In Battle Over Health Care Costs, Private Equity Plays Both Sides

As medical practices owned by private equity firms fuel overbilling, a payment tool also backed by such investors helps insurers boost their profits.Insurance companies have long blamed private-equity-owned hospitals and physician groups for exorbitant billing that drives up health care costs. But a tool backed by private equity is helping insurers make billions of dollars and shift costs to patients.The tool, Data iSight, is the premier offering of a cost-containment firm called MultiPlan that has attracted round after round of private equity investment since positioning itself as a central player in the lucrative medical payments field. Today Hellman & Friedman, the California-based private equity giant, and the Saudi Arabian government’s sovereign wealth fund are among the firm’s largest investors.The evolution of Data iSight, which recommends how much of each medical bill should be paid, is an untold chapter in the story of private equity’s influence on American health care.A New York Times investigation of insurers’ relationship with MultiPlan found that countering predatory billing is just one aspect of the collaboration. Low payments have burdened patients with unexpectedly large bills, slashed pay for doctors and other medical professionals and left employers that fund health plans with high, often unanticipated fees — all while making the country’s biggest health insurance companies a lot of money.Often, when someone gets insurance through an employer and sees a doctor outside the plan’s network, the insurer routes the bill to MultiPlan to recommend an amount to pay. Both MultiPlan and the insurer receive processing fees from the employer, usually based on the size of the final payment: the smaller the payout, the bigger the fees.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe.

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A Fraught New Frontier in Telehealth: Ketamine

With loosened rules around remote prescriptions, a psychedelic-like drug has become a popular treatment for mental health conditions. But a boom in at-home use has outpaced evidence of safety.For Greg Rice, ketamine was transformative. The drug, approved decades ago to sedate patients during surgery, was increasingly being used to treat mental health conditions like his depression.Since his teenage years, Mr. Rice had cycled through a long list of medications. Searching for relief, he sometimes abused his prescriptions and experimented with LSD, psychedelic mushrooms and other illicit substances.At a particularly low point following a breakup a few years ago, Mr. Rice, 38, bought ketamine through back channels and injected it nightly for two weeks. The psychedelic-like journeys seemed to loosen the grip of his negative thoughts. “That was probably not the best way of coping,” he acknowledged, “but it got me through a really rough experience.”He continued using the drug periodically, he said, but was left hunting for a supply — until last year, when he discovered the freewheeling world of telemedicine.Mr. Rice went online and made an appointment with a doctor more than 2,500 miles from his California home whom he had never met. After a 30-minute video call, he received a prescription for a month’s supply. “I finally had an avenue to get pure medical-grade ketamine for cheap, sent to me over the mail,” he said.Not long ago, such an arrangement would have been illegal. Access to ketamine was tightly controlled by the Drug Enforcement Administration, which puts its risk of abuse one notch below that of opioids like oxycodone and fentanyl. While prescribing it for depression was allowed, patients needed to first meet in person with a doctor, and treatment was mostly limited to infusions in clinics.But in 2020, at the height of the pandemic, the Trump administration made it easier to treat patients by telemedicine, including remotely prescribing controlled substances. These regulatory changes, which have continued under President Biden, have made all manner of medical care, from management of chronic diseases like diabetes to substance abuse treatment, more accessible and affordable.While many patients have benefited, the rapid growth of remote prescribing and at-home use of various drugs has outpaced the evidence that doing so is safe and effective. As the gap between medical treatment and online shopping has narrowed, already-thorny debates over the proper balance between availability and safety have become increasingly urgent.The ketamine boom is a particularly fraught case study of this new reality because of the drug’s powerful effects and the vulnerable patients drawn to it: typically those with severe depression or other mental health conditions who have not responded to traditional therapies. The shift away from clinics has led many patients to take the drug more frequently and for longer periods of time — multiple times a week, even daily in some cases, and for months or years — despite scant research on safety.To better understand how this is playing out, The Times interviewed more than 40 patients who said their access to the drug was expanded through telehealth, spoke