Lanton Law; Your Digital Lawyer & Lobbying Team

As organizational needs evolve right now, businesses are looking for innovative ways to become efficient and manage risks. 

For years our team at Lanton Law have been helping businesses around the country remotely with a variety of transactional needs. 

Legal services include but not limited to:

• Contract drafting, review and negotiation

• Due diligence in transactional matters

• Change of ownership

• Corporate governance matters

• Employment matters

• Privacy and data security 

• Leases

• Business strategy and growth objectives

• Day to day operational matters

• Litigation readiness and response

• Pre-litigation dispute resolutions such as arbitration and mediation

• Regulatory compliance 

• Acquisition due diligence/transfer of ownership

• Payor network access   

Additionally, our government affairs services include:

• Federal and state lobbying

• Strategic consulting

• Bill composition/bill check service

• Submitting regulatory comments

• Regulatory monitoring

New Rule: Transition to BLA Pathway Is Complete

We have a new article with the Center for Biosimilars titled “New Rule: Transition to BLA Pathway is Complete.”

Click here for the article

For those having difficulty accessing the article, we have provided the text from the article below.

As of today, March 23, 2020, the life sciences industry completes “the transition.” New categories of biologics will now be licensed via the biologics approval pathway under the Biologics Price Competition and Innovation Act (BPCIA). 

This transition occurs 10 years after the 2009 enactment of the BPCIA. During that interim, manufacturers of certain biologics approved and under review for approval were in limbo as to how their products and rights of exclusivity would be treated under the new policy.

Now, biologics previously approved under section 505 of the Federal Food, Drug, and Cosmetic Act (FDC) will automatically be “deemed” biologics licensed under section 351 of the Public Health Service Act (PHS). Ultimately, these drugs will be categorized as biologics, subject to biosimilar and not generic competition.

Unfortunately, the original BPCIA statute did not provide instructions to the FDA on how to implement this change. Therefore, the FDA has taken certain steps to enact the transition via several proposed rules and the implementation of its Biosimilars Action Plan (BAP). 

The BAP was released in July 2018. The plan is in 2 sections. The first defines key areas in which the FDA wants to focus its regulatory efforts: improving clarity and efficiency of the biosimilar approval process, enhancing understanding through better public communications, and addressing anticompetitive practices.  

The second section is made up of key actions. These are steps that the FDA is either taking or planning to take to improve review processes, create information resources, upgrade guidance, and encourage public feedback. Many of these actions have already been initiated.

On February 21, 2020, the FDA released a final rule that goes into effect today. It amends the FDA’s regulatory definition of a biological product so that it is aligned with the BPCIA. “Under the final rule, the term protein means any alpha amino acid polymer with a specific defined sequence that is greater than 40 amino acids in size.” This is one of the final steps in the 10-year transition process. It opens the door for insulins to be approved via the biologics license application (BLA) pathway.  

Over 100 products that had been approved via new drug applications under the FDC now must be reviewed as BLAs under section 351 of the PHS. Drugs that will be transitioned include naturally occurring proteins such as hyaluronidase, human growth hormones, and menotropins.

The FDA is focusing on insulins and has made waves with the release of draft guidance on insulin biosimilars. The FDA indicated that switching studies may not be needed for a designation of interchangeable insulins if analytical assessments suggest high similarity between biosimilars and reference products. This could speed the arrival to market of the first interchangeable biosimilars in the United States for insulin.

The FDA has also released 2 question-and-answer documents that discuss the transition for patients and healthcare providers. With the BAP and guidance, the FDA has signaled that they are moving forward with the transition as a means of introducing more affordable medicines into the healthcare system—specifically, by expanding the use of biosimilars.
 

Election May Determine Pace of Biosimilar Legislation

We have a new article out with the Center for Biosimilars titled “Election May Determine Pace of Biosimilar Legislation.” The article can be viewed here.

If you are having difficulty accessing the article, we have provided it below:

By the end of 2019, 26 biosimilar products had been launched in the United States. As 2020 gets underway, there are several pending legislative proposals designed to encourage more commercialization of these cost-saving drugs.

House Legislation

HR 3: Elijah E. Cummings Lower Drug Costs Now Act
Many parts of this legislation could indirectly affect biosimilars. Two proposals of note would directly change drug costs for biosimilars if the law is passed.

The first proposal would require the HHS secretary to add a new set of measures to the 5-star rating system under Medicare in order to encourage increased access to biosimilar biological products. Specifically, the proposed legislation calls for determining whether a biosimilar is on formulary and whether and how utilization management tools are applied with respect to a biosimilar. The bill also calls for determination of the percentage of enrollees prescribed the biosimilar product when the reference biologic is also available.

The second proposal would temporarily increase the amount Medicare Part B pays for biosimilars for 5 years. This means that Medicare would pay the average sales price (ASP) plus 8% rather than plus 6%. The product would have to meet certain pricing criteria in order to qualify.

Both proposals may increase the utilization of biosimilars. The star rating system currently used does not make a distinction for biosimilars and allows payers to use the same policies for biosimilars and brands as they do for generics and brands. This can mean that a specialty pharmacy that dispenses under Part B does not get the same credit as a pharmacy that dispenses for Part D. Establishing new guidelines for the star rating system can help specialty pharmacy use more biosimilars and get credit toward its ratings with the payer.

An ASP increase of 2 percentage points could help cover additional costs for specialty pharmacy for educating consumers about biosimilar utilization.

This bill has passed the full House and has yet to be taken up by the Senate.

HR 4597: Acting to Cancel Copays and Ensure Substantial Savings for Biosimilars (ACCESS) Act
This bill would eliminate a patient’s copay for a biosimilar under Medicare Part B. The bill would drive down medical costs by increasing access to lower-cost biosimilar drugs and give Americans more treatment options. This bill has been referred to the Subcommittee on Health in the House.

HR 2375: Preserve Access to Affordable Generics and Biosimilars Act
This would prohibit prescription drug companies from compensating other prescription drug companies to delay the market entry of a generic drug, biosimilar biological product, or interchangeable biological product. This would basically make “pay for delay” in patent settlements illegal. This legislation has cleared the Judiciary Committee and is pending in the House.

Senate Legislation

S 1416: Affordable Prescriptions for Patients Act of 2019
Originally, this legislation was aimed at allowing the Federal Trade Commission antitrust enforcement powers to sue manufacturers who use patent thickets to block generic and biosimilar products from launching. Since its introduction, the bill’s main sponsor, Sen John Cornyn, R-Texas, has stated that he is redesigning the bill to shift the enforcement power to the FDA instead of the FTC. As currently modified, the bill addresses anticompetitive practices involving manipulation of the availability of reference drugs. There is other patent thicket legislation proposed, which would be stricter than S 1416, but it is unknown when this would come to a vote in the Senate.

With the election season well underway, it remains to be seen whether any of these bills will advance before the year’s end.

Pending Antitrust Actions Could Change Biosimilar Dynamics

I have a new article that was published in the Centers for Biosimilars titled Pending Antitrust Actions Could Change Biosimilar Dynamics. If you have trouble accessing the link above we have provided the article text below:

There are 3 major antitrust actions on the biosimilar scene still pending. These have a long way to go before any court resolution, unless the parties involved settle before then. One is a class-action lawsuit attacking the use of patent thickets and pay-for-delay tactics. The other is a claim alleging anticompetitive contract practices to retain market share for an originator product. Related to the latter, an investigation by the Federal Trade Commission (FTC) remains in progress.

