Category: Health Law Highlights

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Health Law Highlights

OIG Issues Favorable Advisory Opinion Involving Financial Risk Mitigation Arrangements for High-Cost Rare Disease Drug

Summary of article from Arnall Golden Gregory LLP, by David Blank:

On June 20, 2024, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion 24-04, favorably evaluating a refund and discount program for a high-cost regenerative therapy for a rare pediatric immunodeficiency disorder. The program, initiated by an international pharmaceutical manufacturer, aims to mitigate financial risks for treatment centers by offering refunds or discounts if insurers reverse coverage decisions or if the drug’s wholesale acquisition cost (WAC) increases. The OIG concluded that the program’s fraud and abuse risks are low due to its narrow scope, lack of therapeutic alternatives, and transparency measures, thus not violating the Anti-Kickback Statute or Beneficiary Inducement CMP. The discount program also meets safe harbor criteria, protecting it from AKS prosecution. This opinion provides a framework for similar programs, emphasizing the need for robust safeguards and compliance with regulatory requirements.

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Health Law Highlights

FTC to Sue Drug Middlemen Over Insulin Prices, Source Says

Summary of article from Reuters, by Jody Godoy, Mariam E Sunny:

The U.S. Federal Trade Commission (FTC) plans to sue UnitedHealth, Cigna, and CVS Health over their roles as pharmacy benefit managers (PBMs) in negotiating drug prices, including insulin, due to concerns about rebates and pricing practices. CVS has vowed to defend itself, while UnitedHealth and Cigna have not commented. The FTC is also scrutinizing insulin manufacturers Sanofi, Novo Nordisk, and Eli Lilly. This legal action follows President Biden’s Inflation Reduction Act, which capped insulin prices for Medicare recipients but not for those with private insurance or uninsured. An FTC report indicates that these PBMs, controlling 79% of U.S. prescription drug claims, have leveraged their position to benefit financially at the expense of smaller pharmacies and consumers.

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Health Law Highlights

Fourth Circuit Broadens TCPA’s Reach Over ‘Unsolicited Advertisements’

Summary of article from Faegre Drinker Biddle & Reath LLP, by Bridgette Lehman, William Wright:

The Fourth Circuit Court of Appeals has broadened the interpretation of “unsolicited advertisements” under the TCPA in the case of Family Health Physical Medicine, LLC v. Pulse8, LLC. The court reversed a lower court’s dismissal, ruling that a fax inviting recipients to a free webinar could be considered an advertisement, even without explicitly offering goods or services for sale. This decision, which contrasts with narrower interpretations from other circuits, allows for “implicit marketing” and considers the potential for future promotional contact. As a result, businesses face increased liability and may need to reassess their fax communication strategies to mitigate TCPA risks. The ruling’s implications could influence TCPA litigation strategies beyond the Fourth Circuit.

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Health Law Highlights

FTC Rule Addressing Noncompete Covenants: Impact of Senior Executive Exception on Health Care Entities

Summary of article from ArentFox Schiff, by Douglas a. Grimm, Moyosore O. Koya:

The new Rule, effective September 4, introduces potential confusion and regulatory risks for health care providers, especially concerning noncompete covenants for senior executives. Defined as individuals earning at least $151,164 annually and holding policy-making positions, the implementation of this Rule is complicated by legal challenges and ambiguities around what constitutes policy-making authority. For multi-provider systems, determining whether C-suite members or subsidiary leaders qualify as senior executives is particularly complex. Health care organizations must carefully review job descriptions and responsibilities to ensure compliance and consider executing or renewing noncompete agreements before the Rule’s effective date. Continuous monitoring and analysis by legal experts are advised to navigate these changes effectively.

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Health Law Highlights

Chevron’s End Means Uncertainty and Opportunity for the Healthcare Industry

Summary of article from Schwabe, Williamson & Wyatt PC, by Gary Bruce, Jon French:

The U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which overruled the Chevron Doctrine, will significantly affect the healthcare industry by allowing courts to independently interpret statutory ambiguities rather than deferring to administrative agencies. This shift is expected to increase legal challenges to federal health agencies’ regulations and actions, leading to greater unpredictability and slower rulemaking processes. Healthcare providers may face more litigation, particularly concerning reimbursement rates and enforcement of fraud, abuse, and privacy laws. Consequently, healthcare organizations should anticipate ongoing disruption, stay informed on legal developments, and be prepared to adjust their policies and procedures swiftly.