with two dozen doctors and other medical professionals, and reviewed scientific studies, case reports and data from researchers, government agencies and private analytics firms.Many of the patients said ketamine was life-changing, the only drug that had ever relieved their crushing symptoms. But some described serious drawbacks — including addiction and bladder damage — that have been documented for years among recreational users but have been largely played down by the drug’s medical proponents.On a Reddit forum devoted to ketamine therapy, an online community that has grown from fewer than 2,000 members in 2019 to more than 25,000 today, posts about misuse of the drug have appeared often enough that some members have pleaded for discretion, fearing a tightening of telehealth regulations.“I feel like some authority at some point is going to want to crack down and be like, ‘No, we don’t think this is OK,’” said one ketamine patient, Samuel Brooks, in an interview.Covid-19 exacerbated the nation’s mental health crisis and underscored the inadequacy of many existing treatments, accelerating a reconsideration of once-stigmatized psychedelics. Because the Food and Drug Administration approved ketamine as an anesthetic more than 50 years ago, federal rules allow doctors to prescribe it for other conditions as well, and its use for depression, anxiety and post-traumatic stress disorder was growing before the pandemic.With the rule changes in 2020, the at-home ketamine industry appeared practically overnight.Tech start-ups and individual doctors began offering medical services online, and so-called compounding pharmacies, which can make variations of approved drugs, found a market for  tablet and lozenge versions of ketamine, normally manufactured as a liquid and distributed in vials.Primed by glowing media coverage and aggressive advertising, many patients interviewed by The Times came to regard the drug — and its remote availability — as akin to a miracle cure with few risks.They can now pursue a treatment course not approved by the F.D.A., taking forms of the drug that are also not approved, produced by companies operating largely outside the agency’s oversight — all without comprehensive monitoring.Some found their way to online physicians like Scott Smith, a family medicine doctor who closed his practice in South Carolina in 2020 to focus full time on online ketamine treatment. In the past three years, Dr. Smith has remotely treated about 3,000 patients in 44 states, and has been featured in The Washington Post and on social media sites like YouTube and Reddit.Others sought out fledgling tech companies like Joyous, which offers rock-bottom pricing and daily dosing adjusted by text message, or a host of more established firms.Studies of recreational users have documented that ketamine — popularly known as K or Special K, with a reputation as a club drug — can be addictive and, when taken chronically in high doses, can cause severe bladder damage that in the worst cases requires surgical reconstruction of the organ. There are indications that abuse may also lead to cognitive impairment.Advocates of increased therapeutic use say those issues are exceedingly rare or nonexistent at the doses and frequencies commonly prescribed. But because treatment is remote and there is little mandatory reporting of side effects, it is nearly impossible to accurately gauge their prevalence.Patients who told The Times they began experiencing problems after starting ketamine included a 50-year-old man who must use a catheter to empty his bladder and a 37-year-old woman who wears adult diapers.More on the Coronavirus PandemicLeaving Millions on the Table: Stop-and-go federal funding floods public health agencies with cash during crises but starves them of funds afterward. In Mississippi, the pandemic showed the pitfalls of that approach.New Drug’s Long Odds: A promising new treatment quashes all Covid variants, but regulatory hurdles and a lack of funding make it unlikely to reach the United States market anytime soon.Dangers Remain for Seniors: For older Americans, the Covid pandemic still poses significant threats. But they are increasingly left to protect themselves as the rest of the country abandons precautions.N.Y.C.’s Mandate: New York City will end its aggressive but contentious vaccine mandate for municipal workers, Mayor Eric Adams announced, signaling a key moment in the city’s long battle against the pandemic.Some said they concealed problems from their telehealth providers for fear of losing access to the only treatment that had ever helped, while others acknowledged abusing their prescriptions, taking too much and in some cases dissolving and injecting the drug.On private online forums for medical professionals, accounts of bladder issues are common enough that some providers are becoming more restrained in their prescriptions, according to multiple people with access to the websites. Some psychiatrists at prominent institutions have published cautionary reports.The approaches of patients like Mr. Rice highlight the underlying tension. He acknowledged his “addictive tendencies” with ketamine, but his top priority in choosing