FDA in ascertaining equivalence is reasonable. Section 465.025(6)(a), Florida Statutes, provides that the party requesting the boards to include a drug on the negative formulary has the burden of proof to show why such inclusion should be made. In attempting to establish the alleged biological or therapeutic inequivalence between Tegretol and generic carbamazepine, Ciba-Geigy likely encouraged physicians to contact the boards through letter, and may otherwise have mobilized and demonstrated support for their position that carbamazepine should be placed on the negative formulary. A number of physicians sent letters to the Respondent addressing the issue of placing carbamazepine in the negative drug formulary. The letters provide anecdotal allegations of instances where therapeutic failures, generally seizures or side effects, are attributed to use of generic medication instead of Tegretol. The letters provide little evidence upon which a scientific determination can be based. There is no reason to presume that the anecdotal information contained within the letters is false. Although such anecdotal information gives cause for concern, concerned physicians can assure that brand Tegretol is used in filling prescriptions simply by writing "medically necessary" on the prescription, or by orally communicating such instructions in oral prescriptions. The letters are not sufficient to establish clinically significant biological or therapeutic inequivalence between Tegretol or generic carbamazepine. The Adverse Drug Reports (ADRs) do not establish that the alleged adverse reactions were related to the use of carbamazepine or substitution of the generic drug for Tegretol. Such reports are filed on a voluntary basis when a patient on medication experiences an unusual occurrence or incident which may by some means be related to use of the medication. ADRs are completed and submitted to the FDA by physicians or pharmacists who choose to do so. The FDA investigates the reports and monitors for trends which could indicate problems in manufacturing or equivalence. In fact, a reported adverse reaction may have no relationship to medication. The evidence did not establish that the FDA has identified biological or therapeutic equivalence concerns related to carbamazepine ADRs. Although the ADRs supplied by Ciba-Geigy to the boards imply that the alleged reactions resulted from substitutions of generic carbamazepine for Tegretol, no information is provided which specifically establishes a connection between the alleged reaction and the use of, or substitution of, generic carbamazepine. The bioequivalence of carbamazepine formulations is the subject of current scientific research, as reflected by a number of scholarly articles published in reputable medical journals, which suggest that various formulations may or may not be therapeutically equivalent. One of the studies compared liquid carbamazepine suspension to tablet form and concluded that the formulations were not equivalent due to absorption rates. However, the evidence indicates that the liquid suspension and the tablet formulation would not be classified as generically equivalent drugs in that they are not the same finished dosage form. Other studies have compared United States formulations of carbamazepine to other formulations which are not available within the United States or to formulations for which insufficient identification prevents determining availability. The evidence suggests that such foreign formulations are not commercially available within the U.S. Substitution by a Florida pharmacist of such a foreign formulation for a physician-prescribed carbamazepine product would be improper. The articles do not establish clinically significant biological or therapeutic inequivalence between generically equivalent carbamazepine products which may be used by a Florida pharmacist in dispensing medication. A recall of the generic carbamazepine tablets due to manufacturing difficulties does not establish biological or therapeutic inequivalence. It is possible for any pharmaceutical company to encounter problems related to manufacturing or storage which require the recalling of previously shipped dosages, as was apparently the case with the recall considered by the boards. Such recalls do not establish that the formulation of a drug is, in a clinically significant manner, biologically or therapeutically inequivalent. There is no clinically significant evidence which would establish that all generically equivalent carbamazepine products, containing the same active ingredient, finished dosage form, and strength are biologically or therapeutically inequivalent. The action of the Boards of Pharmacy and Medicine in placing carbamazepine on the negative drug formulary was arbitrary or capricious. The economic impact statement prepared as part of the Board of Pharmacy's rule adoption process clearly fails to address, or even mention, the economic impact to manufacturers and consumers of carbamazepine products. The summary of the estimated economic impact published in the December 16, 1988 edition of Florida Administrative Weekly minimally identifies the impact on consumers and manufacturers, however, the economic impact statement, contrary to statutory requirement, fails to properly include the estimated cost or economic benefit to all persons directly affected by rule adoption. The evidence indicates no more than cursory review of the economic impact of the rule adoption on manufacturers and consumers of the drug. The rule as adopted erroneously listed the referenced drug as carbomazepine, rather than the correctly spelled carbamazepine. There is no evidence that there was any confusion or harm resulting from the erroneous spelling, which apparently was the result of scrivener's error.
Findings Of Fact The Parties The Petitioner is the state agency that administers the Florida Medicaid program, which includes pharmacies that participate in the program. The Petitioner's Office of Program Integrity is responsible for insuring that the goods and services billed to the Medicaid program are those that are actually provided to Medicaid recipients. Medicaid is a joint program, funded by the federal government and by the State of Florida, and is administered pursuant to both state and federal statutes and rules. All services or goods billed to the program must be necessary, Medicaid compensable, and must also have actually been provided to eligible recipients by providers prior to submitting claims. Any payment made by the Medicaid program for goods or services not actually provided to an eligible recipient is subject to recoupment by the Petitioner, and the provider is also subject to the imposition of administrative fines and exclusion from the program for a specified period of time. The Respondent is a community pharmacy located in a hispanic section of Miami, Florida, which has been owned and operated for the past six years by Frances Larin, a licensed pharmacist, who makes all drug purchases and does all Medicaid billings at the pharmacy herself. Most of Respondent's customers have limited financial resources and are Medicaid recipients. The Respondent has participated in the Medicaid program for approximately eight years, and has not previously been charged with overbilling the Medicaid program. The Respondent has cooperated fully with the Petitioner throughout these proceedings. Prior Review From February to April 1988, the Petitioner's Office of Program Integrity had a review performed of the Respondent's billings to Medicaid from March 1, 1987 to December 31, 1987. This review was conducted for the Petitioner by the Foundation for Health Care, Inc. (Foundation), contract auditors, and resulted in the determination that the Respondent had overbilled the Medicaid program for prescription drugs dispensed to program recipients during the review period. In performing this review, the Foundation used an across-the-board Medicaid percentage of 54% in determining the available units of the various drugs on hand for dispensing to Medicaid recipients. Based upon the Foundation's review, the Petitioner sought recoupment for overpayments in the amount of $28,649.99 by letter to the Respondent dated July 20, 1988, as well as an administrative fine of $7,162.49, and a three month suspension from the program. The Respondent timely sought a formal administrative hearing in which it disputed the results of the Foundation review. However, after the matter was referred to the Division of Administrative Hearings, the Petitioner withdrew its notice of overpayment and imposition of administrative sanctions, and thus, without a determination on the merits, the Division of Administrative Hearings file was closed and jurisdiction was relinquished to the Petitioner. Subsequently, the Petitioner entered a Final Order which provided that the Respondent would be re-audited. The Respondent timely sought judicial review of this Final Order in which it challenged that Petitioner's right to conduct a further review of the period March 1, 1987 to December 31, 1987. However, the District Court of Appeal of Florida, Third District, dismissed the Respondent's appeal, and the Petitioner proceeded with a further review. The KPMG Review (a) For purposes of its further review, the Petitioner employed the public accounting and management consulting firm of KPMG Peat Marwick which designed a statistically valid sampling methodology to determine the Respondent's Medicaid percentage for each drug, and also to perform a management review of the Respondent. It was established by competent substantial evidence in the record, and in particular by the expert testimony in statistics from Dr. Robert Ladner and Robert Peirce, that the KPMG methodology was statistically valid. The KPMG review was conducted during the latter half of 1989, and included developing a Medicaid percentage for individual drugs based upon an analysis of prescriptions for all drugs in question to determine the portion of each drug's total sales that went to Medicaid recipients, calculating the total units claimed for each drug for which the Respondent sought reimbursement during the audit period, and calculating the total units purchased by the Respondent for each drug claimed for reimbursement during the audit period. The Medicaid percentage of each drug was then applied to total purchases for each specific drug to determine the amount of each drug that was on hand at the Respondent's pharmacy for dispensing to Medicaid recipients. This number of available units was then compared with the total units claimed for reimbursement. Where the units claimed exceeded the units available for dispensing, a positive variance was noted, and this number of excess units claimed was then multiplied by the per unit reimbursement amount for that particular drug in order to obtain the amount of the apparent overbilling for that particular drug. Where the total units available for dispensing exceeded the total units claimed for a particular drug, a negative variance was noted. It was stipulated by the parties that negative variances did not indicate underpayments, and the evidence, including specifically the testimony and report of Dr. Victor Pestien, an expert in statistics, does not establish that such negative variances should be offset against the positive variances or that they in any way reduce the positive variances. This is the first instance in which this methodology has been utilized by the Petitioner in seeking a recoupment of an alleged Medicaid overpayment from a pharmacy, and this methodology was not set forth in any rule or regulation of the Petitioner that had been adopted at any time material hereto. Previous audits used an overall Medicaid percentage to calculate the portion of a pharmacy's business that was comprised of Medicaid recipients, and the quantity of drugs that were available to them. Using a drug specific Medicaid percentage, however, is a more accurate and conservative approach to determining overpayments than using a fixed percentage. Based upon the consideration of all evidence in the record, it is specifically found that the greater weight of evidence establishes that the methodology used by KPMG in this review for calculating Medicaid percentages was sound and reasonable, and in no way precluded the Respondent from presenting additional competent substantial evidence to the Petitioner, or at hearing, which would have established different Medicaid percentages for particular drugs. (a) The type of review conducted by KPMG is known as an aggregate analysis, a generally accepted type of statistical analysis, in which drugs that have been billed to and paid for by the Medicaid program are reviewed to determine whether the pharmacy under review purchased or otherwise acquired a sufficient quantity of drugs to justify its billings to Medicaid. Interchangeable brand-name drugs and generic equivalents were grouped together so that in conducting this review, whole equivalent groups of drugs were considered as one type of drug, regardless of differences in individual product names. To obtain a statistically random sample, prescriptions were put in numerical order and every fourth prescription for the review period was examined, and since prescriptions may be refilled for up to a year after they are originally filled, reviewers also examined every prescription for the year prior to the review period. Competent substantial evidence establishes that KPMG performed an appropriate and valid statistical analysis, and that they used an acceptable sampling methodology which produced a truly random result. The underlying assumption of this analysis is that before a drug can be claimed to have been dispensed and billed to Medicaid, the pharmacy under review must have that drug in its possession. (b) The approach taken by KPMG and the Petitioner was to be as conservative as possible in resolving all uncertainties and questions which arose during the course of this review in favor of the Respondent. KPMG did not conduct a financial audit of the Respondent, but did prepare a management report based upon its review of Respondent's operations during the audit period. Data used by KPMG in its methodology in calculating the amount paid