Health Care

On October 9, 2019, the Department of Health & Human Services (HHS) announced significant changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (known as the Stark Law) through proposed rules issued by the Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS). The proposed rules are part of HHS’s Regulatory Sprint to Coordinated Care, which aims to promote value-based care and ease regulatory burden on health care providers, particularly with respect to the AKS and the Stark Law.

On September 26, 2019, FDA released a six revised digital health guidances. The primary objective of these revisions was to bring the guidances into alignment with the software function exemptions described in Section 3060 of the 21st Century Cures Act (the “Cures Act”). The medical device community has anticipated these changes since Congress passed the Cures Act almost three years ago in December 2016.

As promised, the Department of Health and Human Services (HHS) filed a brief in the United States Court of Appeals for the District of Columbia Circuit challenging the district court’s holding that the Secretary lacked the authority to compel drug manufacturers from disclosing drug prices in direct-to-consumers television advertisements (DTC rule). On September 23, 2019, HHS filed its appeal in the D.C. Circuit against plaintiffs Merck & Co., Eli Lilly and Co., and Amgen Inc. The brief argues that the district court erred in holding that HHS lacks the statutory authority through the Social Security Act (SSA) to force the DTC rule upon drug manufacturers because they are not direct participants in the Medicare and Medicaid programs.

Congress has just days to pass a continuing resolution to avoid a government shutdown and extend a number of key public health programs. Meanwhile, policymakers are holding hearings and considering a series of drug pricing proposals around negotiation within Medicare and other policies. We cover this and more in this week's preview, which you can find by clicking here.

The Court of Appeals for the Third Circuit recently weighed in on a relator’s right to a hearing where the government moves to dismiss a declined qui tam case, holding that the False Claims Act (FCA) does not guarantee a relator an in-person hearing before their declined FCA cases may be dismissed.

The Department of Justice (DOJ) recently announced that it has agreed to a $21.36 million settlement with compounding pharmacy Diabetic Care Rx LLC d/b/a Patient Care America (PCA), private equity firm Riordan, Lewis & Haden Inc. (RLH), and two PCA executives to resolve a pending False Claims Act (FCA) case. As discussed in a previous post regarding DOJ's decision to intervene, this case is notable because a private equity firm does not typically find itself subject to FCA action, and it is reported to be the first case against a private equity firm in which DOJ has chosen to intervene.

Employers and retail giants alike are increasingly inserting mental health into the broader, public conversation around individual healthcare and employee benefits. Various U.S. employers are rolling out employee-based benefit programs to improve employees’ mental health and overall well-being.

Out of a sample of 29 non-representative drug manufacturers surveyed earlier this year, 23 had publicly posted policies related to accessing their investigational drugs outside of the context of formal clinical trials, according to the General Accountability Office (GAO). Of those 23 company policies, GAO reports that nineteen of them stated that the manufacturer would consider individual requests for expanded access to their drug candidates, while the remaining four companies stated that such requests would not be considered at the present time. Moreover, approximately half of those companies who would be open to meeting a patient’s request for expanded access also noted expressly in their policies that additional procedures would need to be followed, including review of the request by the Food and Drug Administration (FDA) and an institutional review board (IRB). The GAO study – released on September 9, 2019 – was conducted in response to a congressional mandate (included in the FDA Reauthorization Act of 2017) for the investigative body GAO to review the agency’s actions to facilitate patient access to investigational drugs.

This week, Congress is working towards passage of a continuing resolution that would fund the government through the middle of November. This will give policymakers and appropriators enough time to hash out differences in funding priorities as well as work on policies addressing drug pricing, surprise billing, and funding for public health programs. The surprise billing issue is really heating up with outside stakeholder groups weighing in and Congress carefully considering its next steps. We cover this and more in this week's preview, which you can find by clicking here.

The Centers for Medicare & Medicare Services (CMS) recently published a final rule with comment period (the “Final Rule”) that is designed to increase CMS’s ability to identify and prevent bad actors from participating in Medicare, Medicaid, and CHIP. Providers and suppliers should take note because implementation will be costly and burdensome. Among other things, the Final Rule requires the disclosure of certain provider and supplier affiliations and permits CMS to revoke or deny enrollment where those affiliations pose an undue risk of fraud and abuse. The Final Rule also grants CMS several additional authorities to revoke or deny a provider’s Medicare enrollment and increases the duration of such revocations and denials. The Final Rule takes effect on November 4, 2019. Comments on the Final Rule are due by 5:00 p.m. on that same day.