online treatment was clear: “I wanted something hands-off.”Keith NegleyA Trip With RisksMany ketamine patients described the drug as a reset button for the brain. During treatment sessions, they experienced pleasant visualizations, sometimes accompanied by a sense of existing outside themselves and melding with the universe. Afterward, their daily problems seemed less weighty.The considerable hype surrounding ketamine stems in part from the drug’s ability to affect brain receptors that traditional antidepressants do not target. The psychedelic-like trip, many believe, is integral to the drug’s therapeutic effect.But for some patients who spoke to The Times, including a Tennessee cybersecurity manager and a former Pennsylvania factory worker, the profound experiences of their early sessions faded. Chasing the lost high, they sought increased doses, took multiple days’ worth at once or altered the medicine to release more of its payload.For others — a Utah data analyst, a California bartender and a Pennsylvania internet entrepreneur — ketamine treatment eventually meant dealing with a constant urge to urinate, often painfully, as well as other bladder ailments.The experiences of the dozens of patients who shared their stories with The Times encapsulate both the well-publicized promise of ketamine and the lesser-discussed risks.Driving the interest are early-stage studies showing that the drug can rapidly and dramatically relieve symptoms of depression. But there has been little research on how to maintain the improvements and even less on whether prolonged treatment is safe.When discussing the risks, prescribers often insist there is a sharp line between chronic abuse and medical use.“That happens in people that abuse ketamine and use more than a thousand milligrams on a daily basis,” Dr. Smith, the online physician from South Carolina, said of bladder damage. “We’re treating most people with 200 milligrams every three days. We haven’t seen anybody that’s had that problem.”Still, two of Dr. Smith’s former patients said in interviews that they experienced serious issues that required care from a urologist. Both said they did not tell Dr. Smith because they felt addicted to the drug and wanted to continue their prescriptions, which they were misusing.Among the 12 patients who described bladder problems, most saw their symptoms resolve after they stopped taking ketamine. Most said their doctors couldn’t conclusively peg the cause of their problems but identified ketamine as the likely culprit.Three patients said their troubles persisted. One of them, a man living in Utah, recounted the painful daily ritual of using a catheter to empty his bladder but expressed no regrets. Without ketamine, he said, he might have killed himself.For other patients, a similar calculus led them to stay on ketamine despite the harm. All of them spoke on the condition that their full names not be published, for fear of losing access to the drug or affecting their job prospects.Sarah, a 30-year-old Californian, said she had tried more than a dozen psychotropic medications and undergone more than 30 electroconvulsive therapy treatments before finding ketamine. Now, between periodic infusions at a local clinic, she takes tablets at home that she gets through an online service.But she has not told either provider about her worsening bladder issues. Her urologist may soon need to inject Botox into her bladder, a treatment for certain urinary problems.“It’s kind of a lot to admit that you have bladder issues as a 30-year-old, mostly because you’re causing it,” she said.Many ketamine proponents minimize the potential for addiction and abuse. Dr. Smith said that of the thousands of patients he had treated, only two or three had misused the drug, and that he got them help. He said he had reported one patient to the D.E.A. tip line and also stopped treating a handful of patients after learning they were taking more than prescribed.“I have to go through hoops to be licensed to treat people with controlled substances,” he said. “So I comply with all federal and state laws regarding that. And part of my daily job is to look for people that are abusing the medicine or diverting the medicine.”Three of Dr. Smith’s patients told The Times they abused their prescriptions and concealed it from him. Two others described dissolving the tablet or lozenge and administering it rectally, a practice known as boofing that some believe produces a faster and more intense high.Abuse is “absolutely unacceptable,” Dr. Smith said, but “just because there’s a handful of people that don’t follow directions, that does not mean that this medicine is not safe for the rest of the population of competent adults.”Six patients of various medical providers said they came to crave the ketamine trip so much they began to use the drug compulsively. The more they took, some found, the more they needed.