Humira (adalimumab) antitrust litigation (1:19-cv-01873)
United Food and Commercial Workers Local 1500 filed a class-action lawsuit against AbbVie, the holder of patents for its blockbuster drug Humira, claiming a monopoly had been created by AbbVie via its use of patent thickets and pay-for-delay tactics to block less-expensive biosimilars of adalimumab and raise prices for indirect purchasers. One of the main allegations is that AbbVie amassed more than 100 patents to prevent biosimilar versions of Humira from reaching market before 2023. Another main argument is that AbbVie colluded with biosimilar makers by using financial inducements to delay the launching of competitors in the United States while allowing them in Europe. AbbVie denies using these tactics to create a monopoly and contends that the lawsuit threatens to “upend the well-settled balancebetween the patent and antitrust laws.” This case is ongoing.

Pfizer versus Johnson & Johnson (J&J; 2:17-cv-04180) 
Pfizer, the maker of the biosimilar Inflectra (infliximab), has sued J&J for alleged anticompetitive sales practices in regard to the infliximab reference product (Remicade). J&J is accused of using exclusionary contracts to keep the biosimilar out of the market. These contracts allegedly “led to the near total foreclosure of Inflectra and other infliximab biosimilars.” Bundling Remicade with other drugs in these contracts for hospitals and infusion centers was also done in order to retain market control, Pfizer alleges. Rebate penalties for payers and providers are also alleged. This case is in the discovery phase and will be well into 2020.

Walgreens/Kroger versus Johnson & Johnson (2-18-cv-02357)
Walgreens and Kroger sued J&J in 2018 for antitrust regarding its contracts with wholesale distributers purchasing Remicade which inflated its price. The case was dismissed for lack of standing or insufficient connection to and harm from the action challenged. Walgreens and Kroger appealed to the Third Circuit stating that the lower court was wrong in dismissing the case because of anti-assignment provisions between the wholesaler and the plaintiffs. The Third Circuit overturned the lower court ruling stating that the case could go forward in spite of the clause because the claim arises out of federal anti-trust law and not the contract itself. This case will now go back to the lower courts and start over from scratch. More cases like this could arise as distribution contract anti-assignment clauses are common and may have prevented many from suing in the past.

FTC Civil Investigation 

The FTC issued a Civil Investigative Demand (CID) to J&J regarding its contracting practices for Remicade, meaning it is investigating J&J’s contracting practices with respect to the reference product. Although the CID was issued in June 2019, J&J has yet to comment on the investigation. Because the inquiry is in its early phase, it remains unclear whether the FTC will lodge an antitrust suit against J&J. They would need to determine if bundling deals and the rebate practices involved constitute antitrust practices. 

All of this litigation may take years to resolve. If the court judgements do not come down in favor of the product originators, the cases could significantly change how biologics are priced, by either eliminating rebates or forcing payers to place both biosimilar and originator products on formularies

Legislation to Play Significant Role in Drug Pricing Across Specialty Pharmacy

Jennifer Nessel of Pharmacy Times has featured Lanton Law in an article titled “Legislation to Play Significant Role in Drug Pricing Across Specialty Pharmacy.” The article can be read here. In case you have difficulty reading the article, we have featured it below. This article appeared in Pharmacy Times on 2/17/20.

As utilization and drug spending continue to rise, health care providers are looking to resolve key questions that address drug pricing and biosimilar implementation in specialty pharmacy.

Hospital and health systems saw nearly 20% growth in the specialty drug market in 2018, according to Becker’s Hospital Review.2 The diversity of specialty pharmacies has resulted in variability across all operational areas, including tracking adherence, educating patients, dispensing medications, and ensuring drug safety.3

However, although the specialty industry has had a positive impact on health systems’ quality and continuity of care initiatives, the administration of specialty drugs is challenging and highly complex given the number of new therapies and payer requirements.

According to Ron Lanton, III, Esq, principal of Lanton Law and biologics committee chair of the New York State Bar Association, policymakers on the federal level understand that the issue of drug pricing needs to be resolved but they are having a hard time coming to an agreement on how this reform should be done.

The Drug Price Conundrum
Due to the fact that the legislative session has recently begun in many states and in Congress and that it is an election year, it is difficult to determine whether there will be a unifying drug-legislative solution for drug prices.

However, California’s Governor Gavin Newsom (D-CA) has recently proposed that California become the first US state to manufacture its own generic prescription label, with a goal of making affordable medications available to the state’s almost 40 million residents. However, the governor’s proposal has yet to pass the California legislature.

According to Lanton, a manufacturer could leverage its influence over smaller states to stop legislation such as Governor Newsom’s from advancing. However, due to its size and the fact that its policies may influence other state legislatures, California may be a harder market for a manufacturer to confront.

“I [have to] question as to whether California’s efforts would further drive down an already deflated generic drug market and whether California would be able to determine how much it will charge for generics once manufacturing costs, such as raw materials, are concerned. Not to mention how much this is going to cost since that remains unknown at this point in time,” Lanton explained to Directions in Specialty PharmacyTM.  

Although the proposal marks the first state-wide attempt to lower prescription drug prices, there have been attempts within federal legislation to corral drug prices. The Trump administration recently attempted to lower drug costs through its Blueprint to Lower Drug Costs, and the FDA has recently been an advocate for greater generic and biosimilar utilization.

“To date, there has been no silver bullet to deal with rising prescription drug costs. Notwithstanding whether I agree with this plan, I applaud California in trying to solve a problem that refuses to go away quietly,” Lanton said.

Biosimilar Implementation
Specialty drugs, with nearly 700 therapies currently under development for treatment areas such as cancer, hepatitis C virus, HIV, autoimmune disorders, and multiple sclerosis, are expected to claim 9 of the top 10 spots among bestselling drugs in 2020.3 Although specialty drugs have been hallmarked as important treatment options for patients with cancer or other complex diseases, there can be issues surrounding access and affordability.

The cost of specialty medications and the increased adoption of high-deductible health plans have placed a higher financial burden on patients. As out-of-pocket costs increase, including insurance denials, patients are more likely to abandon their treatment plans.4

Biosimilars are potentially more affordable specialty medications for patients with complex disease states. According to Managed Health Executive, biosimilars could bring approximately $250 billion in savings by 2024.3

Pending legislation may have a large impact on biosimilar implementation across the specialty pharmacy landscape. There are several bills that Lanton singled out for the 2020 year1:
 

• HR 4597 Acting to Cancel Co-pays and Ensure Substantial Savings for Biosimilars (ACCESS) Act would eliminate a patient’s co-pay for a biosimilar if they normally would pay full cost of a biologic drug under Medicare Part B. The bill seeks to drive down medical costs by increasing access to lower-cost biosimilar drugs and give Americans more treatment options.

• HR 4629 Star Rating for Biosimilar Act would require the Secretary of Health and Human Services to add a new set of measures to the 5-star rating system under the Medicare Advantage program in order to encourage increased access to biosimilar biological products.