On Monday, the U.S. Court of Appeals for the Eleventh Circuit issued its long-awaited and closely watched decision in United States v. AseraCare Inc.. The court ruled that a claim cannot be deemed false under the False Claims Act (FCA) based on a difference in clinical judgment.  Instead, there must be proof of an objective falsehood. More than three years have passed since the U.S. District Court for the Northern District of Alabama issued the series of rulings that gave rise to the Eleventh Circuit case. 

On August 22, the Substance Abuse and Mental Health Services Administration (“SAMHSA”) announced a new proposed rule (the “Proposed Rule”) amending 42 CFR part 2 (“Part 2”), which is aimed at protecting patient records created by federally funded programs for the treatment of substance use disorder (“SUD”). The Proposed Rule is aimed at alleviating these concerns within the constraints of the underlying statute, while also addressing the increasingly urgent need to streamline SUD services in light of the opioid epidemic. Here we’ll discuss some of the major changes under the Proposed Rule while highlighting the challenges that remain.

GAO recently released a report analyzing the use of pharmacy benefit managers (“PBMs”) and efforts to manage drug spending and use in the Medicare Part D program. Importantly, the report found that use of PBMs reduced Part D spending in 2016 by 20%, from $145 billion to $116 billon, through drug price rebates.

Looks like the Drug Pricing Disclosure Rule may not have seen its last day in court. On August 21, 2019, the U.S. Department of Health and Human Services (HHS) filed a notice of appeal against a federal judge’s decision to block an HHS final rule that would require drugmakers to disclose product list prices within consumer-directed television advertisements for certain prescription drugs.

On August 20, 2019, the United States exercised its authority under the False Claims Act (FCA) to seek dismissal of a relator’s qui tam suit because of the defendant’s burdensome discovery demands, in Polansky v. Executive Health Resources, Inc.  Since the lawsuit’s inception in 2012, the U.S. Department of Justice (DOJ), the U.S. Department of Health and Human Services' (HHS) Centers for Medicare and Medicaid Services (CMS), and other government agencies have attempted to fend off a series of burdensome Touhy requests but failed to do so.  Meanwhile, the scope of discovery has ballooned.  Collectively, DOJ and HHS have deployed six attorneys to work this case.  And, to top it off, DOJ is concerned about relator’s credibility and his ability to prove a FCA violation.  DOJ’s dismissal request thus comes as no surprise.

Recently, a bipartisan group of Senators introduced the Cannabidiol and Marijuana Research Expansion Act (S. 2032), a bill to encourage scientific and medical research on marijuana and its compounds including cannabidiol, or CBD. The bill would expedite the process by which researchers can request an increase in the amount of a Schedule I substance used for approved research by sidestepping the FDA when requesting more marijuana for use in their research. The legislation also would streamline development of FDA-approved drugs that use CBD and marijuana by allowing accredited medical and osteopathic schools, practitioners, research institutions and manufacturers with a Schedule I registration to manufacture marijuana for research.

The proposed 2020 Outpatient Prospective Payment (OPPS) rule was published on August 9, 2019.  Buried in the 819 pages of proposed changes and justifications, CMS took another swing at cutting Medicare Part B reimbursement rates for 340B drugs.   CMS opened its discussion of 340B provisions in the 2020 OPPS proposed rule by first stating it was keeping in effect the 340B reimbursement cut first implemented though the 2018 OPPS rule. The 2018 OPPS rule slashed most hospitals’ Part B reimbursement for 340B drugs from Average Sales Price (ASP) plus 6% down to ASP less 22.5%, a reduction of almost 30%.

On July 30, 2019, the Centers for Medicare & Medicaid Services (CMS) announced more proposed changes to the Open Payments Program, otherwise known as the Sunshine Act. The proposed changes include new requirements that are expected to impose burdens on pharmaceutical and medical device manufacturers.

On July 31, 2019, the U.S. Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) jointly published a proposal, called the Safe Importation Action Plan, to allow certain entities to import drugs from foreign entities. While this development was not a surprise given President Trump’s campaign promises to lower drug prices by, among other things, removing barriers to drug product importation, it represents a stark departure from prior agency positions that the importation of drugs could not be adequately verified as safe and would not lead to significant cost reductions.