by Medicaid to the Respondent, the unit price of drugs dispensed, and the quantity claimed by Respondent for payment by Medicaid, was derived from computer based information provided by the Petitioner's fiscal agent. During the period of time being reviewed in this case, Electronic Data Systems (EDS) was the Petitioner's fiscal agent, while Consultec was the Petitioner's fiscal agent during the period when the KPMG review was actually being performed. When Consultec was selected as the Petitioner's fiscal agent and replaced EDS on January 1, 1989, EDS turned over its computer records to the new agent by copying all of its magnetic, computer files, along with supporting microfiche documentation, which it then provided to Consultec under the supervision of the Petitioner. Upon receipt of these magnetic tapes, Consultec placed them in a controlled environment vault, and then later converted the information on these tapes to a new format used by Consultec. It was established by competent substantial evidence that in this process, no data was added, deleted or changed in any manner. The "units claimed" data was subsequently provided by computer download from the Consultec claims data base directly to the Petitioner's Office of Program Integrity. It was established by competent substantial evidence that data regarding claims which originated with EDS passed through Consultec to the Petitioner's Office of Program Integrity unchanged. Specific information regarding Respondent, including the claimed quantity of drugs dispensed and amounts paid, was accessed by staff in the Office of Program Integrity, randomly verified, and then made available to KPMG. Both Consultec and EDS are nationally recognized data processing and management companies. Competent substantial evidence established that the claims processing function utilized by the Petitioner in the Medicaid program during the period at issue was subject to several quality control checks to insure that claims were properly processed and appropriate payments were made. On occasion claim adjustments were made, but these were reasonable and for good cause, such as a substantiated underpayment. The computer hardware utilized in this process was reliable and properly maintained. In order to verify the data used by KPMG concerning the dollar amount of claims paid and the quantity of units of medication claimed, an "audit trail" was performed using 140 randomly selected sample claims by tracing each claim from its claim reference number to its associated remittance voucher and cancelled checks, where available. This audit trail verified that the data used as the basis for quantity claimed and total dollars paid was valid and reliable. The KPMG review was not limited to the top 100 drugs, by volume claimed, during the audit period, but included each drug dispensed by the Respondent to Medicaid recipients during the audit period. In its report dated November 20, 1989, KPMG calculated a total Medicaid overpayment to Respondent of $30,452.59, and based thereon, the Petitioner notified the Respondent that it was seeking recoupment of this amount, as well as an administrative fine of $2,000 and termination from the Medicaid program for at least two years. Subsequently, however, the Petitioner and KPMG reviewed and considered additional invoices documenting additional purchases of drugs in question by the Respondent during the audit period, and prepared a revised report dated August 30, 1990. Based upon this revised report, the Petitioner sought recoupment of a revised, reduced overpayment calculated to be $21,939.93, as well as a $2,000 administrative fine and a minimum two year termination from the program, and it was on this basis that this matter proceeded to final hearing. The Top 100 Drugs Subsequent to the final hearing, the Petitioner issued an amended recoupment letter dated October 17, 1990, which limited the recoupment it is seeking in this matter to the top 100 drugs, by dollar volume of claims, plus their generic equivalents. This resulted in the elimination of many individual drugs with relatively small overpayments from the list of overpayments, and left only five instances among these top 100 drugs where the difference between the quantity available, adjusted for standard error, and the quantity claimed is less than 100 units. In many instances the difference is well in excess of 1,000 units. The sanctions being sought in this amended recoupment letter further reduced the recoupment being sought to $12,643.11, reduced the administrative fine to $1,400, and reduced the period of exclusion from the program that is being sought to 16 months. However, due to an error in calculating the top 100 drugs and equivalents, the Petitioner issued a second amended recoupment letter dated October 26, 1990, further reducing the administrative fine sought to $1,200 and reducing the period of exclusion to 14 months. Inventory Analysis In performing its review, KPMG obtained information concerning the quantities of drugs purchased during the review period by the Respondent directly from the pharmacy's wholesalers and from a review of invoices retained by the Respondent for a period that included one month prior to the review period through one month after the review period (February 1, 1987, to January 31, 1988). The effect of seasonal variations in pharmacy sales and ordering patterns was also taken into account, and balanced, by extending this period to a full twelve months. All documentation concerning drug acquisitions was requested from Respondent, and the information received and considered by KPMG and the Petitioner was checked for reasonableness by a consultant pharmacist and cross validated by two reviewers. It was stipulated by the parties that the Respondent's main wholesaler, Gulf Distribution, Inc., had and maintained accurate information and records regarding its sales to the Respondent, and that it properly transferred that information to computer disks which were provided to KPMG. Subsequent thereto, additional invoices were discovered and were also made available to KPMG. The Petitioner stipulated that these additional invoices from Gulf did not reduce the number of drug units purchased by, and invoiced to, Respondent. Pharmacies in Florida which choose to participate in the Medicaid program are required to maintain complete and accurate patient and fiscal records which fully substantiate the extent of services rendered and billings made for a period of five years from the date of billing or service, and are also required to retain all invoices from wholesalers, or from the transfer or receipt of drugs through barter or exchange, for a period of five years. (a) Actual beginning and ending inventories of the top 100 drugs reviewed by KPMG for which the Petitioner now seeks recoupment in the amount of $12,643.11 were not determined. Rather, an estimate of inventory on hand was derived by counting invoices of all drug acquisitions through purchase, transfer or exchange made by the Respondent during the review period, as well as invoices of acquisitions made one month prior to and one month after the review period. Additionally, all documentation provided by the Respondent of bulk, or large, acquisitions made during or prior to the review period was also considered and included in the Petitioner's estimate of inventory. It was established by competent substantial evidence that pharmacies generally keep a drug inventory consisting of a two to two-and-a-half week supply on hand, and acquire drugs in anticipation of future sales rather than as a replacement of inventory depletion from past sales. Therefore, a basic assumption of the KPMG methodology, relied upon and accepted by the Petitioner, that Respondent had only those drugs available for dispensing which were obtained by invoiced purchase from wholesalers, or through transfer or exchange, between February 1, 1987 and January 31, 1988, as well as documented invoiced bulk purchases prior to this time period, is reasonable. At hearing, the Respondent established that a significant quantity of nine specific drugs were purchased during the review period from suppliers other than Gulf that were not considered by KPMG. These drugs include Xanax (.5 mg.), Inderal (10 mg.), Tagamet (300 mg.), Nitrostat (.4 mg.), Trental (400 mg.), Motrin (400 mg.), Motrin (600 mg.), Quinamm (260 mg.), and Quinidine Sulfate (200 mg.). It is, therefore, found that the overpayment of $2,902.19 calculated by KPMG and relied upon by the Petitioner for these particular drugs has not been supported by competent substantial evidence. Frances Larin, Respondent's owner and operator, testified that she did not follow the generally accepted practice of retaining only a two to two-and-a- half week supply of drugs on hand. Rather, she testified that for a significant number of the top 100 drugs at issue in this proceeding, she would purchase large quantites in bulk, and was thus able to draw down on these inventories without making additional purchases of particular drugs for over a year. The Respondent sought to establish that due to very large beginning inventories of particular drugs at issue, it was able to legitimately dispense more units during the review period than it purchased during the same time. However, the Respondent did not produce evidence in support of its position, such as invoices for bulk purchases which KPMG or the Petitioner did not consider, or complete records of bartering or transfers which had not been considered, and which would have supported its claim of a significantly larger beginning inventory for these particular drugs than would be the generally accepted practice. To the contrary, competent substantial evidence in the record, as well as the demeanor of Larin while testifying, establishes that Respondent's claim is unreasonable and lacks credibility. The deposition testimony of JoAnn Padell is outweighed by the testimony of Deborah Launer, Susan McCleod, and Robert Peirce. A review of the Respondent's purchasing patterns clearly shows that Respondent generally and routinely kept low inventories of drugs on hand, placing daily orders with Gulf to obtain drugs on an as-needed basis. Recoupment Based upon the foregoing, it is found that competent substantial evidence establishes that the Respondent overbilled the Medicaid program during the review period at issue in this case in the amount of $9,740.92 ($12,643.11 claimed in the second amended recoupment letter minus the $2,902.19 claim associated with the nine specific drugs for which significant purchases were omitted from the KPMG review, as found above at Finding 13). Petitioner is authorized to recoup the established overpayment of $9,740.92 from the Respondent. Sanctions (a) In determining the sanctions stated in the second amended recoupment letter which Petitioner seeks to impose upon the Respondent, the Petitioner considered the provisions of Section 409.266(13), Florida Statutes, as well as the impact which sanctioning this Medicaid provider would have upon Medicaid recipients. Competent substantial evidence establishes that there are eight pharmacies which accept Medicaid within a one mile radius from the Respondent's location, and twenty-six such pharmacies within a two mile radius. Medicaid recipients are issued new cards each month and may transfer pharmacies at the beginning of each month. Therefore, it is found that Medicaid recipients would not be substantially affected by the imposition of sanctions upon the Respondent. The parties stipulated that the sanction matrix set forth in Rule10C- 7.063, Florida Administrative Code, was not applied by the Petitioner against the Respondent in this case because it was not in effect at the time of this review. The sanctions which the Petitioner seeks to impose against the Respondent, therefore, are based upon non-rule policy which must be explicated in this proceeding. In seeking to explicate its non-rule policy upon which the sanctions set forth in the second amended recoupment letter are based, the Petitioner established that it was concerned that sanctions imposed in prior cases, as well as in the original recoupment letter which had been sent to the Respondent in this case, had been too lenient in view of the seriousness of Medicaid violations. The Petitioner developed its non-rule sanctions policy after the KPMG review had been completed, and based its proposal upon the maximum sanctions set forth in state and federal statutes and rules. Specifically, Section 409.266(12), Florida Statutes, provides for a maximum fine of $10,000; the maximum exclusion period applied in previous cases by the Office of Program Integrity is ten years, and the minimum exclusionary period imposed by the federal government has been five years for the failure to supply payment information. At hearing, the Petitioner explained that it first determined the percent of Respondent's total Medicaid payments that the overpayment represented, and then applied that percentage to these maximum sanctions allowed under law and existing policy. The overpayment of $12,643.11 claimed by the Petitioner in its second amended letter of recoupment is 12% of the total payment of $100,397.88 made by the Petitioner to Respondent for the review period, and 12% of the maximum fine and exclusion period is $1,200 and 14 months, respectively. While the Petitioner explained the manner by which this exclusionary period and fine were calculated, it did not explicate its non-rule policy by establishing a reasonable, rational basis for applying the percentage of Medicaid overbillings to the maximum fine and exclusionary period. Certainly, the arithmetic calculation used to arrive at these proposed sanctions is clear, but there was no explication through competent substantial evidence which would establish that there is a basis in fact or logic for this calculation. Therefore, it is found that the Petitioner's non-rule policy used to propose these sanctions is arbitrary and capricious. Due to the lack of any evidentiary basis in the record which would support the imposition of the sanctions of an administrative fine or a period of exclusion from the Medicaid program, the Petitioner is not authorized to impose sanctions on the Respondent.