• HR 4913 would require Medicare prescription drug plan (PDP) formularies to include covered generic drugs and biosimilars for which the wholesale acquisition cost is less than that of the reference (ie, brand-name) product. PDP sponsors must also establish specific cost-sharing tiers that apply lower cost-sharing requirements for such covered generic drugs and biosimilars as compared to those for brand-name products. The bill also prohibits PDP sponsors from instituting certain requirements relating to access to such covered generic drugs and biosimilars that are more restrictive than those for brand-name products (eg, prior authorization requirements).

• HR 2375 would prohibit prescription drug companies from compensating other prescription drug companies to delay the entry of a generic drug, biosimilar biological product, or interchangeable biological product into the market.

• S 1681 proposes to educate health care providers and the public on biosimilar biological products. Under this bill, the Secretary shall establish, maintain, and operate a website consisting of educational materials regarding the meaning and use of biosimilar biological products and interchangeable biological products.

Affordable Care Act (ACA) Transition 
On March 23, 2020, the life sciences industry will undergo “the transition,” according to Lanton. Currently, the FDA has and will continue to regulate biologics, but historically the agency regulated biologics as drugs under the Food, Drug and Cosmetic Act instead of as products licensed under the Public Health Service (PHS) Act.

“In order to bring all biologics under the same legal and regulatory system, the Biologics Price Competition and Innovation Act of 2009 found in the ACA included the ‘Deemed to be a License’ provision,” Lanton said.

This meant that 10 years after enactment, on March 23, 2020, applicable biologics will automatically be deemed biologics licensed under the PHS Act. Unfortunately, the statute did not provide instructions to the FDA on how to do this, meaning the agency will decide on which products transition and how, according to Lanton.

“This basically means no more new drug applications or abbreviated new drug applications for select biologics, only biologic license applications of the 351(a) and 351(k) varieties. Also, not only will they be categorized as biologic[s], but they will be subject to the biosimilar, not generic competition. Specifically, drugs [to] be transitioned are insulins and other naturally occurring proteins, such as hyaluronidase, human growth hormones, and menotropins,” Lanton said.

Reference

1. Lanton, Ron, III, Esq. Interview with Pharmacy Times [email]. Accessed February 11, 2020.

2. 5 Trends Health System Pharmacies Can Expect in 2020. Becker’s Hospital Review. Published December 9, 2020. https://www.beckershospitalreview.com/pharmacy/5-trends-health-system-pharmacies-can-expect-in-2020.html. Accessed February 12, 2020.

3. Biologics Build Oncology Drug Pipeline. Managed Healthcare Executive. Published November 1, 2019. https://www.managedhealthcareexecutive.com/news/biologics-build-oncology-drug-pipeline. Accessed February 12, 2020.

4. Galante, Dominic. Accreditation Explosion Among Top Specialty Pharmacy Trends. J Clin Pathways. 2018;4(7):35-38. doi:10.25270/JCP.2018.09.00037. Accessed February 12, 2020.

With the Debate Over Data Privacy Increasing, Senator Gillibrand Proposes Legislation to Create New Data Protection Agency

U.S. Senator Kirsten Gillibrand (D-NY) has announced the creation of new legislation titled the Data Protection Act. According to the Senator’s press release, the bill would create “the Data Protection Agency (DPA), an independent federal agency that would protect Americans’ data, safeguard their privacy, and ensure data practices are fair and transparent. 

The DPA will have the authority and resources to effectively enforce data protection rules—created either by itself or congress—and would be equipped with a broad range of enforcement tools, including civil penalties, injunctive relief, and equitable remedies. The DPA would promote data protection and privacy innovation across public and private sectors, developing and providing resources such as Privacy Enhancing Technologies (PETs) that minimize or even eliminate the collection of personal data. The U.S. is one of the only democracies, and the only member of the Organization for Economic Co-operation and Development (OECD), without a federal data protection agency.”

The proposed bill will have three core missions:

• Give Americans control and protection over their own data by creating and enforcing data protection rules

• Maintain the most innovative, successful tech sector in the world by ensuring fair competition within the digital marketplace

• Prepare the American government for the digital age

Governmental oversight into data is showing no signs of slowing down. Gone are the days where you don’t have to worry about regulations in order to operate. If you are a healthcare, technology and financial services stakeholder, data privacy will be the most important issue to overcome within the next 10-20 years. Ensuring against breaches of personally identifiable information (PII), protected health information (PHI), personally identifiable financial information (PIFI), and other sensitive data will be key to compliance, trust and market competitiveness. Contact Lanton Law so that our experts can use their advocacy and legal services to help you prepare and succeed in a more interconnected world.   

What Is Medicare for All?

Healthcare Policy Update 

What is Medicare for All? 

As the Democratic primary heats up, we believe it is fitting to examine one of the most discussed topics of the campaign season: healthcare. Since last year, we have witnessed an increased debate on whether the country should move towards Medicare for All. But what is this program? 

The idea of a single national health service began in 1912 with President Roosevelt and has evolved over time. Today, this idea is being championed as Medicare for All by Sanders (D-VT) as he is the primary sponsor for S. 1129 titled the Medicare for All Act of 2019. The House also has a companion bill sponsored by Representative Jayapal (D-WA) also known as H.R. 1384.  

In addition to making healthcare a human right, the proposed bill will create a single national health insurance plan for every American. All public insurance plans such as Medicaid, Medicare, the Children’s Health Insurance Plan (CHIP) individual health insurance plans and employer-sponsored health insurance plans would be phased out. However; some federal programs like the Veterans Health Administration and Indian Health Service would continue.

The plan would cover inpatient and outpatient acute care services, preventative services, emergency services, vision, dental, nursing home, and long term care. Foreseeable out of pocket costs would be for some prescription drugs and elective services. 

Cost-sharing such as copayments, deductibles, and premiums would also go away. It is also foreseeable that taxes will increase depending on individual income levels. Private insurance plans would likely continue to exist offering more specialized options for elective services. Lastly, there would be a four year transition period to the new plan should this be the direction of healthcare.

The Medicare for All bill establishes the following: 

• A national health insurance program that is administered by the Department of Health and Human Services (HHS) 

• Among other requirements, the program must (1) cover all U.S. residents; (2) provide for automatic enrollment of individuals upon birth or residency in the United States; and (3) cover items and services that are medically necessary or appropriate to maintain health or to diagnose, treat, or rehabilitate a health condition, including hospital services, prescription drugs, mental health and substance abuse treatment, dental and vision services, and home- and community-based long-term care.

• The bill prohibits cost-sharing (e.g., deductibles, coinsurance, and copayments) and other charges for covered services, with the exception of prescription drugs. Additionally, private health insurers and employers may only offer coverage that is supplemental to, and not duplicative of, benefits provided under the program.

• Health insurance exchanges and specified federal health programs terminate upon program implementation. However, the program does not affect coverage provided through the Department of Veterans Affairs or the Indian Health Service. Additionally, state Medicaid programs must cover certain institutional long-term care services.

• The bill also establishes a series of implementing provisions relating to (1) health care provider participation; (2) HHS administration; and (3) payments and costs, including the requirement that HHS negotiate prices for prescription drugs and establish a formulary.