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Health Law Highlights

Chevron Runs Out of Gas: The Bumpy Road Ahead for Health Regulations After Loper Bright

Summary of article from Akin Gump Strauss Hauer & Feld LLP, by Anna Abram, Sudhana Bajracharya, Jenna Becker, Craig Bleifer, Nathan Brown, Kelly Cleary:

The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo overturns the Chevron doctrine, which previously allowed federal agencies to interpret ambiguous statutes with judicial deference. This change raises the bar for agencies like CMS and FDA, requiring them to provide the “best reading” of statutory gaps rather than a “permissible” one. The ruling will significantly impact lower courts, which have continued to apply Chevron, and could lead to increased litigation challenging longstanding regulations. Additionally, the Corner Post decision extends the timeframe for challenging agency regulations under the APA, further exposing agencies to potential lawsuits. These developments will necessitate more precise statutory language from Congress and could constrain agency policy changes across administrations.

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Health Law Highlights

‘Data Is the Differentiator’: How an Integrated Data Strategy Supports Healthcare AI Success

Summary of article from HealthTech Magazine, by Jordan Scott:

At the AWS Summit in Washington, D.C., Dr. Naqi Khan emphasized the critical role of high-quality data in the successful implementation of generative AI in healthcare. He highlighted that while healthcare generates vast amounts of data, much of it remains unstructured and unused. A robust integrated data strategy is essential for leveraging AI to improve clinician workflows, patient experiences, and health outcomes. Dr. Khan also stressed the importance of data privacy and the need for federated data approaches to reduce bias and enhance data sharing. AWS offers several services, including HealthLake, HealthImaging, and SageMaker, to support healthcare organizations in achieving these goals.

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Health Law Highlights

Healthcare Groups Say Cyber Rule Should Explicitly Name Insurers, Vendors

Summary of article from Healthcare Dive, by Emily Olsen:

Healthcare and hospital groups are urging the Cybersecurity and Infrastructure Security Agency (CISA) to explicitly include insurers and third-party vendors in its proposed cybersecurity reporting rule, citing the interconnected nature of the healthcare sector and the potential widespread impact of cyber incidents. The rule, which mandates reporting of cyber incidents within 72 hours and ransom payments within 24 hours, currently does not specify sector-specific criteria for these entities. Industry groups argue that the exclusion could leave significant vulnerabilities unaddressed, as demonstrated by the recent cyberattack on Change Healthcare. They also express concerns over the stringent reporting timelines and the additional burdens they could impose, particularly on under-resourced hospitals. These groups are calling for more flexibility, financial support, and technical assistance to ensure effective incident management without compromising patient care.

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Health Law Highlights

Fifth Circuit Grants Motion Relating to New CMA Compensation Rule

Summary of article from Troutman Amin, LLP, by John H. Henson:

On July 3, 2024, the US District Court of Northern Texas issued a Memorandum Opinion and Order in the combined cases challenging new CMS rules regarding compensation for Medicare Advantage and Part D plans. The court found the compensation changes to be arbitrary and capricious, granting a partial stay on these rules but allowing the consent requirement for sharing beneficiary data to proceed. The decision highlights the court’s scrutiny of the CMS rulemaking process and indicates a substantial likelihood of the plaintiffs’ success on the merits. However, the consent requirement remains in effect, necessitating prior express written consent for data sharing between third-party marketing organizations. This ruling does not impact the FCC’s 1:1 consent requirement, which remains distinct and unaffected.

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Health Law Highlights

Whether “Willful” Under the Anti-Kickback Statute Requires Knowledge that the Conduct is Unlawful

Summary of article from Mintz, by Laurence J. Freedman, Laura E. Martin:

The Supreme Court has the opportunity to clarify the definition of “willfulness” under the Anti-Kickback Statute (AKS) in a case involving McKesson Corporation. The Second Circuit upheld the dismissal of a False Claims Act (FCA) case, ruling that “willfulness” under the AKS requires the defendant to know their conduct is unlawful. The petitioner, Adam Hart, argues that this interpretation is too stringent and seeks Supreme Court review to resolve a circuit split on the issue. The outcome could significantly impact the Department of Justice and relators’ ability to prove AKS violations as predicates for FCA claims. The case has attracted significant interest from various industry and legal groups, anticipating potential Supreme Court involvement.