Recommendation Based upon the foregoing, it is recommended that Petitioner enter a Final Order which requires that Respondent to repay the Petitioner for Medicaid overbillings in the amount of $9,704.92, but which does not impose sanctions consisting of either an administrative fine or period of exclusion. DONE AND ENTERED this 18th day of January, 1991 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 18th day of January, 1991. APPENDIX TO RECOMMENDED ORDER Rulings on the Petitioner's Proposed Findings of Fact: Adopted in Finding 1. Adopted in Finding 2. Adopted in Finding 3. Adopted in Finding 1. Adopted in Finding 4. Adopted in Findings 4 and 5. 7-10. Adopted in Findings 6 and 7, but otherwise Rejected as unnecessary. 11-17. Rejected as unnecessary. 18-20. Adopted in Findings 6 and 7. 21-24. Adopted in Finding 12. 25. Adopted in Finding 2. 26-28. This is a conclusion of law and not a proposed finding. 29-30. Adopted in Finding 8. 31-32. Adopted in Findings 7 and 10. Adopted in Finding 6. Rejected as unnecessary. 35-39. Adopted in Finding 7. 40-47. Adopted in Finding 7, but otherwise Rejected as unnecessary. 48. Rejected as unnecessary and immaterial 49-51. Adopted in Finding 7, but otherwise Rejected as unnecessary. 52-53. Rejected as unnecessary. 54-63. Adopted in Finding 12, but otherwise Rejected as unnecessary. Adopted in Finding 8. Adopted in Finding 9. 66-67. Adopted in Finding 8, but otherwise Rejected as unnecessary. 68-69. Adopted in Finding 9. 70-78. Adopted in Finding 8, but otherwise Rejected as unnecessary. 79-82. Adopted in Finding 8. 83-85. Rejected as unnecessary. 86-93. Adopted in Finding 13, but otherwise Rejected as unnecessary. 94-97. Adopted in Finding 14, but otherwise Rejected as unnecessary. 98-103. Adopted in Finding 14. 104-105 Rejected as unnecessary and immaterial. 106-107 Adopted in Finding 12. 108. Adopted in Findings 12 and 13. 109-112 Rejected as unnecessary and immaterial. 113-115 Adopted in Finding 13, but otherwise Rejected as immaterial. This is a conclusion of law and not a proposed finding. Adopted in Finding 11. 118-119 Rejected as unnecessary and immaterial 120-122 Adopted in Finding 11. Rejected as unnecessary. Adopted in Finding 6. 125-128 Rejected as unnecessary. 129. Adopted in Finding 6. 130-132 Adopted in Finding 9. Adopted in Finding 11. This is a conclusion of law and not a proposed finding. 135-147 Adopted in Finding 16, but otherwise Rejected as unnecessary and immaterial. 148. Adopted in Finding 11. 149-150 Adopted in Finding 16, but otherwise Rejected as unnecessary. 151-152 Rejected as unnecessary. 153. Rejected as unnecessary and cumulative. Rulings on the Respondent's Proposed Findings of Fact: 1. Adopted in Finding 4. 2-3. Adopted in Finding 5, but otherwise Rejected as unnecessary and not based on competent substantial evidence. 4-5. Adopted in Findings 3, 6 and 7. 6-7. Adopted in Finding 10, but otherwise Rejected as unnecessary. 8-9. Adopted in Finding 11. 10-11. Adopted in Finding 3, but otherwise Rejected as unnecessary. Adopted in Finding 6. Rejected as immaterial and unnecessary. 14-15. Rejected as argument on the evidence rather than a proposed finding, and otherwise as not based on competent substantial evidence. Adopted in Finding 7, but otherwise Rejected as argument on the evidence rather than a proposed finding. Rejected as repetitive and otherwise as immaterial. Adopted in Finding 13, but Rejected in Finding 14 and otherwise as argument on the evidence rather than a proposed finding and as not based on competent substantial evidence. Rejected in Finding 14, as immaterial, speculative, and as not based on competent substantial evidence. 20-21. Rejected in Finding 6, as immaterial, and as not based on competent substantial evidence. 22-23. Rejected in Findings 13 and 14, and otherwise as immaterial and not based on competent substantial evidence. Rejected as repetitive and otherwise as argument on the evidence rather than a proposed finding. Rejected in Findings 13 and 14. 26-30. Rejected as a statement of the Respondent's position and not a proposed finding, as speculative and contrary to competent substantial evidence, and as totally without citation to authority in the record as required by Rule 22I-6.031(3), Florida Administrative Code. 31-35. Rejected in Finding 6, and as not based on competent substantial evidence and as unnecessary. 36-38. Adopted in Findings 12 and 13. 39-41. Adopted in Finding 8. 42. Rejected as immaterial. 43-44. Rejected in Finding 9. 45. Rejected as simply a summation of testimony and not a proposed finding. 46-48. Rejected in Finding 9, and otherwise as immaterial and not based on competent substantial evidence. 49-50. Rejected as unnecessary and immaterial. 51. Adopted in Finding 16, but otherwise Rejected as immaterial. 52-53. Rejected as unnecessary and immaterial. Rejected as not based on competent substantial evidence. Adopted and Rejected in part in Finding 16. 56-57. Adopted in Finding 16. 58-61. Rejected as immaterial and irrelevant. 62. Adopted and Rejected in part in Finding 15. COPIES FURNISHED: David G. Pius, Esquire Building Six, Room 233 1317 Winewood Boulevard Tallahassee, FL 32399-0700 James J. Breen, Esquire Michael P. Scian, Esquire 900 Sun Bank Building 777 Brickell Avenue Miami, FL 33131 R. S. Power, Agency Clerk 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Linda Harris, Acting General Counsel 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Robert B. Williams, Acting Secretary 1323 Winewood Boulevard Tallahassee, FL 32399-0700
Findings Of Fact The Respondent, Clayton E. Linkous, Jr., M.D., at all times pertinent to this proceeding, has held a current and valid medical license issued by the Board of Medical Examiners of the Department of Professional Regulation. The Petitioner is an agency of the State of Florida charged with enforcing the requirements of Chapter 458, Florida Statutes, and appurtenant rules involving the licensing of physicians, the regulation of their licensure status and the enforcement of standards of professional practice of physicians it licenses to practice in the State of Florida. The Respondent received his medical degree from the University of West Virginia Medical School. Be entered the Navy and served a "rotating internship" at Bethesda Naval Hospital. He was on the staff at Bethesda Naval Hospital for approximately one year. The Respondent then came to Pensacola for Naval Flight Surgeon training and was ultimately assigned to Camp Pendleton, California. The Respondent later was assigned to Vietnam with the Marine Corps as a Flight Surgeon and General Surgeon. Upon concluding his tour of duty in Vietnam, the Respondent returned to the Naval Air Station in Pensacola where he was placed in charge of the Division of Physical Evaluation of Aviation Medicine, serving in that post for some two and a half years. The Respondent resigned from the service and opened a practice of emergency medicine at Sacred Heart Hospital in Pensacola, serving in that capacity for approximately four years. The Respondent then entered private practice in the areas of acute medicine and family practice, which practice he was engaged in at the time of the hearing. The Respondent is a member of the County Medical Society in Escambia County, the American Medical Association, Southern Medical Association, Association of Military Surgeons and a Charter Member of the American College of Emergency Physicians. The Respondent is current on continuing medical education requirements through September, 1983. In January of 1978, Mrs. Julie Hebert visited the Respondent with complaints of a recent weight gain of 7 pounds and sleeping long hours. Mrs. Hebert weighed approximately 101 pounds at that time. The Respondent treated Mrs. Hebert for sleeping long hours and for depression, for which he prescribed antidepressants as well as anorexiants, which are appetite suppressors. During his course of treatment of Mrs. Hebert on this and later occasions, the Respondent failed to record her height, which has a direct relationship to a determination of her ideal weight, although he was treating her to alleviate a supposed excessive weight gain. The Respondent also failed to take a psychosocial or neurological examination of Mrs. Hebert and thus, of course, failed to make a written record of any such examination or history. The Respondent made a diagnosis of obesity. The patient complained of a 7 pound weight gain and her weight was 101 pounds, but if a diagnosis of obesity is made, the usual and reasonable course of treatment for a physician engaged in family practice is to try and predict an ideal body weight or weight loss goal, interview the patient extensively with regard to diet habits, exercise habits and then try to make recommendations to modify those in order to alleviate the diagnosed condition of obesity. This should always be done before an anorexiant drug is prescribed and the appropriate standard of care for a patient with a diagnosis of obesity does not consist of merely prescribing anorexiants to suppress appetite. Anorexiants suppress the appetite control center of the brain. Their use can be helpful to suppress appetite during the first few weeks of treatment for obesity, but they must be prescribed as a part of a total program of weight control consisting of diet modification and exercise on a long-term basis. Anorexiants provide a diminishing return in their benefits in treating obesity because, as their use continues, their effectiveness diminishes and an increasing dose is required as a few weeks elapse. The need to increase the dosage to achieve the same effect of suppressing appetite, and therefore weight control increases geometrically. Thus, if their dosages continued at or near the originally prescribed amount, the anorexiant soon no longer has the effect of suppressing the patient's appetite and the patient has nothing helping him to lose weight unless an appropriate diet and exercise program was thoroughly discussed and prescribed. On the other hand, if anorexiant dosages are increased as their beneficial effect diminishes, then the serious side effects of anorexiant drugs come into play. Anorexiants cause an elevated pulse rate and an increased body temperature similar to that of an adrenaline response or "high active state." Anorexiants are amphetamines or "amphetamine-analogue" drugs, which, because of their stimulative effects, often cause cardiac arrhythmias and increasing dosages can often prove seriously harmful or fatal to a patient. Because of these potentially dangerous effects of anorexiant medications and because their use necessitates geometrically increasing dosages in order to remain effective in weight control, the use of such "amphetamine- family" anorexiants is inappropriate in a patient like Julie Hebert, particularly because of her age of 17 years, because of the potential for causing serious heart rhythm abnormalities and possible death, as well as the addictive potential of such increasing dosages. The use of anorexiants were especially contraindicated in the case of patient Hebert because no long-term diet and exercise modification program was discussed with the patient nor prescribed and the diagnosis of obesity, when the patient reported a recent weight gain of only 7 pounds and only weighed approximately 101 pounds on the first examination, was established to be incorrect. (Cohen deposition; Petitioner's Exhibit 2) The Respondent also diagnosed Julie Hebert, as suffering from depression. The appropriate standard of care in treating depression is a thorough consultation with the patient about depression, its causes and means for alleviating it. A family practitioner practicing an appropriate standard of care in dealing with depression should recommend counseling for the patient herself, as well as involving her family and should take an extensive psychosocial history of the patient's personal and family background in order to assist him in determining the causes of her depression. The Respondent failed to do this in this case. Instead he immediately prescribed two antidepressant medications, which, without the accompanying consultation and counseling and eliciting of a detailed history, can be a potentially dangerous deviation from the standard practice when dealing with such a 17-year-old patient. Antidepressant medication, when appropriately prescribed, requires approximately four weeks to exert its full, antidepressant effect. Its benefit is not immediate, but rather is a cumulative effect. This patient's antidepressant medications, however, were changed frequently. Two medicines were prescribed the first visit and two different antidepressant medications were prescribed on the next visit and still a third medication prescribed on the her third visit, all in the space of less than two months. In fact, on her third visit a major phenothiazine tranquilizer was prescribed when, according to the Respondent's notes, the patient seemed anxious and agitated. That type of medication is used to treat schizophrenia or a major psychosis. There is no psychosocial history in the case of Julie Hebert to indicate that she had or ever had a psychosis which would justify prescribing that drug, especially in view of the fact that it represented a third change from the previous course of antidepressant medications prescribed. The changing of antidepressant medications three times