• Individuals who are age 18 or younger may enroll in the program starting one year after the enactment of this bill; other individuals may buy into a transitional plan or an expanded Medicare program at this time, depending on age. The bill's program must be fully implemented four years after enactment.
  

What are the risks of this bill? 

At this point, the immediate risks would be to the insurance industry. Companies like CVS Health, Cigna, Centene, Humana, and UnitedHealthcare would face an uncertain reality if Medicare for All actually becomes the law of the land. They would have four years to figure out how they can remain in the market by either moving to coverage for elective services or data services for providers. 

Currently, S. 1129 has 14 co-sponsors while H.R. 1384 has 118 co-sponsors. The House version is a lot stronger than its Senate counterpart, especially since the House usually is less moderate than the Senate regardless of which political party is in power. This law will probably not move forward as the Senate is controlled by the Republicans. This does provide insight into how strong this bill is for 2021, which is especially true depending on if the Democrats are able to hold the House and capture the Senate, the White House or even both. If Bernie Sanders does win the nomination for the Democrats his policy ideas such as Medicare for All will continue to gain momentum. No matter who wins the White House in 2020 there will be changes to the current health system. 

For more information contact:

Ron Lanton III, Esq. 

Principal 

Lanton Law 

rlanton@lantonlaw.com

The materials and information provided in this update is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this article or any of the materials or information contained within this article do not create an attorney-client relationship between Lanton Law and the user or viewer. You should contact an attorney to obtain advice with respect to any particular issue or problem. 

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Surprise Medical Billing: What is it and what’s being done to stop it?

Surprise medical billing is an issue that has been widespread for a while, but due to social media and more intense scrutiny, we are now seeing the effects of how common this problem is among patients accessing our healthcare system. According to a study by Kaiser “roughly 1 of every 6 emergency room visits and inpatient hospital stays in 2017, patients came home with at least one out-of-network medical bill.” The question is what is surprise medical billing?

Surprise medical bills generally have two components. The first component is the higher amount the patient owes under her health plan, reflecting the difference in cost-sharing levels between in-network and out-of-network services. 

The second component of surprise medical bills is an additional amount the physician or other provider may bill the patient directly, a practice known as “balance billing.” Typically, health plans negotiate discounted charges with network providers and require them to accept the negotiated fee as payment-in-full. Network providers are prohibited from billing plan enrollees the difference (or balance) between the allowed charge and the full charge. Out-of-network providers, however, have no such contractual obligation. As a result, patients can be liable for the balance bill in addition to any applicable out-of-network cost sharing.

To illustrate a patient can find his or herself in a situation where the patient needs emergency care but cannot select the emergency room or the ambulance provider in a certain situation. Another instance is where a patient knowingly goes to an in-network hospital to receive surgery but does not know that an anesthesiologist is an out of network provider.   

So what’s being done about this? 

The Administration:

Last May, the Administration released a fact sheet on medical billing that advocated for the following: 

• In emergency situations, balance billing for amounts above the in-network allowed amount should be prohibited.

• Before scheduling their care, patients should be given information about whether the care providers are out of their network and what related costs that may bring.

Congress:

In Congress there have been bills this session to combat surprise medical billing, but these solutions have differing philosophical approaches. For example one method calls on the use of arbitration, where an insurer and a provider would advance a proposed payment rate for the service provided to the patient and then an independent arbiter would adjudicate a fair price. On the other hand insurers have been advocating for benchmark payment rates as a solution to surprise medical billing where benchmark payment rates would ensure that providers are paid a standard rate for out-of-network services provided.

H.R. 3630: This bill sponsored by Rep. Pallone (D-NJ) expands restrictions on charging health care plan holders out-of-network rates for certain services. First, the bill requires insurers offering plans that cover emergency services to bill plan holders no more than the median in-network rate for a particular emergency service, even if the service provider is out of network. The bill further prohibits insurers from billing plan holders more than the median in-network rate for nonemergency services provided by out-of-network providers at in-network facilities. Out-of-network providers may not bill plan holders for the difference between the in-network and out-of-network rates for emergency services. The bill further prohibits out-of-network providers from billing plan holders for the difference in rates for nonemergency services provided at an in-network facility unless the provider complies with specified notice and consent requirements. 

S. 1895: This bill sponsored by Senator Alexander (R-TN) applies in-network cost-sharing requirements to certain emergency and related nonemergency services that are provided out-of-network, and prohibits health care facilities and practitioners from billing above the applicable in-network cost-sharing rate for such services. Additionally, it requires health care facilities and practitioners to give patients a list of provided services upon discharge and to bill for such services within 45 days.

Most recently, two U.S. House Committees have moved forward with additional possible solutions to this issue. The U.S. House Ways and Means Committee released a surprise billing plan, that calls for a dispute resolution process between the insurer and the provider. This bill does not address patients who are billed for air ambulance rides but does require providers to share cost data and insurers to share claims data to the Department of Health and Human Services. If enacted this language would be effective in 2022. 

The U.S. House Education and Labor Committee has released its proposal that is similar with what the House Energy and Commerce Committee and the Senate Health, Education, Labor and Pensions Committee (HELP) proposed in December 2019, where insurers would pay out-of-network providers the median in-network rate for that geographic area for amounts up to $750. For larger amounts, either side could request an arbitration process. When a patient receives a surprise bill from an air ambulance provider, the threshold would be $25,000. Both House committees plan to discuss their respective bills this week. 

State Legislative Protections:

States have created their own but varied approaches to surprise medical billing. According to an analysis by The Commonwealth Fund, 28 states have enacted laws to protect enrollees against this issue. Last year Colorado, Nevada, Texas and Washington State passed enhanced or new surprise medical billing laws.   

Conclusion

In conclusion, this issue will continue to be debated in the states until there is a federal solution. With this being an election year, it is uncertain as to whether this issue will pass Congress. While this issue can be a bi-partisan victory for patients nationwide, it is also questionable as to whether either the Democrats or Republicans are willing to give the other side a share in a political victory during the crucial 2020 election season.

Bi-Partisan Political Controversy Surrounding Cashless Stores

On January 30th, the U.S. House Committee on Financial Services held a hearing titled “Is Cash Still King? Reviewing the Rise of Mobile Payments.” The Committee headed by Congresswoman Maxine Waters (D-CA) held this hearing to determine whether businesses should be allowed or prohibited from refusing cash payments in stores. The policy rationale behind the debate is whether cashless stores would have the unintended consequences of harming marketplace access for low-income Americans who do not have a bank account. 

In response to the emerging trend of cashless merchants, two Congressional bills have been introduced. H.R. 2650 titled the “Payment Choice Act of 2019 sponsored by Rep. Payne (D-NJ) has 34 co-sponsors and proposes to prohibit retail businesses from refusing cash payments. Rep. Payne argues for Americans to have a choice of how to pay for goods. Also H.R. 2630 sponsored by Rep. Cicilline (D-RI) titled “Cash Always Should be Honored Act,” proposes to make it unlawful for any physical retail establishment to refuse to accept cash as payment.     