“It’s pretty powerful,” said a 59-year-old woman from Philadelphia who sometimes takes more than prescribed, runs out early and tries to buy the drug on the dark web.A 41-year-old man from Nashville who has battled depression since childhood described the drug as his “superpower.” People liked him more, he had more energy and “I got more stuff done.”After undergoing infusions at a clinic, he said, he transitioned during the pandemic to taking small lozenges called troches at home. He started at 100 milligrams a day, then took 200, then 400. His provider would not increase the dose any further, so he now exhausts his monthly prescription early — taking 800 milligrams a day.Speaking on a Tuesday afternoon in December, he said he had just received a performance review at the company where he works in cybersecurity.“My boss was like, ‘You’re not meeting expectations,’” he said.“I’m using it right now,” he continued. “Since the start of this call, I’ve taken 400 milligrams.”Keith NegleyIn the Absence of ScienceWhile proponents of at-home ketamine stress the lack of scientific studies showing that long-term medical use might be harmful, the converse is also true: There are few studies showing that it isn’t. Some urge caution.“We know at a certain point you will get both the neurotoxic and the bladder-toxic effects — we just don’t know at what level,” said Dr. Gerard Sanacora, a psychiatrist and leading ketamine researcher at Yale University.In the absence of data, some medical professionals said they were becoming more conservative in their prescribing because of anecdotes in published case reports or online forums.Professional groups have developed informal guidelines that emphasize catching symptoms early, reducing the dose and spacing out treatments. But some at-home providers are pushing in the opposite direction, viewing ketamine as just another medicine to be taken regularly.“I would be worried about chronic usage” said Dr. Adam Howe, a urologist at Albany Medical Center who advises a group developing treatment guidance. Damage is avoidable with proper safeguards, he said, but “common sense would tell you, if you’re to use this every day for years on end, then at a certain point, you’re going to be damaging your bladder probably.”The literature on addiction and abuse among medical users is also thin and inconclusive. Supporters point to studies indicating that patients on ketamine rarely, if ever, have those issues. Others note a pattern common in drug development: an initial overestimation of benefit, followed by more tempered results and recognition of previously undetected harm.“We really don’t know what sort of addiction we might be causing,” said Dr. Noah Capurso, a Yale psychiatrist who co-wrote a case study of a patient whose at-home, prescribed use rapidly escalated until he was involuntarily admitted to a psychiatric unit.Doctors at the Baylor College of Medicine and the Mayo Clinic have published similar accounts. In one case, after a 52-year-old man who regularly took more than prescribed had to be hospitalized, his family said the drug was “ripping his life apart” and he had “no control over it.”Keith NegleyProduction Is BoomingFor years, mental health clinics have administered the F.D.A.-approved liquid form of ketamine that doctors also use to sedate patients in surgery. But at-home treatment created demand for a version that was less potent and easier to take — something not available from drugmakers.Enter a uniquely positioned industry: compounding pharmacies.These specialized companies operate in a murky regulatory space somewhere between a corner drugstore and a pharmaceutical manufacturer. They can produce variations of approved drugs but do not have to follow the same quality-control rules as drugmakers.Most compounding pharmacies do not have to notify federal regulators when they learn of a patient experiencing a problem, and they are rarely, if ever, inspected by the F.D.A. In many cases, the agency may not even know they exist.The companies were originally granted legal leeway to produce small amounts of drugs for patients with particular needs, such as an allergy to an ingredient in a commercial product or an inability to swallow a pill. But some have dramatically grown their production capacity and reach.Companies that once served primarily local customers now ship their products across the country as the ketamine boom has presented an alluring opportunity.“It’s become the new buzz in this space,” said Jeanine Sinanan-Singh, chief executive of Vitae Industries, which sells a machine that compounding pharmacies can use to produce doses at a faster clip than with other methods.The size of this new market is difficult to gauge. The number of mental health patients prescribed ketamine more than doubled from just under 15,000 in 2016 to nearly 30,000 in 2021, according to data from the analytics company Komodo Health. But the actual numbers are likely to be far higher because the data is drawn from insurance claims, and plans tend not to cover the drug’s off-label uses.Most compounders do not report the amount of ketamine they produce to the F.D.A., and the agency refuses to disclose data from those that do, asserting that it is confidential commercial information. In a statement, the F.D.A. noted its limited authority over most compounding pharmacies and said it “continues to monitor reports of adverse events or other complaints involving compounded ketamine.”Some compounding pharmacies have gone