in less than two months is not a course of treatment followed by reasonable, prudent general practitioners or family practitioners in treating such a patient because an insufficient opportunity was provided for the initial medications prescribed to render their full beneficial effects before their use ceased. Further, the doctor prescribed three different amphetamine-family medications in less than three weeks and failed to keep any record of the amounts of any of those medications. The use of such amphetamine-family drugs or anorexiants has no therapeutic place in diet therapy, especially with a 17-year-old girl who only weighs approximately 101 to 105 pounds. On April 18, 1978, patient Gloria Brock visited Respondent at his office complaining of a weight problem. At that visit the Respondent failed to record the patient's height and failed to record an ideal body weight or any weight loss goals. No record was made of the patient's diet habits or exercise habits, nor the type of therapy he prescribed for her. The doctor did prescribe a substantial number of medications. He prescribed diuretics, thyroid medication and amphetamine-family anorexiants. The doctor prescribed Tofranil, an antidepressant; Valium, a minor tranquilizer; Oretic, a diuretic; Thyrolar, a thyroid hormone; Ionamin and Bacarate, both amphetamine analogue medications; and well as Midrin, a headache medication. The sole diagnosis underlying these prescriptions was the patient's weight problem. The doctor next saw this patient on May 9, 1978, at which time he refilled the prescriptions for the previous medications and added a prescription for Phenaphen #2, a narcotic analgesic and Didrex, a different diuretic medication. On that visit she had an additional complaint of mild muscle tenderness in her neck. On June 15, 1978, she came in complaining of additional problems involving miofasciculitis and vascular cephalgia (sore muscles and headaches). He refilled the previous medications, except the Oretic and Tofranil, and added a prescription for Elavil, which is a different anti-depressant from that previously prescribed. He also increased the dose of thyroid hormone. On July 17, 1978, she again visited the Respondent's office and he administered an injectable medication called Vernate, a decongestant and antihistamine combination. Vernate has no therapeutic purpose with a patient in Mrs. Brock's medical situation. The patient also received an injection of Keflex, as well as Comhistla and Ionamin injections. Keflex is an antibiotic. The Respondent had made a note on that date that he thought her ear canal was inflamed or infected. The Keflex was used, however, in conjunction with Terramycin, which is a brand of Tetracycline, the use of which in combination with Keflex is wholly inappropriate. The use of the antibiotic Keflex with the antibiotic Tetracycline is incompatible and the Tetracycline actually will impair the effect of the Keflex prescription. Comhistla is an antihistamine decongestant and Ionamin is a amphetamine-family anorexiant. On September 6, 1978, the Respondent prescribed to her Parafon Forte, a muscle relaxant; Triaprin DC, which is an analgesic containing synthetic Codeine; Histalet, an antihistamine and Minocin, an antibiotic. No record was made by the Respondent of any of these prescriptions. The next office visit was October 23, 1978. No complaints by the patient were recorded for that date, but some physical findings were noted such as her weight (121 3/4 pounds) and that her nasal mucus membranes were swollen. The patient received three injectable medications that date; Iatric, a multi- vitamin combination that is combined with Testosterone and Estrone. That medication is designed for geriatric use and has no therapeutic value in treating Mrs. Brock, a 38-year-old patient with no symptoms indicating its use. She was also injected with vitamin B-12. The only therapeutic indication for a B-12 injection is for pernicious anemia, which Mrs. Brock did not have. Vernate was again injected on that date. The Respondent also prescribed Brexin, another amphetamine-family anorexiant; another antibiotic (Erythromycin); Sinequan, an anti-depressant; and refilled Thyrolar, a thyroid medication. On November 15, 1978, Mrs. Brock came to his office complaining of a muscle spasm. At that time she was injected with Aristocort and Vernate. Prescriptions were also given on that date for Soma Compound, an analgesic- muscle relaxant combination. The next visit was January 18, 1979, when the previous medications were re-prescribed. The Respondent made no notes on that visit regarding the patient's complaints and no physical findings were recorded in his notes. The Respondent last saw this patient on January 30, 1979, and injected her with Lincocin, an antibiotic; Aristocort, a cortisone synthetic preparation; and Cofene, another decongestant-antihistamine combination. On that visit she complained of intermittent auxiliary or underarm swollen glands as well as swollen glands in the groin area (lymphnodes), nausea and weakness. Prescriptions for Vectrin, Elavil and Cofene were given on that date. Those are, respectively, antidepressants and an antihistamine decongestant. . . None of these medications were medically indicated for these complaints. The Respondent's records and notes made during this visit and his course of treatment of Mrs. Brock do not reflect an appropriate history, physical findings or amounts of drugs prescribed. Some of the later physical complaints by the patient during her course of treatment, such as nausea and weakness, are actually signs of misuse or overuse of the medications prescribed and yet the Respondent's later prescription practice and treatment of the patient does not reflect consideration of any adverse drug reactions or side effects. Patient, Vassie Johnson, came to the Respondent on November 7, 1977, complaining of a weight problem. The Respondent recorded her weight as 190 pounds and her age as 60 years and made no recordation of her height at that time as it related to her then present weight or her ideal weight. The Respondent prescribed Ionamin and Bacarate, two amphetamine anorexiants. He also prescribed Hygroton, a diuretic; Thyrolar, which is a thyroid hormone; Quibron Plus, a bronchial dilator; Triavil, an antidepressant. The Respondent diagnosed her problems as being chronic, obstructive pulmonary disease; peripheral vascular insufficiency; obesity; and Mitral Valve Prolapse, a disease or condition of the heart. When she came to the Respondent on this first visit, this patient was already taking the following medications: Triavil, an antidepressant; Donnatal, a gastro-intestinal anti-spasmodic; Dyazide, a diuretic; Inderal, an anti-hypertensive drug; Premarin, a female hormone replacement; Nicotinic Acid; and Librax, a gastro-intestinal anti-spasmodic. The patient had indicated on the personal history she supplied the Respondent that she had emphysema, that she had high blood pressure (hypertension), and that she had Mitral Valve disease of the heart. The prescription of amphetamine-family anorexiants are particularly dangerous for someone known to have heart disease and are contraindicated with a patient who has hypertension, as this patient did. This is because the stimulant effects of such drugs speed the heart rate, stress the heart muscle and elevate the blood pressure in someone who already has a problem with elevated blood pressure. Such a course of treatment with a patient such as Mrs. Johnson could have serious adverse health consequences for her, possibly even fatal ones. The standard treatment for obesity with a patient such as Mrs. Johnson is to do a standard medical history, including her diet and exercise history. The practitioner should then establish a program of diet and exercise habit modification appropriate to the patient. The doctor's records do not reflect that this was done with Mrs. Johnson. Catecholamine is a substance produced by cells in the nervous system which acts as a stimulant. Exogenous catecholamines are drugs that have that same effect. They are prescribed for persons with asthma or lung disease, but should not be used with amphetamine-family anorexiants. The Respondent however prescribed two amphetamine-family anorexiants on the same occasion that he prescribed Quibron Plus, a bronchodilator (catecholamines) which is clearly contraindicated in the manufacturer's recommendations. As noted above, amphetamine-family anorexiants can cause heart rhythm problems. On the very next visit, November 28, 1977, Mrs. Johnson complained of chest pain and Dr. Linkous' notation for that visit notes that it is relieved by nitroglycerin. He also notes, in addition to chest pain, that the patient had an occasional extra heart beat or altered heart rhythm. This is a known adverse side effect from the prescription of amphetamine anorexiants. Thus the Respondent, already having a history of the patient's heart problems before prescribing the anorexiants the first time, was supplied additional unequivocal evidence of the patient's heart condition by her complaints of chest pains and altered heart rhythm. In spite of this, on the next visit, on December 5, 1977, the doctor merely prescribed additional medications. Those medications were Hygrotin, a diuretic, P 200 (nature unidentified) ; Bacarate and Ionamin, the same amphetamine-family anorexiants once again. The heart symptoms she experienced at that time are consistent with the known side effects of the prescription of such amphetamine-family medications. Two days after the patient had complained of chest pains and occasional irregular heart beat, November 30, 1977, the Respondent admitted her to Sacred Heart Hospital of Pensacola. His diagnosis at that time consisted of ruling out ischemic myocardial disease, peptic ulcer disease, chronic obstructive pulmonary disease, hyperthyroidism. In his admission summary, the doctor made no record whatever of the medication already prescribed to the patient and which she was at that time taking. He merely indicated in his admission summary the medications the patient was already taking when she first came to him for her first visit. The subsequent office notes during the Respondent's entire course of treatment of this patient do not reflect the course of treatment in the hospital nor that she was ever hospitalized, which is a significant error of omission, as is the failure to record in the hospital admissions summary the medications the patient had been taking and was taking. On December 23, 1977, Mrs. Johnson returned to the Respondent complaining of dysphagia, meaning difficulty in swallowing. The doctor's records don't reflect that any prescriptions were given on that date. She again returned to the Respondent on February 13, 1978, and the doctor's notes indicate that the same medications were continued. In summary, there is no question that the care he provided these three patients was indeed quite dangerous and could or may have been substantially harmful to them. The Respondent has never been charged with a violation of statutory professional practice standards and has never been disciplined with regard to his licensure status.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence in the record and the candor and demeanor of the witnesses, it is, therefore RECOMMENDED: That the Respondent, Dr. Clayton D. Linkous, Jr., be found guilty of violating Subsections 458.1201(1)(m) and (k), Florida Statutes (1977), as substantially reenacted by Subsections 458.331(1)(t) and (h), Florida Statutes, and that his license be suspended for one (1) year, but with that suspension to be stayed and held in abeyance after 45 days of that suspension has been served, and that it be permanently abated after the Respondent demonstrates to the Board that he has successfully completed a continuing medical education course designed to enhance his skills regarding the appropriate use of drugs in medical practice and therapy, appropriate prescription practices and appropriate patient record-keeping and monitoring. DONE and ENTERED this 4th day of June, 1983, in Tallahassee, Florida. P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of June, 1983. COPIES FURNISHED: Harold E. Regan, Esquire The Whitehouse - Suite 3 203 North Gadsden Street Tallahassee, Florida 32301 Paul W. Lambert, Esquire 1114 East Park Avenue Tallahassee, Florida 32301 Dorothy Faircloth, Executive Director Board of Medical Examiners Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Fred Roche, Secretary Department of Professional Regulation 130 North Nonroe Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER ================================================================= BEFORE THE BOARD OF MEDICAL EXAMINERS DEPARTMENT OF PROFESSIONAL REGULATION, Petitioner, vs. CASE NO. 81-1631 CLAYTON E. LINKOUS, JR., M.D., License No. 15233 Respondent. /
The Issue The issue for determination is whether Petitioner must reimburse Respondent for payments totaling $1,140,763.88 that Petitioner received from the Medicaid Program in compensation for the provision of prescription drugs between late-August and November of 1998. Respondent contends that Petitioner is not entitled to retain the payments in question because Petitioner allegedly has failed to demonstrate that it had available during the pertinent period a sufficient quantity of the prescription drugs in question.