Late last year Pew Charitable Trust released a study titled “Rise of Cashless Retailers Problematic for Some Consumers” that showed cash remains a vital payment option; at least here in the U.S. While the study listed how proponents of going cashless cited issues such as security, efficiency and an improved customer experience, the study stated “Cash made up nearly 40 percent of in-person transactions in 2017, according to the Federal Reserve, and, although its usage continues to decline, cash is still the most widely used payment type. Further, a Pew survey of consumers in 2018 about their payment experiences found that 78 percent used cash at some point in the previous month; for 14 percent (more than 35 million adults), cash remains the primary method of payment.” The study explored other elements of who is using cash and who isn’t. 

The Committee heard from the following witnesses: 

Ms. Deyanira Del Rio, Co-Executive Director, New Economy Project, 

Mr. Usman Ahmed, Head of Global Public Policy, PayPal, 

Mr. Aaron Klein, Fellow, Economic Studies and Policy Director, Center  on Regulation and Markets, Brookings Institute,

Ms. Christina Tetreault, Senior Policy Counsel, Consumer Reports,

Ms. Kim Ford, Executive Director, U.S. Faster Payments Council

We expect this to continue to be a point of contention as our society progresses towards modernization. States such as Massachusetts, New York, New Jersey, Pennsylvania and California have and continue to debate this issue, especially with their concerns on lower income access to the marketplace. If you are a technology stakeholder and you are needing guidance in how to navigate federal and state policies on this issue, contact Lanton Law.   

Lanton Law Presents at New York Bar Association's 2020 Annual Meeting

Lanton Law gave a biosimilars presentation at the New York Bar Association's 2020 Annual Meeting & Expo for the Food, Drug & Cosmetic Law Section in NYC last week. This presentation discussed the biosimilars market as well as the near and long term market and policy implications for both biologic and biosimilars. Contact us for slides and additional information.

Litigation Involving the Illinois Biometric Information Privacy Act May Hold the Key to Future Biometric Policy

The Illinois Biometric Information Privacy Act enacted in 2008 was an important first step in developing policy on biometrics. According to the law, a private entity possessing biometric information accessible to the public must have a retention schedule and policy for permanently destroying biometric information. Additionally, there are restrictions on how a private entity may collect, capture, purchase, receive through trade, or otherwise obtain a person's or a customer's biometric identifier or biometric information. Most importantly, this law requires obtaining written consent prior to collecting biometric information as the law provides a private right of action for anyone injured under the Act. 

Interestingly, the case of Patel v. Facebook is an illustration of how this law applies to our growing dependence on technology. The question in Patel, is whether the collection of an individual's biometric data in violation of the Illinois Biometric Information Privacy Act is sufficient to establish Article III standing. According to the complaint, plaintiffs’ allege that Facebook subjected them to facial-recognition technology without complying with an Illinois statute intended to safeguard their privacy. Since the plaintiff did not allege substantive harm, the defendant moved to dismiss the case on Article III standing grounds. However; the Ninth Circuit stated that “Because a violation of the Illinois statute injures an individual’s concrete right to privacy, we reject Facebook’s claim that the plaintiff have failed to allege a concrete injury-in-fact for purposes of Article III standing.”

This case is in contrast to Santana v. Take-Two Interactive Software, Inc. who in 2017 interesting had the same Illinois law at issue. In this case plaintiff purchased NBA 2K15 and used the MyPlayer feature that allowed the creation of MyPlayer avatars. However; the Illinois Biometric Information Privacy Act’s private right of action allowed for plaintiff to allege that defendant “(1) collected their biometric data without their informed consent; (2) disseminated their biometric data to others during game play without their informed consent; (3) failed to inform them in writing of the specific purpose and length of term for which their biometric data would be stored; (4) failed to make publicly available a retention schedule and guidelines for permanently destroying plaintiffs’ biometric data; and (5) failed to store, transmit, or protect from disclosure plaintiffs’ biometric data by using a reasonable standard of care or in a manner that is at least as protective as the manner in which it stores, transmits, and protects other confidential and sensitive information.”

The Second Circuit in contrast to Patel, found that the plaintiff lacked standing for this claim because they did not allege that this deficient notice created any material risk that would have “resulted in plaintiffs’ biometric data being used or disclosed without their consent.”

So what happens now? First Santana is a summary order which means that this is not binding precedent on the Second Circuit. The Patel court attempted to distinguish itself from Santana by saying that in Patel unlike Santana, the plaintiff did not know that their biometric information was being collected. It seems like the U.S. Supreme Court may be the appropriate forum to settle this split decision by the Court of Appeals. This is especially true as Congress has not yet passed a federal biometric law that could put all questions to rest. Needless to say that as technology companies look for innovative ways to deliver advanced customer experiences, these stakeholders may want to forecast how their new products may be impacted by enacted laws like biometrics. Contact Lanton Law for additional information.  

Amazon’s Hand Scanning Points to the Need for Biometrics Policy

Recently, we have learned of Amazon’s new hand scanning idea to revolutionize consumer interactions via fintech. The idea would involve creating a payment system that would biometrically scan a user’s hand to transfer payment from the user to Amazon, instead of via a credit card, phone application or cash. New point of sale terminals equipped with this technology would be placed in brick and mortar stores so that customers can “travel lighter” by not having to worry about carrying physical payment forms. There are early indications that Visa will be working with Amazon on this idea, along with potentially Mastercard, J.P. Morgan, Wells Fargo and others. While this theoretically sounds like a logical fit for where technology and banking or “fintech” is moving, are there laws in place that govern biometrics? 

Surprisingly, there is not a lot of established law on the issue of biometrics. We first started hearing about biometrics in 2014 with a Congressional bill titled the “Biometric Information Privacy Act,” also known as H.R. 4381. Sponsored by Representative Stockman (R-TX), the bill called for penalties to a business entity, governmental entity or person who knowingly (1) fraudulently obtains personal physiological biometric information relating to an individual; or (2) discloses personal physiological biometric information without permission from the individuals to which the personal physiological biometric information pertains. That bill did not get much traction. 

Congressional members have recently taken a cautious tone when dealing with Amazon’s cutting edge technology. For example, in late 2018 Rep. Jimmy Gomez (D-CA) joined by Senator Edward Markey (D-MA), Reps. Luis Gutiérrez (D-IL), John Lewis (D-GA), Judy Chu (D-CA), Ro Khanna (D-CA), Pramila Jayapal (D-WA), and Jan Schakowsky (D-IL) sent a letter to Amazon Chairman, President, and CEO Jeff Bezos, requesting information about Amazon’s facial recognition technology, branded and sold as “Amazon Rekognition. The letter expressed concern of the technology’s potential impact on communities of color. And while there are no federal rules outlining biometrics, we do see federal agencies speaking with the tech community on utilizing biometric technology for future unspecified projects.

State policy on this issue has been a bit of a mixed bag. While Illinois, Washington and Texas have biometric laws on the books, other states are following suit. Florida, Arizona, Massachusetts, Connecticut and New Hampshire to name a few are states that are debating biometrics, while California is about to undergo implementing its CCPA otherwise known as the California Consumer Privacy Act protections. We wrote a prior blog on the specifics of the new California law, which we believe will be a precursor to similar policies being developed in the near future.  