public with stepped-up efforts to attract customers. In social media posts and mailers to doctors, they extol the benefits of ketamine, and some offer to connect patients with prescribers. They promise fast shipping and low prices. Compounders can formulate troches from inexpensive generic ketamine and charge between $50 and $100 for a month’s supply, a fraction of the cost of receiving treatment at a clinic.After a deadly meningitis outbreak was linked to one compounding pharmacy in 2012, the F.D.A. sought to impose greater oversight on companies that mailed drugs to other states in large volumes, but the industry has successfully stalled the restrictions. As a result, most of the largest ketamine compounders can ship across the country with little federal scrutiny.Scott Brunner, chief executive of the Alliance for Pharmacy Compounding, a trade group, said that the F.D.A.’s proposals constituted overreach but that the industry was open to some reporting of interstate shipments and adverse events. “Compounding pharmacists’ concern is always the health and safety of their patients,” he said.Just one of the major at-home ketamine compounders appears to have registered with the F.D.A., and the resulting inspections have turned up serious quality problems, according to agency records.That company, Empower Pharmacy, ships to all 50 states. Three times over the past five years, F.D.A. inspectors have visited its Houston production site and cited violations, including inadequate monitoring for contamination, insufficient investigations of batches that failed quality tests and a failure to properly report adverse events.During a visit last summer, inspectors found that the company had been producing ketamine nasal spray for more than two years without ever conducting potency tests to ensure the product had the correct strength.Empower did not respond to questions from The Times. In a letter to the F.D.A. after last year’s inspection, the company said it had been “steadily improving its management and corporate governance” and “restructuring its manufacturing, quality and compliance departments for greater oversight.”Keith NegleyDaily Doses at Bargain RatesCost concerns led Chad Curl to the telehealth start-up Joyous. After trying seemingly everything — prescription pills, electroconvulsive therapy, an implanted nerve stimulator — he found relief from depression at a clinic administering a closely related drug, esketamine, which is a nasal spray approved by the F.D.A. as a mental health treatment. But it cannot be taken at home, and he could afford only a few sessions.Searching online for alternatives last fall, he found an apparent bargain: $129 a month, ketamine included. He filled out Joyous’s intake questionnaire, had a 20-minute virtual appointment and received a prescription, all in the same night.“I was like, ‘Wow, I didn’t even plan on this today, and here we go,’” he said.Joyous is the new kid on the at-home ketamine block, a reflection of where market forces and scant regulation have taken the fledgling industry. The company has sought to distinguish itself by promoting its tech-driven, customizable treatment plans, but the real draw for many patients is its pricing.“I signed up for Joyous, if we’re being honest, just because of the price,” said Francisco Llauger, who, like Mr. Curl, found in-clinic treatments effective but too expensive.Joyous illustrates a reality of how at-home ketamine has evolved: Patients with some of the most serious and complicated mental health challenges are turning to some of the most hands-off treatment, according to The Times’s interviews.The company has carved out its place with a novel approach: Instead of prescribing higher doses to be taken once or twice a week, Joyous offers lower doses to be taken daily.Melding the argots of Silicon Valley and self-care, Joyous delivers treatment primarily by text message, replete with exclamation points and emojis. Each morning, patients receive a questionnaire on their phones asking about symptoms and side effects, and each evening, they get a text with the next day’s recommended dose.“Our algorithms use all of this information to tailor the protocol exactly to your brain and body’s needs,” Sharon Niv, co-founder and chief of customer experience, says in a video.In written responses to questions from The Times, the company said its general treatment approach “has been adapted and used by providers nationally and internationally” for more than five years and its internal data indicated that “this medicine is highly effective for both anxiety and depression.” It declined to provide details about how its technology works. The company says lower doses translate to lower risk. Yet most of the eight Joyous patients who spoke with The Times said their doses reached the maximum the company would prescribe within weeks. Some providers who generally support at-home treatment expressed concern that taking ketamine every day, even at lower doses, could heighten the risk of tolerance, addiction and bladder problems.“Patient outcomes are our highest priority,” the company said in its written responses. “Joyous takes patient safety and risk mitigation very seriously.”