Findings Of Fact The parties' Joint Stipulation of Facts and the evidence presented at final hearing established the facts that follow. The Parties The Agency for Health Care Administration (the “Agency”) is responsible for administering the Florida Medicaid Program. As one of its duties, the Agency must recover "overpayments . . . as appropriate," the term "overpayment" being statutorily defined to mean "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." See Section 409.913(1)(d), Florida Statutes. Palm Beach Pharmacy, Inc. (“PBPI”), d/b/a Eddie’s Drug (“Eddie’s”) was, at all times material hereto, a duly contracted Medicaid provider, having entered into a Medicaid Provider Agreement with the Agency and been assigned a Medicaid Provider Number: 106343000. Eddie’s is a Florida licensed pharmacy.1 As an enrolled Medicaid provider, Eddie’s is authorized to dispense drugs and supplies to Medicaid recipients. In return, Eddie’s has agreed to comply with all governing statutes, rules, and policies, including those policies set forth in the Florida Medicaid Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (the “Handbook”). The Agency, which prepared the Handbook and furnishes it to Medicaid providers, has incorporated the Handbook by reference into Rule 59G-4.250(2), Florida Administrative Code. PBPI, which owned and operated a number of pharmacies (including Eddie’s), maintained its corporate headquarters in West Palm Beach, Florida. Eddie’s was located in Miami, Florida. On July 1, 1998, PBPI acquired a drug store known as Jay’s Drugs (“Jay’s”). Jay’s was located in Miami, Florida, across the street from Eddie’s. Thus, before both stores came under common ownership, they had been competitors. This case arises out of the Agency's attempt to recover alleged overpayments on Medicaid claims for which Eddie’s was paid several years ago. The "audit period" that is the subject of the Agency's recoupment effort is April 1, 1998 to July 31, 1999, although the actual period in controversy is much shorter. From July 1, 1998, until the end of the audit period, PBPI owned and operated both Eddie’s and Jay’s. The Underlying Facts The transactions at the heart of this case occurred between late-August and November of 1998, during which period (the “Focal Period”) Medicaid reimbursed Eddie’s more than $1 million for prescription drugs including Neupogen and Epogen/Procrit (collectively, the “Drugs”). The Drugs are used to treat AIDS patients and persons infected with HIV. Prior to the Focal Period, Eddie’s had not dispensed $1 million worth of the Drugs——or any figure approaching that amount——in three or four months’ time. The reason for the dramatic spike in Eddie’s business is that Eddie’s was dispensing the Drugs to customers of Jay’s pursuant to an arrangement designed to manipulate PBPI’s contractual obligations to the former owner of Jay’s under the purchase and sale agreement by which PBPI had acquired Jay’s. Essentially, the arrangement was this. Jay’s was dispensing the Drugs to a large number (approximately 150) of Medicaid beneficiaries who were receiving treatment at a nearby clinic. Because the Drugs were administered to the patients via intravenous infusion, the clinic typically obtained the Drugs from Jay’s in bulk. To fill these prescriptions, Jay’s ordered the Drugs from a wholesale supplier, which usually delivered the Drugs to Jay’s the next day. At some point before the Focal Period, arrangements were made to have the clinic present its prescriptions for the Drugs to Eddie’s rather than Jay’s.2 The evidence does not show, exactly, how this was accomplished, but whatever the means, the clinic abruptly began bringing prescriptions for the Drugs to Eddie’s.3 This diversion of Jay’s’ business to Eddie’s was intended to deprive Jay’s of Medicaid reimbursements to which Jay’s’ former owner had access as a source of funds for paying down a note that PBPI had given for the purchase of Jay’s. By having Eddie’s dispense the Drugs and submit the Medicaid claims, Medicaid money flowed into Eddie’s’ bank account (rather than Jay’s’ bank account) and hence was not immediately available to the former owner of Jay’s to reduce PBPI’s debt. During the Focal Period, Eddie’s did not purchase the Drugs from a wholesaler but instead acquired them from Jay’s. The process by which this was accomplished involved a pharmacy technician named Wright, who was employed at Eddie’s, and a pharmacist named Shafor, who worked at Jay’s. Wright (at Eddie’s) accepted the prescriptions for the Drugs as the clinic brought them in Then, she called Shafor (at Jay’s) and told him the quantities needed to fill the prescriptions. Shafor ordered the Drugs from a wholesaler, which delivered them in bulk to Jay’s, usually the next day. Upon receiving the Drugs, Shafor personally delivered them to Wright, who, recall, was across the street at Eddie’s. Wright labeled and dispensed the Drugs. Eddie’s submitted a claim for the Drugs to Medicaid, and Medicaid paid Eddie’s. PBPI maintained separate accounting ledgers for Eddie’s and Jay’s, respectively. The company’s accountants recorded the subject transactions in these ledgers so that Jay’s——not Eddie’s——would “recognize” the sales of the Drugs. In a nutshell, this was done through “inter-company” transfers whereby all of the money that Eddie’s received from Medicaid for the Drugs was moved, on the books, into an account of Jay’s. In this way, any profit from the sales of the Drugs (the difference between the wholesale cost of the Drugs and the Medicaid reimbursement therefor, less overhead) was realized on Jay’s’ books.4 The Medicaid payments to Eddie’s that the Agency seeks to recoup were included in four remittance vouchers dated September 2, 1998; September 30, 1998; October 28, 1998; and November 25, 1998, respectively. The September 2 payment to Eddie’s totaled $287,205.52. Of this amount, $276,033.23 reimbursed Eddie’s for dispensing the Drugs. Eddie’s’ accounting ledger reflects that, as of September 30, 1998, the sum of $276,033.23 had been transferred from an account of Eddie’s to an account of Jay’s. The September 30 payment to Eddie’s totaled $439,175.77, of which $432,700.36 was paid in consideration of the Drugs. The October 28 Medicaid payment was $431,753.82, of which total the Drugs accounted for $424,202.76. Eddie’s’ accounting ledger reflects that, as of October 31, 1998, the sum of $870,929.59 (439,175.77 + 431,753.82) had been transferred from an account of Eddie’s to an account of Jay’s. The November 25 payment to Eddie’s totaled $407,088.00. Of this amount, $393,063.00 reimbursed Eddie’s for dispensing the Drugs. Eddie’s’ accounting ledger reflects that, as of November 30, 1998, the sum of $407,088.00 had been transferred from an account of Eddie’s to an account of Jay’s. The Agency’s Allegations On October 31, 2000, the Agency issued its Final Agency Audit Report (“Audit”) in which Eddie’s was alleged to have received $1,143,612.68 in overpayments relating to the Drugs. In the Audit, the Agency spelled out its theory of the case; indeed, the Audit is the only document in the record that does so. The Agency cited several statutory provisions. First, Section 409.913(7)(e), Florida Statutes, was referenced. This section states: When presenting a claim for payment under the Medicaid program, a provider has an affirmative duty to supervise the provision of, and be responsible for, goods and services claimed to have been provided, to supervise and be responsible for preparation and submission of the claim, and to present a claim that is true and accurate and that is for goods and services that: * * * (e) Are provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law. Section 409.913(7)(e), Florida Statutes. The Agency did not allege (or prove), however, that Eddie’s had violated Section 409.913(7)(e), Florida Statutes.5 Put another way, the Agency did not plead or prove lack of supervision, submission of a false claim, or that the Drugs were not provided in accordance with applicable law. Next, the Agency cited Section 409.913(8), Florida Statutes, which provides: A Medicaid provider shall retain medical, professional, financial, and business records pertaining to services and goods furnished to a Medicaid recipient and billed to Medicaid for a period of 5 years after the date of furnishing such services or goods. The agency may investigate, review, or analyze such records, which must be made available during normal business hours. However, 24-hour notice must be provided if patient treatment would be disrupted. The provider is responsible for furnishing to the agency, and keeping the agency informed of the location of, the provider's Medicaid- related records. The authority of the agency to obtain Medicaid-related records from a provider is neither curtailed nor limited during a period of litigation between the agency and the provider. The Agency further alleged, as fact, that Eddie’s had failed, upon request, “to submit invoices from [its] suppliers to substantiate the availability of drugs that [were] billed to Medicaid” and thus had not “fully substantiated such availability.” The Agency, however, did not invoke any of the available remedial provisions as authority to impose a sanction for this alleged failure to turn over Medicaid-related records. See, e.g., Sections 409.913(14)(b), (c), and (d), Florida Statutes. The Agency cited Section 409.913(10), Florida Statutes, which authorizes the Agency to “require repayment for inappropriate, medically unnecessary, or excessive goods or services from the person furnishing them, the person under whose supervision they were furnished, or the person causing them to be furnished.” There was no allegation (or proof), however, that the Drugs which Eddie’s had purported to dispense (i.e. the Drugs for which it had submitted Medicaid claims) were “inappropriate, medically unnecessary, or excessive.” Thus, Eddie’s was not alleged (or shown) to have violated Section 409.913(10), Florida Statutes. Finally, the Agency relied upon Section 409.913(14)(n), Florida Statutes, which is the basis of the Agency’s legal theory. This section provides: The agency may seek any remedy provided by law, including, but not limited to, the remedies provided in subsections (12) and (15) and s. 812.035, if: * * * (n) The provider fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods, or sufficient time in the case of services, to support the provider's billings to the Medicaid program[.] The Agency contended, additionally, that “[b]illing Medicaid for drugs that have not been demonstrated as available for dispensing is a violation of the Medicaid laws and regulations and has resulted in the finding that [Eddie’s] ha[s] been overpaid by the Medicaid program.” (Emphasis added). The Agency explained, “Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid.” Thus, the Agency’s theory of recovery is that Eddie’s must forfeit “overpayments” arising from its failure to demonstrate the availability, in inventory, of a sufficient quantity of the Drugs for which claims were submitted, as required by Section 409.913(14)(n), Florida Statutes. After the Audit was issued, the Agency accepted a handwritten note regarding the transfer of a small quantity of Drugs from Jay’s to Eddie’s as sufficient to demonstrate the availability of such amount. This resulted in a slight reduction of the amount of the alleged overpayment, to $1,140,763.88. The Separate Audit of Jay’s The Agency conducted a separate audit of Jay’s, concerning which some evidence was introduced at hearing. Without getting into unnecessary detail, the audit of Jay’s revealed that Jay’s had purchased, during and around the Focal Period, a quantity of the Drugs that exceeded the number of units that Jay’s had billed to Medicaid. It was Eddie’s theory that this “excess inventory” of Jay’s matched, more or less, the alleged inventory shortfall at Eddie’s, thereby corroborating the testimony concerning the transfer of these Drugs from Jay’s to Eddie’s for dispensation. At hearing, the parties sharply disputed whether, in fact, Jay’s had transferred the Drugs to Eddie’s. The Agency, of course, maintained that such transfers were not properly documented; Eddie’s argued that the documents and other evidence, including testimony about the transactions in question, adequately demonstrated that the transfers had, in fact, occurred. There was no dispute, however, that if it were found that such transfers had occurred, and if, further, the documents (and other evidence) pertaining to the inventory of Jay’s were accepted as proof of the quantities of Drugs so transferred, then all but $176,078.30 worth of the Drugs could be accounted for. Thus, as counsel for Eddie’s conceded at hearing, the Agency is entitled to recoup some sum of money. The question is whether that sum is $1,140,763.88 or $176,078.30. Ultimate Factual Determination Based on all of the evidence in the record, including the deposition testimony received through the parties’ joint stipulation, it is determined that, more likely than not, Eddie’s had available during the Focal Period a sufficient quantity of the Drugs to support all but $176,078.30 worth of the claims in dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Eddie’s to repay the Agency the principal amount of $176,078.30. DONE AND ENTERED this 12th day of March, 2002, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of March, 2002.