In conclusion, we expect fintech to continue to be ahead of the law as companies like Amazon push forward to create marketplace solutions that provide convenience and a relatable user experience.  The question becomes whether policymakers are comfortable with the pace of expansion and the awkwardness of proceeding with little to no regulatory oversight on something as personal to us as our biometrics.

Contact Lanton Law for additional information or for strategies on how to deal with unsettled legal and policy within biometrics. 

Will California’s Bold Proposal to Manufacture its Own Generic Drugs Be the Answer to Lower Prescription Drug Costs?

California’s Governor Newsom (D-CA) has made a bold budgetary proposal to become the first state in the Union to manufacture its own generic prescription drug label. The purpose behind this is to make affordable medications accessible to the state’s 40 million residents.

His plan to essentially create a single market for prescription drug pricing where companies would likely have to bid in order to sell their particular medications at a low price. 

According to the Governor’s Proposed 2020-21 State Budget “The Administration has announced a new CalRx generic drug program making California the first state to create its own generic drug label and making the state’s generic prescription drugs available for sale to all Californians. The Budget transforms Medi-Cal to a more consistent and seamless system by reducing complexity and increasing flexibility and establishes a single market for drug pricing within the state.” (Governor Newsom Proposes 2020-21 State Budget; January 10, 2020 click here for reference

The Governor’s bold approach has been foreshadowed by his plans announced last year via his Executive Order of N-01-19. This Executive Order established a few major policy objectives: 

• The Department of Health Care Services shall take all necessary steps to transition all pharmacy services tor Medi-Cal managed care to a fee-for-service benefit by January 2021

• The Department of Health Care Services, in consultation with the Health and Human Services Agency and California Pharmaceutical Collaborative, shall review all State purchasing initiatives and consider additional options to maximize the State's bargaining power, including the Medi-Cal program.

• The Department of General Services, in consultation with the California Pharmaceutical Collaborative, shall develop a list of prescription drugs that could appropriately be prioritized tor future bulk purchasing initiatives or reexamined tor potential renegotiation with the manufacturer.

• Based on the prioritized list, the Department of General Services, in consultation with the California Pharmaceutical Collaborative, shall develop and implement bulk purchasing arrangements tor high-priority drugs. (Governor Newsom Proposes 2020-21 State Budget; January 10, 2020 click here for reference

The Governor's plan has echoes of a plan that Senator Warren (D-MA) introduced in the 115th Congress via the proposed Affordable Drug Manufacturing Act of 2018. This bill’s purpose was to establish an Office of Drug Manufacturing within the Department of Health and Human Services for the purposes of lowering prices, increasing access, and addressing shortages of prescription drugs, including insulin. According to the Senator’s announcement, “Public manufacturing of pharmaceuticals will lower drug prices for millions while improving competition. The Affordable Drug Manufacturing Act tasks the Department of Health and Human Services with the public manufacturing of generic drugs in cases where the market has failed and strengthens the generic market for the long term by jump-starting competition.” (AFFORDABLE DRUG MANUFACTURING ACT; Senator Elizabeth Warren and Representative Jan Schakowsky. Click here for reference. While this bill did not get much traction in Congress, it served as a model of things to come. 

The question is whether the Governor’s proposal will pass the California legislature? At this point I think it is too early to tell. We have already seen multiple attempts to control prescription drug prices without having the government become a market player. We have seen the Administration via various policies such as the Administration’s Blueprint to Lower Drug Costs as well as an active FDA who has been advocating for greater generic and biosimilar utilization as ways to lower costs. 

We have also seen various Congressional attempts to lower prescription costs via legislation aimed at Medicare Part D negotiation to bills attempting to benchmark foreign countries prescription drug costs against our own. 

To date, there has been no silver bullet to deal with rising prescription drug costs. The difference here is that a manufacturer could leverage its influence over smaller states to stop legislation like Governor Newsom’s from advancing. California may be a harder market for a manufacturer to confront due to its size and the fact that its policies are very much likely to influence other state legislatures. I also have a question as to whether California’s efforts would further drive down an already deflated generic drug market and whether California would be able to determine how much it will charge for generics once manufacturing costs such as raw materials are concerned. Not to mention how much this is going to costs since that remains unknown at this point in time. 

Notwithstanding whether I agree with this plan, I applaud California in trying to solve a problem that refuses to go away quietly. Whether this idea works without solving other ancillary issues such as pharmacy benefit manager transparency, drug rebates and patient adherence is another.

Seattle's New Campaign Finance Law Could Be a Sign of Things to Come

As new political alliances emerge and populism continues to push political parties to make faster adjustments, companies need to take a fresh look at how they engage with the political system in order to convey priorities and goals. Political trends happen in small doses before they spread quickly, which is what St. Petersburg, Florida and now Seattle, Washington may be demonstrating.

This week, the city of Seattle via the Seattle City Council passed a ban on “most political spending by “foreign-influenced” corporations and increased election transparency...voting in unanimous support of President M. Lorena González’s Clean Campaigns Act during its Full Council meeting.”  

According to the Council; the highlights of the Clean Campaigns Act include the following: 

1. a ban on foreign-influenced corporations from making any contribution to independent expenditure committees;

2. a cap on all political contributions to independent expenditures of $5,000 (with the exception of limited contributor committees); and,

3. new reporting requirements to increase transparency.

As more corporations become involved in the political process, it is apparent that messaging and compliance with campaign finance laws are becoming essential to corporate strategy. At Lanton law we help organizations within the healthcare/life sciences, technology and finance sectors with legal and government affairs to advance an organization’s priorities. If you are planning on either starting or increasing your advocacy to state or federal officials, contact us so that we can not only ensure that your methods comply but we can also help craft your messaging and follow-ups to help attain the results you are seeking.   

Lanton Law Quoted in Pharmacy Times Article on Rutledge v. PCMA

We were quoted in the recent Pharmacy Times article titled “Supreme Court to Rule on States’ Right to Regulate Pharmacy Benefit Managers.” The article authored by Jennifer Nessel can be accessed at https://www.pharmacytimes.com/news/supreme-court-to-rule-on-states-right-to-regulate-pharmacy-benefit-managers

We have provided the article below in case you are having trouble accessing the link.

The US Supreme Court has announced it will hear a case in the coming months that could determine whether states have the right to regulate pharmacy benefit managers (PBMs).