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Federal Government Cuts Ties With Troubled Vaccine Maker

Emergent BioSolutions ruined millions of doses of Covid-19 vaccines. Now its $600 million deal is canceled.WASHINGTON — The federal government has canceled its contract with a troubled Covid-19 vaccine manufacturer that ruined millions of doses and had to halt production for months after regulators raised serious quality concerns.The decision marks a stark reversal of fortune for the politically connected contractor, Maryland-based Emergent BioSolutions, and an abandonment by the government of a deal that was supposed to be a centerpiece of Operation Warp Speed.Early in the pandemic, the government decided to bank on the company to be the sole domestic manufacturer of the Johnson & Johnson and AstraZeneca vaccines. But this March, testing found that a batch of the Johnson & Johnson vaccine had been contaminated, and Emergent agreed to pause manufacturing after an inspection uncovered a host of problems at its facility in Baltimore’s Bayview area.The termination of the contract, disclosed on Thursday by Emergent executives during a call with investors, was the result of negotiations that began after the government earlier this year stopped making payments under the deal, which was awarded in May 2020 and was worth more than $600 million. Emergent will now forgo roughly $180 million of that amount, according to company disclosures.The company said it would continue working with Johnson & Johnson to produce its vaccine in Baltimore because the arrangement with that company, while endorsed by the government, was not financed under the $600 million deal. While the site has not yet won regulators’ approval, it has resumed operations, and the Food and Drug Administration has allowed roughly 100 million doses to be released for potential use.The contract cancellation also brings an abrupt end to a nearly decade-old effort by the government that was intended to better prepare for a pandemic. In 2012, the Department of Health and Human Services gave Emergent a $163 million contract to expand the Baltimore site and ready it to rapidly produce vaccines in response to a novel virus.The decision disclosed on Thursday put a stop to that deal years before it was set to expire, leaving the facility without the stamp of approval that it had long touted in presentations to investors and potential clients.The Emergent chief executive, Robert Kramer, acknowledged during the investor call that the initiative, “as it was contemplated back in 2012, was a good idea at the time, but unfortunately it didn’t work out as it was anticipated.” Mr. Kramer also sought to put a positive spin on the breakup, writing in a guest essay in The Baltimore Sun that the health department had agreed to Emergent’s “request to end our 9-year pandemic manufacturing partnership.”Mr. Kramer laid blame on the government, even as he conceded that “not everything went perfectly” during the pandemic. “But if you want companies to engage,” he wrote, “you need to be willing to stand by them through both challenge and achievement.”But a senior Biden administration official, speaking on the condition of anonymity, disputed Mr. Kramer’s account. The official said that the health department had ended the contract, and that the termination was structured in such a way that the company would not fight it and the government would avoid a costly legal challenge. The company had been asking for payment since spring, the official added, but the government had not paid since the contamination was disclosed.When the pandemic arrived last year, the Baltimore