Findings Of Fact Respondent is Paula Kay Spears. She is a licensed registered nurse and holds license number 1435502. At all times pertinent to these proceedings, Respondent was employed as a registered nurse at Lakeland Regional Medical Center in Lakeland, Florida. Caren Hicks worked as a unit coordinator in the cardiovascular surgery unit of the hospital where Respondent was also employed as a registered nurse. Hicks and Respondent worked together for approximately five years. In April of 1988, Hicks witnessed Respondent using for the first time what Hicks believed to be a drug commonly called "crank". Hicks also used the substance on that occasion. Hicks purchased the substance from Respondent on only one later occasion; although she and Respondent engaged in joint use of the substance on several subsequent occasions. They ingested the substance by "snorting" it through the nose. Hicks provided crank on some occasions for the joint use of herself and Respondent. The two used the drug while on duty in the cardiovascular unit to which they were assigned. The last occasion of their joint usage of the drug was September 11, 1988. When she nasally inhaled the drug, Hicks observedthat her pulse rate and energy level increased. While she experienced fatigue when the effects of the drug wore off, Hicks never experienced any sense of confusion. She compared the effects of the substance to that of a drug commonly called "speed". Tommy Smith is the head nurse for the cardiovascular unit where Respondent and Hicks were employed in September of 1988. He confronted Respondent with the accusation that she and Hicks had used crank while on duty. Respondent denied the charge. Smith offered Respondent continued employment in her position, provided she submit to drug screening and rehabilitative treatment for drug abuse. Respondent rejected the offer. Subsequently, Respondent's employment with the hospital was terminated. Later, Smith made the same offer to Hicks. Hicks accepted the offer, attended a drug rehabilitation program and is still employed at the hospital. Expert testimony of Martin Zfaz, M.D., establishes that crank is a form of methamphetamine, a central nervous system stimulant which is regulated in accordance with Chapter 893, Florida Statutes, as a controlled substance and a schedule II drug. Crank, over a period of time, can cause confusion in the user's mental acuity. Depression follows use of the drug when its effects wear off. Usage can lead to dependence, with the possibility of resultant acute psychosis. Poor, impaired or confused judgement in the user can result. The substance is highly addictive, with limited medical use. Medical uses for crank include treatment for narcolepsy and hyper- activity in children. The substance is also prescribed as a balance to phenobarbital medication of epileptic patients. Although it depresses appetite, its usage for this purpose has decreased. Use of crank would have a negative effect on a medical nurse's judgement and performance.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered by the Board of Nursing finding Respondent in violation of Section 464.018(1)(i) and Section 464.018(1)(h), Florida Statutes. IT IS FURTHER RECOMMENDED that such Final Order suspend Respondent's license pending Respondent's completion of a drug dependency evaluation and provision by her of a report of that evaluation to the Board and demonstration to the Board that she is capable of safely practicing the profession of nursing. IT IS FURTHER RECOMMENDED that such Final Order place Respondent's license on probationary status for a period of three years upon satisfaction of the foregoing requirements for termination of license suspension with specific conditions of such probation to include periodic drug dependency reevaluations and reports as may be determined by the Board and payment of an administrative fine of $500. DONE AND ENTERED this 3rd day of November, 1989, in Tallahassee, Leon County, Florida. DON W.DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Fl 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of November, 1989. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings. 1.-2. Accepted. 3. Weight of the evidence demonstrates that Respondent ingested the drug by "snorting" it. Finding rejected. 4.-14. Accepted 15. Rejected. Not consistent with the weight of the evidence. 16.-17. Rejected, unnecessary to result reached. Respondent's Proposed Findings. None submitted. COPIES FURNISHED: Michael A. Mon), Esq. Department of Professional Regulation The Northwood Centre, Suite 60 1940 N. Monroe St. Tallahassee, FL 32399-0750 Paula Kay Spears 1240 Sarasota Avenue Lakeland, FL 33805 Kenneth Easley, Esq. General Counsel Department of Professional Regulation The Northwood Centre, Suite 60 1940 N. Monroe St. Tallahassee, FL 32399-0750 Judie Ritter Executive Director Board of Nursing Department of Professional Regulation 504 Daniel Building 111 East Coastline Drive Jacksonville, FL 32201
The Issue The issue for determination is whether Petitioner must reimburse Respondent an amount up to $1,676,390.45, which sum Petitioner received from the Florida Medicaid Program in payment of claims arising from Petitioner's dispensing of pharmaceuticals between July 3, 2000 and March 28, 2002. Respondent alleges that the amount in controversy represents an overpayment related to Petitioner's failure to demonstrate the availability of sufficient quantities of drugs to support its billings to the Medicaid program.
Findings Of Fact Respondent Agency for Health Care Administration ("AHCA" or the "Agency") is the state agency responsible for administering the Florida Medicaid Program ("Medicaid"). Petitioner Disney Medical Equipment, Inc., d/b/a Disney Pharmacy Discount ("Disney Pharmacy"), was, at all relevant times, a Medicaid provider authorized, pursuant to contracts it had entered into with the Agency known as Provider Agreements, to receive reimbursement for covered services rendered to Medicaid beneficiaries. Exercising its statutory authority to oversee the integrity of Medicaid, the Agency directed its agent, Heritage Information Systems, Inc. ("Heritage"), to conduct an audit of Disney Pharmacy's records to verify that claims paid by Medicaid during the period from July 3, 2000 to March 28, 2002 (the "Audit Period") had not exceeded authorized amounts. Over the course of four days in May 2002, three of Heritage's auditors reviewed records on-site at Disney Pharmacy's drugstore in Hialeah, Florida; they also interviewed some of the store's personnel. Thereafter, Heritage analyzed the data it had collected using several different approaches. Each approach pointed to the conclusion that Medicaid had paid too much on claims submitted by Disney Pharmacy during the Audit Period. The total amount of the alleged overpayment differed substantially, however, depending on the analytical approach taken. The approach that yielded the largest apparent overpayment was the "prorated purchase invoice" analysis. Generally speaking, under this approach, the volume of pharmaceuticals that the provider maintained in its inventory during the Audit Period is compared to the provider's contemporaneous Medicaid claims to determine whether the provider possessed enough of the relevant pharmaceuticals to support the Medicaid claims presented. If the total amount purportedly dispensed, according to the claims made in connection with a particular drug, exceeds the amount of that drug available at the time for dispensing, then an inference of impropriety arises with regard to those claims for which product was apparently unavailable; the Agency considers amounts paid on such claims to be overpayments. To determine the quantities of certain drugs that Disney Pharmacy had kept on hand during the Audit Period, Heritage tallied up the total number of "units" of selected drugs that Disney Pharmacy had acquired, using as a database the invoices reflecting Disney Pharmacy's purchases of the drugs under review. Heritage then ascertained——again using Disney Pharmacy's records——the utilization rate of Medicaid beneficiaries for each of the pharmaceuticals under consideration. In other words, Heritage determined, for each drug at issue, the relative demand——expressed as a percentage of the total number of units of that drug dispensed to all customers during the Audit Period——attributable to Medicaid beneficiaries. Heritage found, for example, that Medicaid recipients accounted for 55.13% of Disney Pharmacy's total sales of the drug Acetylcysteine-10% solution ("Acetylcysteine") during the Audit Period. Having calculated the total amount of each drug at issue that Disney Pharmacy had acquired during the Audit Period, and having further determined for each such drug the Medicaid utilization rate, Heritage multiplied the total number of available units of each drug by the applicable utilization rate, prorating the entire supply of each drug to reflect the approximate number of units available for dispensing to Medicaid recipients specifically. For example, Disney Pharmacy's records showed that it had purchased a total of 121,440 units of Acetylcysteine during the Audit Period. Disney Pharmacy's records showed, additionally, that this drug was dispensed to Medicaid beneficiaries 55.13% of the time. Thus, the prorated quantity of Acetylcysteine available for Medicaid recipients was approximately 66,950 units (121,440 x 0.5513). The prorated number of available units of each subject drug was compared to the total number of units for which Medicaid had reimbursed Disney Pharmacy during the Audit Period. For Acetylcysteine, these figures were 66,950 and 1,076,070, respectively. If the total number of units for which Medicaid had paid on claims for a particular drug were found to exceed the amount of that drug which Disney Pharmacy apparently had on hand——as it did for Acetylcysteine——then the inventory shortfall——1,009,120 units in the case of Acetylcysteine——was multiplied by the drug's average per-unit cost to Medicaid, producing a drug-specific apparent overcharge. Thus, for example, because the average cost of Acetylcysteine was $0.65 per unit, the apparent overcharge with respect to this drug was $655,928.00. Using the foregoing approach, Heritage identified apparent overcharges in connection with 13 drugs. The sum of these drug-specific overcharges is $1,676,390.45. Two drugs—— Acetylcysteine and Ipratropium Solution ("Ipratropium")——account for nearly 93% of this grand total. Two other drugs——Albuterol- 0.83% ("Albuterol") and Metaproterenol-0.4% ("Metaproterenol")—— account for another 7.0% of the total alleged overcharge. These four drugs——whose individual overcharges, taken together, comprise approximately 99.8% of the total alleged overcharge of $1,676,390.45——are used for treating breathing disorders and typically are inhaled by the patients who use them.i There is no genuine dispute regarding the reason why Disney Pharmacy was unable to document its acquisition of Acetylcysteine, Ipratropium, Albuterol, and Metaproterenol (collectively the "Inhalation Therapy Drugs") in quantities sufficient to support its claims to Medicaid for these pharmaceuticals. During the Audit Period, Disney Pharmacy generally filled prescriptions for the Inhalation Therapy Drugs by "compounding" the prescribed medications. (Compounding is a process whereby the pharmacist mixes or combines ingredients to fashion a tailor-made medication for the patient.) Thus, Disney Pharmacy (for the most part) did not purchase the commercially available versions of the Inhalation Therapy Drugs; rather, it created its own "generic copies" of these medications, purchasing only the raw materials needed to make finished products. Medicaid reimburses for compound drugs under certain conditions, which will be spelled out below. But