The US Court of Appeals for the Eighth Circuit, covering Arkansas and 6 other states, previously ruled on Rutledge v. Pharmaceutical Care Management Association. The Eighth Circuit decision favored the Pharmaceutical Care Management Association (PCMA), ruling that the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets minimum standards for voluntarily established retirement and health plans in private industry, superseded an Arkansas law that sought to regulate PBMs.1

Passed in 2015, Arkansas Act 900 required PBMs to raise reimbursement rates for drugs if they fell below the pharmacy’s wholesale costs and created an appeal process for pharmacies to challenge PBM reimbursement rates. This effectively prohibited PBMs from reimbursing pharmacies below the pharmacies’ cost of acquisition.2

In his brief to the US Supreme Court, Solicitor General Noel Francisco disagreed with the Eighth Circuit decision, stating that the ruling was contrary to higher court’s precedent and should be reviewed and corrected. He urged the court to take up the case, siding with attorney generals from 31 states and the District of Columbia that want the US Supreme Court to reverse the Eighth Circuit’s ruling.3

The National Community Pharmacists Association’s (NCPA) vice president, Mustafa Hersi, told Pharmacy Times that the organization is optimistic about the potential for the US Supreme Court to rule in favor of Arkansas, which is represented in the case by the state’s Attorney General Leslie Rutledge. The NCPA, together with the Arkansas Pharmacists Association, previously filed a brief supporting the state before the Eighth Circuit court, and plans to file a similar brief before the Supreme Court.5

“We feel that this matter has national implications. PBMs have been relying on ERISA preemption to avoid meaningful oversight by states, and states like Arkansas have taken it upon themselves to draft well-tailored legislation—that does not implicate or involve ERISA—to regulate PBMs that operate within their state. The implications are that, if the court were to not only grant the request but rule in the favor of Arkansas, that states would be empowered to make more decisions to regulate PBMs and the role that they have in our health care system so that their citizens can make informed decisions with the respect to the choices that they have in health care,” Hersi said.

PBMs are intermediaries between health plans and pharmacies, and provide services such as claims processing, managing data, mail-order drug sales, calculating benefit levels, and making disbursements. Pharmacies acquire their drug inventories from wholesalers. When a patient buys a drug from a pharmacy, they often do so at a lower price through a health plan that covers part of the price. The PBMs then create a maximum affordable cost list that sets reimbursement rates to pharmacies dispensing generic drugs.2

Contracts between PBMs and pharmacies create pharmacy networks. Based upon these contracts, and in order to participate in a preferred network, some pharmacies choose to accept lower reimbursements for dispensed prescriptions. Thus, a pharmacy may lose money on a given prescription transaction.2

Although the Arkansas law set to change this practice, PCMA, the trade association that represents all major PBMs, has pointed to ERISA, saying that it preempts state laws that may relate to ERISA-governed employee benefit plans.4

“The (ERISA) has long enabled employers to provide consistent, nationwide health care benefits due to its preemption of state laws.  We are committed to federal preemption, which is a vitally important issue to ensuring high quality health care for patients,” said PCMA President and CEO JC Scott in a press release. “Unique state laws governing the administration of pharmacy benefits are proliferating across the country, establishing vastly different standards. These inconsistent and often conflicting state policies eliminate flexibility for plan sponsors and create significant administrative inefficiencies. These inefficiencies divert funds from where they should be spent: providing access to the health care services on which employees of plans across the country rely.”

However, Hersi said that ERISA has been used previously by PBM groups to avoid regulation and litigation.

“Previously in the Eighth Circuit, there was litigation in North Dakota that related to the use of ERISA as a means to potentially shield meaningful oversight by states with respect to PBMs that operate in their state. We feel as though, states that have taken steps, like the state of Arkansas, to draft well-tailored legislation to ensure that ERISA is not implicated should be able to do that for their citizens,” Hersai told Pharmacy Times.

Ron Lanton, III, Esq, principal of Lanton Law, a national health care law and government affairs firm in Washington DC, agrees.

“Like many, I was disappointed in the Eighth Circuit's decision. I have advocated for retail pharmacy issues in state legislatures and ERISA and higher insurance costs were the ‘go to’ arguments from opponents like PBMs, who did not want any transparency on their business practices. Without laws like Arkansas, whose intent was to ensure transparency and patient access, pharmacies will have a harder time operating in an already challenging marketplace. I believe there is precedent that shows that the ERISA statute should not be interpreted as broad as opponents of the Arkansas law are calling for.”

The Solicitor General argued that there is no distinction between regulating PBM administration, which is not preempted by ERISA, and regulating plan administration, which could lead to preemption under ERISA. To the extent it affects health plans, the solicitor general adds, the law is not specifically focused on ERISA plans, and a Supreme Court decision would help address conflicting decisions by a federal appeals court on ERISA state law preemption.3

The Solicitor General’s brief increased the likelihood that the Supreme Court to review Rutledge and to address the scope of the States’ authority to regulate PBMs, even when those PBMS are working for ERISA plans.1

The Supreme Court will now set the case for briefing and oral argument for Rutledge, the latter of which would likely occur in March or April 2020.1

“This is an important moment for community pharmacies. There’s strong bipartisan agreement in the states that PBM behavior is out of control. The US is the only country in the world that has turned over the management of prescription drugs to PBMs and the U.S. has the highest drug costs in the world. We don’t think that is coincidence,” said B. Douglas Hoey, pharmacist, MBA, CEO of the NCPA in a prepared statement.5

In addition to Arkansas, the Eighth Circuit covers Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.

REFERENCES

1. Analysis: SCOTUS Could Open the Door for States to Regulate PBMS. NCPA website. http://www.ncpa.co/pdf/analysis-scotus-states-pbms.pdf. Accessed January 10, 2020.

2. Pharmaceutical Care Management Association v. Rutledge Case Report. FindLaw.com Published June 8, 2019. https://caselaw.findlaw.com/us-8th-circuit/1898787.html. Accessed January 10, 2020.

3. Karlin-Smith, Sarah; Owermohle, Sarah. 2020 Drug Price Increases Unlikely to Change Policy. Politco.com. Published January 7, 2020. https://www.politico.com/newsletters/prescription-pulse/2020/01/07/2020-drug-price-increases-unlikely-to-change-policy-488001. Accessed January 10, 2020.

4. ERISA Broadly Preempts State Regulation of PBM-Pharmacy and PBM-Plan Agreements. McDermott Will & Emery website. Published July 26, 2018. https://www.mwe.com/insights/erisa-preempt-pbm-pharmacy-pricing-agreement-2/. Accessed January 10, 2020.

5. Community Pharmacy Cheers SCOTUS Decision to Rule on States’ Authority to Regulate PBMs [press release]. NCPA website. Published January 10, 2020. https://www.ncpanet.org/newsroom/news-releases/2020/01/10/community-pharmacy-cheers-scotus-decision-to-rule-on-states-authority-to-regulate-pbms. Accessed January 13, 2020.

Can Rhode Island Serve As A Model for Digital Currency in Today’s Worldwide Changing Marketplace?

Can Rhode Island Serve As A Model for Digital Currency in Today’s Worldwide Changing Marketplace?

For those that monitor the digital currency market, we have witnessed Chinese President Xi Jinping’s announcement in October 2019 that China should “seize the opportunity” that blockchain presents. According to a study by PR Newswire, the current worldwide crypto-currency market valued at $1.9 billion in 2017 can grow to $84 billion by 2024.     

With the world’s varying economies changing daily, the question that I have heard stakeholders ask is what place will digital currencies have here in the United States? The response here has been skeptical. While we have seen flashes of digital currency acceptance, the treatment of cryptocurrencies in the enacted Tax Cuts and Jobs Act of 2017 shows that we still have a long way to go in understanding how digital currencies have started to become a part of our economy. 

This year Rhode Island has shown why it is one of the early adopter states of acknowledging and strategizing for a blockchain future. In May 2019, the state issued a Request for Proposal or RFP that identified 12 business segments of opportunity (anti-fraud, contracts, medical marijuana, investigations, records, notarization, registration and licensing, shareholder or policyholder voting and crowdsourcing) where Rhode Island is looking to achieve its goals of becoming more efficient, transparent and business-friendly to name a few. 