site still had not won regulatory approval to mass-produce any approved product, and a government assessment warned that relying on the largely untested facility was risky.Mr. Kramer on Thursday said a lack of experience at the factory was attributable in large part to a lack of consistent government funding over the years. “The necessary operational investments by all administrations fell short of what was needed to maintain capability in case of an emergency,” he said.Since May, Emergent has said it expected federal regulators to soon certify vaccine production at the Baltimore plant. But regulators have yet to issue that certification, although they have certified Johnson & Johnson’s manufacturing operation in the Netherlands as well as plants that produce vaccines for Pfizer-BioNTech and Moderna vaccines.Instead of giving the Bayview plant a green light, the F.D.A. cleared multiple batches of AstraZeneca’s and Johnson & Johnson’s vaccines — and then only after special scrutiny, because of the plant’s problems. A batch can include as many as 15 million doses.The cancellation appears to have no impact on the availability of coronavirus vaccines in the United States. The contract only involved production of AstraZeneca’s vaccine, which is not authorized for distribution in the United States.Although Johnson & Johnson, one of only three federally authorized vaccines here, produced tens of millions of doses at the Baltimore plant, it did so under a separate contract with Emergent as its subcontractor.In a statement on Thursday, a spokesman for Johnson & Johnson said that “today’s announcement by Emergent BioSolutions will not impact our collaboration to produce our Covid-19 vaccine.” The company said it would continue to work with authorities to obtain certification of the Bayview site for production of its vaccine.Johnson & Johnson has played a comparatively minor role in the nation’s vaccination campaign. Slightly more than 15 million people have received one dose of the Johnson & Johnson shot, compared with nearly 71 million who have received two doses of the Moderna vaccine and 107 million who have received two doses of the Pfizer-BioNTech vaccine. In a series of regulatory decisions since mid-September, at least some recipients of all three vaccines became eligible for booster shots.The manufacturing problems at the Bayview site have affected immunization efforts outside the United States, delaying the distribution of vaccines in Canada, the European Union and South Africa.Executives emphasized during Thursday’s call that the cancellation would not affect the other government contracts that remain the core of Emergent’s business. In fact, the company noted, health officials this year committed to purchasing another $637 million worth of Emergent’s anthrax and smallpox products in coming months.The company also disclosed that Mary Oates, a former Pfizer executive who joined Emergent in November 2020 as a senior vice president overseeing manufacturing quality, was leaving “to pursue a new career opportunity.”In September, Emergent announced that it had reached a five-year agreement with Providence Therapeutics, a Canadian biotechnology company that specializes in mRNA vaccine therapies, to support that company’s Covid-19 mRNA vaccine development.“Emergent’s commitment to fight the Covid-19 pandemic is anchored in our partnerships with innovators who share the same mission to address public health threats around the world,” Adam R. Havey, the company’s executive vice president and chief operating officer, said in a statement at the time.Sharon LaFraniere and Sheryl Gay Stolberg contributed reporting.