first: it is undisputed that Disney Pharmacy did not submit claims for compound drugs. Instead, in presenting claims to Medicaid for the Inhalation Therapy Drugs, Disney Pharmacy billed the medications under their respective National Drug Code ("NDC") numbers, as though commercially manufactured drug products had been dispensed. (An NDC is an 11-digit number, unique to each commercially available pharmaceutical, which identifies the manufacturer, product, and package size.) As a result, Medicaid paid Disney Pharmacy for mass produced products when, in fact, the pharmacy actually had dispensed its own homemade copies thereof. According to the Prescribed Drug Coverage, Limitations and Reimbursement Handbook ("Medicaid Handbook"), which authoritatively sets forth the terms and conditions under which Medicaid reimburses providers for dispensing pharmaceuticals, Medicaid may pay for a compound drug if the following criteria are met: At least one pharmaceutical is a reimbursable legend drug; The finished product is not otherwise commercially available; and The finished product is being prepared to treat a specific recipient's condition. Medicaid Handbook at 9-16.ii To present a claim for a compound drug, the provider must adhere to the following instructions: Compound drug codes must be submitted on paper Pharmacy 061 claim forms, because they are reviewed and manually priced by Medicaid. When billing for a compound drug, enter one of the following compound drug codes. More than one code is available so that more than one compound can be dispensed to a recipient on the same day without using the same number. Id. 55555-5555-55 66666-6666-66 77777-7777-77 88888-8888-88 Disney Pharmacy attempts to defend its failure to follow the unambiguous instructions for billing compound drugs by explaining that, before commencing the practice of compounding, the provider's owner, Sara Padron, made a telephone call to AHCA to ask for guidance on submitting claims for drugs created on-site. Ms. Padron testified at hearing that the AHCA employee with whom she spoke had told her to present claims for compound drugs by billing for the manufactured products that they most resembled, using the manufactured products' NDC numbers. Ms. Padron could not identify the person who purportedly gave her this plainly incorrect advice. Ms. Padron's testimony in this regard was not contradicted——although in fairness to the Agency hers was the kind of testimony that resists direct evidential challenge, forcing an opponent to stress the implausibility of the claim as a means of discrediting it. Ms. Padron's account cannot simply be dismissed as incredible, for an AHCA employee undoubtedly could give an incorrect answer to a provider's question. But even assuming that Ms. Padron reached a person whom one reasonably could suppose to be knowledgeable about Medicaid billing procedures, and further assuming Ms. Padron asked a clear question which fairly and accurately described the situation, neither of which was proved or should be taken for granted, the undersigned remains skeptical that Ms. Padron was instructed to bill for compound drugs as if billing for their commercially available counterparts: the advice is just too obviously wrong. It is not necessary, however, to accept or reject Ms. Padron's testimony concerning the "official" answer she says she received because even if Ms. Padron were told to bill for compound drugs as though manufactured products had been dispensed, no reasonable provider could have relied upon such a dubious oral representation. The statement, for starters, is an invitation to commit fraud. Common sense should inform any reasonable provider that a claim for something other than what was actually delivered will, if discovered, almost certainly be viewed as deceptive (or worse) by the payor. Additionally, the alleged statement attributed to AHCA's employee contradicts the plain instructions in the Medicaid Handbook on that very subject. No provider can reasonably rely upon verbal advice, given anonymously (or functionally so, since the advisor's name, if given, was evidently easily forgotten) over the telephone, which contravenes the clear language of the Medicaid Handbook. Disney Pharmacy's other defenses are likewise unpersuasive. Disney Pharmacy maintains that compounding the drugs in question substantially benefited the patients who received them, which is probably true——but certainly beside the point. The problem here is not with the practice of compounding per se; the problem is that Disney Pharmacy sought and received reimbursement from Medicaid for mass produced, commercially available drugs that had not actually been dispensed. For the same reason, it is irrelevant, even if likely true, that the Board of Pharmacy, which periodically inspects Disney Pharmacy, never objected to the compounding that was occurring at the premises. Again, to be clear, the problem is not that the compounding was improper, but that the Medicaid billing was improper.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order requiring Disney Pharmacy to repay the Agency the principal amount of $1,676,390.45. DONE AND ENTERED this 11th day of April, 2006, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of April, 2006.
Findings Of Fact The Respondent Walter L. Hurt is a licensed medical doctor having been issued license number ME 0007892. The last known address of the Respondent Hurt is 9871 Indigo Street, Perrine, Florida 33157. The Respondent's medical practice during the period set forth in the Administrative Complaint dealt primarily with weight control. Between approximately February 22, 1980 and August 11, 1981, the Respondent Hurt prescribed to Ms. Gloria Litton the following schedule II controlled substances as defined by Chapter 893, Florida Statutes: DATE DRUG AMOUNT 2/22/80 Sodium Amytal, 50 mg. 30 tablets 2/7/81 Sodium Amytal, 50 mg. 30 tablets 4/6/81 Sodium Amytal, 50 mg. 30 tablets 5/7/81 Sodium Amytal, 50 mg. 30 tablets 6/11/81 Sodium Amytal, 50 mg. 30 tablets 7/12/81 Sodium Amytal, 50 mg. 30 tablets 8/11/81 Sodium Amytal, 50 mg. 30 tablets 12/22/80 Dexedrine Sulfate, 5 mg. 30 tablets 2/26/81 Dexedrine Sulfate, 5 mg. 30 tablets 4/6/81 Dexedrine Sulfate, 5 mg. 30 tablets 5/7/81 Dexedrine Sulfate, 5 mg. 30 tablets 6/11/81 Dexedrine Sulfate, 5 mg. 30 tablets 7/12/81 Dexedrine Sulfate, 5 mg. 30 tablets 8/11/81 Dexedrine Sulfate, 5 mg. 30 tablets 1/14/80 Eskatrol Spans, 15 mg. 30 tablets No Date Tenuate Tabs, 25 mg. 60 tablets These drugs prescribed to Ms. Litton were excessive and inappropriate drugs for the purpose of weight loss. Between October 1, 1980 and December 1, 1980, the Respondent Hurt prescribed 90 tablets of Dexedrine, an amphetamine or sympathomimetic amine drug or compound designated as a schedule II controlled substance pursuant to Chapter 893, Florida Statutes to Ms. Litton for obesity. The drugs prescribed by the Respondent Hurt for Ms. Litton were ineffectual in treating her weight problem. In prescribing the type and quantity of controlled drugs for Ms. Litton, the Respondent failed to practice medicine with that level of care, skill and treatment required by a reasonably prudent similar physician confronted with the same conditions and circumstances. Moreover, the drugs were prescribed for a purpose outside the scope of Section 458.331(1)(cc), Florida Statutes, which prohibits prescribing an amphetamine or sympathomimetic amine drug except for certain enumerated purposes which do not include weight control. On January 29, 1981, the Respondent Hurt issued to Ms. Madeline Lyons a prescription for 30 tablets of Eskatrol Spansules, 15 mg. Further, on July 23, 1981, the Respondent Hurt issued a prescription to Ms. Lyons for 100 tablets of Fastin. These medications are amphetamines or sympathomimetic amine drugs or compounds designated as schedule II controlled substances pursuant to Chapter 893, Florida Statutes, and were given to Ms. Lyons by the Respondent for weight control. In prescribing these schedule II drugs for purposes of weight control, the Respondent failed to practice medicine with the degree of care, skill and treatment which is recognized as acceptable by a reasonably prudent similar physician confronted with similar conditions and circumstances. Moreover, these drugs were prescribed to Ms. Lyons for a purpose outside the scope of Section 458.331(1)(cc), Florida Statutes, which prohibits prescribing amphetamines or sympathomimetic amine drugs except for certain enumerated purposes which do not include weight control. Between approximately June 16, 1980 and October 1, 1981, the Respondent Hurt issued to Mr. Stephen Noel prescriptions for the following controlled substances as defined by Chapter 893, Florida Statutes. DATE DRUG AMOUNT 6/16/80 Preludin Endurets, 75 mg. 100 tablets 8/2/80 Preludin Endurets, 75 mg. 50 tablets 8/19/80 Preludin Endurets, 75 mg. 100 tablets 8/23/80 Preludin Endurets, 75 mg. 45 tablets 9/5/80 Preludin Endurets, 75 mg. 50 tablets 9/11/80 Preludin Endurets, 75 mg. 60 tablets 9/22/80 Preludin Endurets, 75 mg. 60 tablets 10/10/80 Preludin Endurets, 75 mg. 75 tablets 9/3/81 Didrex 100 tablets 9/17/81 Didrex 100 tablets 9/25/81 Didrex 100 tablets 10/1/81 Didrex 100 tablets The prescribing of these controlled substances by the Respondent Hurt to Mr. Noel was excessive and inappropriate for purposes of weight control. In prescribing excessive and inappropriate drugs, the Respondent engaged in gross or repeated malpractice or failed to practice medicine with the level of care, skill and treatment which is recognized by a reasonably prudent similar physician as being acceptable under similar conditions and circumstances. Between approximately July 5, 1980 and October 1, 1981, the Respondent Hurt issued to Mrs. Edna Noel prescriptions for the following controlled substances as defined by Chapter 893, Florida Statutes: DATE DRUG AMOUNT 7/5/80 Preludin Endurets, 75 mg. 15 tablets 7/7/80 Preludin Endurets, 75 mg. 60 tablets 7/10/80 Preludin Endurets, 75 mg. 60 tablets 7/29/80 Preludin Endurets, 75 mg. 100 tablets 8/19/80 Preludin Endurets, 75 mg. 60 tablets 8/29/80 Preludin Endurets, 75 mg. 60 tablets 9/8/80 Preludin Endurets, 75 mg. 60 tablets 9/25/80 Preludin Endurets, 75 mg. 60 tablets 10/4/80 Preludin Endurets, 75 mg. 60 tablets 10/14/80 Preludin Endurets, 75 mg. 60 tablets 9/8/81 Didrex 100 tablets 9/12/81 Didrex 100 tablets 9/21/81 Didrex 100 tablets 9/28/81 Didrex 100 tablets 10/5/81 Didrex 100 tablets The prescribing of these controlled substances to Mrs. Edna Noel for purposes of weight control was excessive and inappropriate. In prescribing excessive and inappropriate controlled medications, the Respondent Hurt failed to practice medicine with the degree of care, skill and treatment which is recognized as acceptable by a reasonably prudent similar physician as being acceptable under similar conditions and circumstances. The prescriptions issued by the Respondent to Mrs. Edna Noel on October 4 and 14, 1980, for 120 tablets of Preludin Endurets, 75 mg. were for weight control. Preludins are amphetamines or sympathomimetic amine drug or compounds designated as a schedule II controlled substance pursuant to Chapter 893, Florida Statutes. These schedule II controlled substances were prescribed for Mrs. Noel for a purpose outside the scope of Section 458.331(1)(cc), Florida Statutes which prohibits prescribing such drugs except for certain statutorily enumerated purposes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Board of Medical Examiners issue a Final Order finding the Respondent guilty of violating Sections 458.331(1)(q), (t) and (cc), Florida Statutes (1981), and revoking his license. DONE and ORDERED this 28th day of December, 1982, in Tallahassee, Florida. SHARYN L. SMITH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of December, 1982.