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U.S. Authorities Seek Documents From Troubled Covid Vaccine Manufacturer

Emergent BioSolutions, which ruined 75 million vaccine doses at its Baltimore plant, disclosed records requests from Congress and federal and state law enforcement agencies.Troubles continued to mount on Friday for a Maryland vaccine manufacturer as it disclosed publicly for the first time that federal and state law enforcement and regulatory agencies were seeking information from the company.Emergent BioSolutions, the Maryland manufacturer that ruined 75 million doses of Johnson & Johnson’s Covid-19 vaccine, has received records requests related to its pandemic-related work from a host of investigators, regulatory documents filed on Friday show.Emergent said that it had received “preliminary inquiries and subpoenas to produce documents” from the Justice Department, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the attorneys general of Maryland and New York and committees in both houses of Congress.The disclosure reflects the growing spotlight on the politically connected company, which received a $628 million federal deal to be the primary domestic manufacturer of the Johnson & Johnson and AstraZeneca vaccines. Production at a company facility in Baltimore was halted for more than three months after a batch of Johnson & Johnson’s vaccine was found to be contaminated and a subsequent inspection by regulators uncovered serious quality-control problems.Emergent is already facing a House committee investigation and multiple shareholder lawsuits related to its manufacturing troubles. In its disclosure, the company provided no further detail on the previously unknown requests, but said it was “producing and has produced documents as required in response and will continue to cooperate with these government inquiries.”Officials with the state and federal agencies either declined to comment or did not respond. A person with knowledge of the matter said that some of the investigative interest stemmed from suspicion of insider trading of Emergent stock, the subject of one of the lawsuits.A Senate aide confirmed that the committee overseeing health issues was also looking into Emergent’s manufacturing troubles, adding to the previously known scrutiny from Capitol Hill.An Emergent spokesman, Matt Hartwig, said he could not provide detail on the records requests beyond what was in the filing. “All of the inquiries and litigation matters relate to the same subject matter — our capabilities to manufacture Covid-19 vaccine bulk drug substance,” he said.The disclosure comes a day after Emergent announced that the Food and Drug Administration had given the go-ahead to resume manufacturing at the Baltimore site, which had been shuttered since April as the company worked to address deficiencies cited by inspectors.That decision does not mean the F.D.A. has broadly authorized Johnson & Johnson to distribute doses made by Emergent on an emergency basis. The F.D.A. signed off on previous batches of vaccine made at the Baltimore factory but with a warning that it could not guarantee the company had followed good manufacturing practices. The agency has cleared the equivalent of up to 75 million doses, but tens of millions remain in limbo.In a conference call with investors on Thursday, Emergent executives announced a $41.5 million hit from being forced to discard doses the F.D.A. had deemed unusable, and said the company had spent another $12.4 million to address manufacturing issues in Baltimore.The newly disclosed inquiries from federal and state agencies underscore a dramatic reversal of fortune for a company that has spent much of the last two decades effectively cornering the market for biodefense, becoming the government’s go-to contractor for products to protect against bioterrorism and infectious disease outbreaks.For most of the last decade, the government has spent nearly half of the annual budget of the nation’s emergency medical reserve, the Strategic National Stockpile, on Emergent’s anthrax vaccine alone, crowding out investments in products such as masks that were in short supply during the pandemic, a New York Times investigation found..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}When the coronavirus pandemic hit, the government turned to Emergent to produce vaccines and treatments. Thanks to a lucrative deal struck in May 2020, Emergent earned record profits and awarded executives record bonuses.Out of public view, however, concern about the company’s ability to deliver was mounting, as The Times has reported. A series of audits by customers, federal officials and the company’s own evaluators found repeated shortcomings in efforts to disinfect and prevent contamination, and a top federal official warned that the company would have to be “monitored closely.”After it was discovered in late March that a batch of the Johnson & Johnson vaccine had been cross-contaminated with material from the AstraZeneca vaccine, federal inspectors descended on the factory, and members of Congress launched an investigation into both the company’s Covid-19 manufacturing work and its contracts with the stockpile.With Emergent’s stock price cut in half, shareholders filed lawsuits accusing the company of committing securities fraud by publicly assuring investors that manufacturing in Baltimore was on track even as evidence of significant setbacks accumulated. In a separate suit, a pension fund claimed that some executives and board members had engaged in insider trading by unloading more than $20 million worth of stock over 15 months.While Emergent’s regulatory filing on Friday does not describe the nature of the document requests from the law enforcement agencies, the disclosure follows a description of the shareholder lawsuits in a section of the report titled “Securities Litigation.”The shareholder lawsuits allege a range of misconduct, including deceptive public statements that “artificially inflated” the company’s stock price, corporate mismanagement and unjust enrichment. In the regulatory filing, Emergent said that the allegations were false and that the company, its executives and board members “intend to defend the matter vigorously.”Ben Protess contributed reporting.

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