The Issue The issue to be determined in this proceeding is whether Petitioner is entitled to a refund of the costs paid for prescriptions for compound Midrin.
Findings Of Fact The Division of State Group Insurance (Division) is the executive agency within the Department of Management Services (Department) that is responsible for the administration of the State Group Insurance Program (Program). Petitioner is retired and receives medical benefits through the State Employees’ HMO Standard Medical Plan (the Plan), which is administered by Capital Health Plan (CHP). The State Employees’ Prescription Drug Program is administered by CVS Caremark. Respondent is the state agency responsible for resolving appeals of medical claims denied by Caremark. Background Mr. Abele was employed with the State of Florida until he retired. He was covered by the Plan and his coverage has remained since his retirement. For the past three years, Mr. Abele has filled a prescription for generic Midrin to treat migraine headaches. The medication was prescribed by his primary care physician, John Ness, M.D. The evidence offered at hearing includes a total of 18 claims2 for prescriptions for compound Midrin that Mr. Abele submitted to Caremark for reimbursement. Mr. Abele submitted claims for prescriptions filled in 2018 dated: July 12 and 25, 2018; August 2, 2018; September 7, 2018; October 5 and 22, 2018; November 6 and 26, 2018; December 12, 2018. Mr. Abele also submitted claims for prescriptions filled in 2019 dated: January 9 and 30, 2019; February 12, 2019; March 6, 18, and 29, 2019; April 10 and 25, 2019; and May 10, 2019. Each of the 18 claims was for reimbursement of $105 for a total of $1,890. Relevant Definitions The Plan Booklet and Benefit Document (“Plan”) includes definitions, relevant in part here, as follows: "Covered Services and Supplies" means those health care services and supplies, including pharmaceuticals as described in Section VIII, for which reimbursement is covered under this Plan. "Exclusions" is defined as any provision of the Plan whereby coverage for a specific hazard or condition is entirely eliminated. “Medically Necessary” is defined as any appropriate medical treatment ... as provided by a physician ... which is necessary for the diagnosis, care and/or treatment of a Health Plan Member’s illness or injury, and which is: Consistent with the symptom, diagnosis, and treatment of the Health Member’s condition; The most appropriate level of supply and/or service for the diagnosis and treatment of the Health Plan Member’s condition; In accordance with standards of acceptable community practice; Not primarily intended for the personal comfort or convenience of the Health Plan Member, the Health Plan Member’s family, the physician or other health care providers; Approved by the appropriate medical body or health care specialty involved as effective, 2 The claims at issue are those claims submitted by Mr. Abele in support of his request for reimbursement. appropriate and essential for the care and treatment of the Health Plan Member’s condition; and Not Experimental or investigational. Medical Necessity Dr. Ness, a family practice physician with 30 years of experience, prescribed generic Midrin for Mr. Abele to treat migraine headaches. Dr. Ness prescribed generic Midrin to treat Mr. Abele based on his assessment that other medications were contraindicated for Mr. Abele due to Mr. Abele’s risk for cardiovascular adverse effects if he uses other medications. Dr. Ness credibly testified that Midrin is medically necessary to treat Mr. Abele’s migraine headaches. Anthony Arnett, M.D., the physician for Caremark responsible for reviewing claims for coverage, determined that Midrin was not medically necessary to treat Mr. Abele’s migraine headaches. However, Dr. Arnett conceded that his decision was based on his general determination that there are other options available for migraine headaches. The undersigned finds Dr. Ness’ testimony more persuasive concerning the determination that Midrin was medically necessary to treat Mr. Abele for migraines. Midrin History At the time Dr. Ness prescribed generic Midrin to Mr. Abele, it was an FDA-approved drug. In fact, Midrin was approved for use in 1948 based on safety and effectiveness. However, in 2017, the United States Food and Drug Administration (the “FDA”) determined that Midrin was no longer safe and effective. On October 12, 2017, the FDA notified manufacturers of prescription drugs containing isometheptene mucate that they should immediately cease distribution of the product. On June 13, 2018, the FDA issued a subsequent notice listing the drugs that were no longer approved by the FDA and that manufacturing companies were required to stop producing. The drug combination for Mr. Abele’s prescription for compound Midrin (acetaminophen, dichloralphenazone, and isometheptene mucate) is on the FDA non-approved list. Midrin Prescription/Coverage Denial In January 2018, Mr. Abele presented his prescription for generic Midrin to his local CVS Pharmacy to be filled but the prescription was refused. Mr. Abele indicated that the pharmacist told him that the manufacturer had stopped producing the drug and suggested that he could have the drug compounded. Since generic Midrin was no longer available, Dr. Ness issued a prescription for the compound Midrin, in capsule form, with a 10-day supply for each prescription. The medication name was listed as “Midrin (ALTERNATE) 325MG/100MG/65MG Capsule,” and the ingredients were listed as acetaminophen, dichloralphenazone, isometheptene mucate, and microcrystalline cellulose3. Mr. Abele filled the prescriptions at a local in- network compounding pharmacy. On January 14, 2018, Mr. Abele contacted Caremark about his compound Midrin prescription and Mr. Abele was told that he would need to submit a claim to determine whether the compound drug ingredients would be covered. There is no evidence that the Caremark representative made any false or misleading representation that Mr. Abele’s compound prescription would be approved. On December 14, 2018, Mr. Abele submitted claims to Caremark for reimbursement for compound Midrin. On December 17, 2018, Caremark notified Mr. Abele by letter that the claims he submitted were not allowed. The reason provided for disallowance was because the drug was not on the plan’s formulary. The letter also notified Mr. Abele that his request for exception did not include the information necessary to approve the request. On February 1, 2019, Dr. Ness, on behalf of Mr. Abele, submitted a non-covered drug formulary exception request seeking approval for compound Midrin. He requested the drug in capsule form for the treatment of Mr. Abele’s migraines. However, the request form did not include a copy of the prescription for the compound formula for Midrin. The form also did not describe the drug as the compound alternative. Dr. Ness testified that it is a common medical practice to use “cap” to refer to the capsule form, even for the compound formula. The Caremark appeals department faxed a response to Dr. Ness as follows: “In researching your fax request, the member’s prescription benefit coverage indicates a [p]rior [a]uthorization is NOT required. For additional questions regarding the medication’s coverage under the member’s plan, please contact Customer Service using the number on the back of the member’s prescription benefit card.” Dr. Anthony Arnett testified that he interpreted the exception request as being for Midrin capsules, rather than the compound form. Based on that interpretation, the response to the exception request was that prior authorization was not necessary. The undersigned finds that even if prior authorization was not required for the prescription, it does not amount to an approval for coverage of the claims. Appeal of Coverage Denial On February 5, 2019, Mr. Abele appealed the denial of reimbursement for compound Midrin. On February 13, 2019, Caremark responded to Mr. Abele instructing him to submit additional information for his claims to be processed. On February 18, 2019, he submitted the requested information and materials. On March 30, 2019, Caremark notified Mr. Abele by letter that his drug coverage request was denied. The basis for the denial was that the 3 Microcrystalline cellulose may be used as a bulking agent in pharmaceutical products. prescription was for a compound drug containing, as relevant here, bulk powder. Mr. Abele then submitted a Level I appeal, also referred to as a clinical appeal4, on April 18, 2019. Dr. Arnett reviewed Mr. Abele’s claims for the Level I appeal. While Dr. Arnett acknowledged that compounding could be approved if no other drug is available for treatment of migraines, he concluded that Mr. Abele’s exception request could not be approved because the compound formula included bulk powder. Caremark denied Mr. Abele’s Level I appeal and notified Mr. Abele by letter of their decision on April 22, 2019. In the letter, Caremark stated that “petitioner’s appeal for Dichloralphenazone Powder Compound has been determined as not medically necessary; and, ‘the plan criteria does not allow coverage of dichloralphenazone Powder Compound’ if the compound contained ‘bulk powder’ as an ingredient.” On May 8, 2019, dissatisfied with the outcome of the Level I appeal, Mr. Abele requested a Level II appeal. The Department denied the Level II appeal on the basis that the compound Midrin “did not meet the medical necessity criteria and non-FDA approved compounds are excluded from the plan.” Limitations and Exclusions The Department's concurrence of Caremark’s decision that coverage for the compound Midrin prescription should be denied was based on the Plan’s general Limitations and Exclusions section, which applies to the Prescription Drug Program. The Prescription Drug Program also outlines specific exclusions related to medications. The Prescription Drug Program, described in Part VIII, provides that covered drugs shall include, but are not limited to, any drug, medicine, medication, or communication that is consumed, administered, or provided at 4 Level I appeals are handled by Caremark by a specific group that focuses on prescriptions appeals. the place where the prescription is given at the medical provider’s office or healthcare facility. The Plan’s limitations and exclusions section provides, “the following services and supplies are excluded from coverage under this Plan unless a specific exception is noted. Exceptions may be subject to certain coverage Limitations.” Under the Plan, the exclusions include “any non-prescription medicine, remedy, biological product, pharmaceutical or chemical compound, vitamins, mineral supplements, fluoride products, health foods, or blood pressure kits, except as specifically provided for in the covered benefits section under prescription drugs.” The Additional Exclusions section provides that bulk powders, bulk chemicals, and proprietary bases used in compound medications and over-the- counter (“OTC”) products used in compound medications are excluded from coverage. Further, the plan excludes services or supplies not medically necessary as determined by the Plan and/or the Prescription Drug Program clinical staff and the state. The Prescription Drug Program provides that the Prescription Drug Program does not cover non-federal legend or OTC products, and bulk powders, bulk chemicals, and proprietary bases used in compounded medications.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division of State Group Insurance, Department of Management Services, enter a final order denying Lawrence Abele’s request for reimbursement for the claims submitted for his compound Midrin prescription. DONE AND ENTERED this 14th day of May, 2020, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of May, 2020. COPIES FURNISHED: Lawrence Abele 841 Maderia Circle Tallahassee, Florida 32312 (eServed) Erica D. Moore, Esquire Office of the General Counsel Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950 (eServed) Jacob Koffsky, Esquire Foley & Lardner LLP 2 South Biscayne Boulevard, Suite 1900 Miami, Florida 33131 (eServed) Gayla Grant, Esquire Office of the General Counsel Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950 (eServed) William Chorba, General Counsel Office of the General Counsel Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399 (eServed)