At this point in time, the idea of blockchain technology or digital currencies seem a long way off. However; most innovative ideas always seem like they are being discussed earlier than they should until a majority of the public fully understands their function and then fully embraces the potential.  

At Lanton Law, we are monitoring policy, market and technology trends when it comes to innovation. If your company is considering investing in digital currencies or blockchain technology and are looking for the “next Rhode Island” or are wondering how state or federal policy will impact your business strategy, contact us today. 

Georgia Supreme Court Sets Data Breach Precedent

In 2016, the Athens Orthopedic Clinic in Georgia was hacked by an anonymous hacking group called the “Dark Overlord.” The group’s action caused a major data breach and affected approximately 200,000 patients. The information obtained involved social security numbers, health insurance information, birth dates, and addresses. 

The Clinic refused to pay the ransom to the thief and advised those affected patients to set up anti-fraud protections. A lawsuit by the victims ensued seeking damages from the Clinic, which caused the courts to consider whether a data breach victim must suffer actual financial loss to be compensated or is the threat of future harm enough to make a claim for compensation? 

On December 23, 2019 the Georgia Supreme Court in Collins et al. v. Athens Orthopedic Clinic, P.A. reversed the Georgia Court of Appeals decision and ruled that “the injury the plaintiffs allege that they have suffered is legally cognizable.” 

As we rely more on technology and sensitive information such as our healthcare records are quickly exchanged from one healthcare provider to another, the risk of data breaches rises. Protected health information (PHI) often includes items such as Social Security numbers, birth dates, home and email addresses, and diagnosis codes can be used by hackers to buy prescription drugs online, purchase medical equipment, or create false identifications, to name a few. It seems that health care data is now more valuable than credit card data since health care data fraud takes longer for a consumer to both realize and report. 

That is why it is even more important for stakeholders that traffic in data to not only ensure that these stakeholders have adequate security protocols to protect against data breaches, but these stakeholders must develop rapid response plans to alert affected parties and assess potential monetary damages. Lanton Law assesses stakeholders potential risks and makes recommendations to help limit stakeholder liability. Contact Lanton Law to get started!    

Pharmacy Times Recaps Lanton Law's NASP Presentation on the FDA Biosimilars Action Plan

Pharmacy Times did a recap of our National Association of Specialty Pharmacy presentation on the FDA Biosimilars Action Plan, during NASP’s Annual Meeting this fall. The original story from Pharmacy Times can be found here. We have provided the article below in case you have trouble accessing the story. 

During the 2019 National Association of Specialty Pharmacy Annual Meeting and Expo, Ron Lanton III, Esq, reviewed the FDA Biosimilars Action Plan, its implications for the biosimilar marketplace, recent legislation set to influence the biosimilar pathway and drug accessibility, and the future of the biosimilar market.

Lanton began his presentation referencing the Biologics Price Competition and Innovation Act, which was enacted with the intent to balance innovation and consumer interest via an abbreviated approval pathway for biologic drugs that are biosimilar to or interchangeable with FDA-approved medications.

The FDA has since made substantial progress toward the scientific and regulatory policies needed to facilitate the abbreviated pathway. It established the Therapeutic Biologics and Biosimilars Staff under the Center for Drug Evaluation and Research, which supports consistent review of policy development for all biosimilars and interchangeable products, Lanton said. The agency also created the Biosimilar Product Development Program to facilitate the rapid development of biosimilar and interchangeable products. Finally, it has prioritized efforts to share regulatory information of stakeholders by publishing policies and documents on exclusivity.

Lanton noted the FDA Biosimilars Action Plan was released to allow the federal agency to manage the review and licensure pathway to facilitate biosimilar legislation; modernize policies that govern the development of biosimilars to make the process more efficient; educate clinicians, payers, and patients regarding biosimilar products and the rigorous evaluations that they go through; and modernize regulatory policies to accommodate new scientific tools that enable comparison between biosimilars and reference products, which may reduce the need for clinical studies.

The Biosimilars Action Plan also calls for the development of an application review templated for 351(k) biological licensing indications, improving coordination and supporting activities in the biosimilar/interchangeable process, accelerating the response time to determine the appropriate stakeholders, and increasing stakeholder communication, Lanton said.

The FDA said these actions and the revised guidelines are meant to prevent companies from blocking new biosimilars from entering the market and to stop manufacturers of reference products from manipulating the exclusivity provision to fend off biosimilar entry to the marketplace.

According to Lanton, the FDA is also going to issue a notice of how, if requested, it would go about trial protocols of applicants to determine whether its new protocols give enough safety protections for biosimilars in term of strategy. In May 2019, the FDA released a document seeking to promote competition in the biologic development market by providing final guidelines for interchangeable biologics.

“The FDA is updating guidelines now to provide additional clarity to biosimilar applicants who seek approval for all conditions for use for which the reference product is licensed,” Lanton said during the presentation. “The agency is also developing a proposed rule on the interpretation of the definition of [biological product], which will provide additional clarity and predictability.” Lanton referenced the following Congressional bills in his presentation:

• The Creating and Restoring Equal Access to Equivalent Samples Act, still under consideration, seeks to speed the entry of lower-priced drugs into the market.

• The Biologic Patent Transparency Act codifies the FDA’s Purple Book as a single searchable list and requires additional information to be published in it.

• The Affordable Prescriptions for Patients Through Improvements to Patent Litigation Act of 2019 limits to 20 patents that can be claimed for a reference product sponsor and tries to stop the “patent thicket.”

• The Prescription Drug Pricing Reduction Act of 2019 has the sole purpose of lowering drug prices. It wants to require that prescription biosimilar and biologic manufacturers that don’t have a Medicaid drug rebate agreement to report average sale price information to the Health and Human Services Secretary, who will use that informmation to establish the payment rates.

“Given the relative newness of biosimilars, the FDA is taking a proactive role toward giving clinicians, patients, and payers information about biosimilars and interchangeable products,” Lanton said. “They are doing this by developing educational materials and videos, explaining the concepts that the agency can use. The FDA will continue to evaluate if these firms are using statutory or regulatory requirements to appropriately delay the approval of a biosimilar or interchangeable companion.”

In referencing the future of biosimilars, Lanton stated that by 2020, there will be 56 new products in clinical development and as much as $110 billion in savings to health systems in Europe and the United States. Furthermore, there will be a 30% reduction in price per treatment day compared with originator biologics.
 

Federal Privacy Laws Are Currently in the Making

In November 2019, we published a blog post titled More Data Oversight on the Horizon that discussed increasing Congressional oversight over data privacy, while highlighting the importance of the Online Privacy Act of 2019. 

In preparation for 2020, Lanton Law is forecasting that it is more likely than not that some form of federal privacy legislation will become law in 2020. One proposed legislative candidate for privacy in 2020 is the Consumer Online Privacy Rights Act (COPRA). This bill is sponsored by Senator Cantwell (D-WA).

According to Senator Cantwell’s press release, the Act otherwise known as S.2968 “establishes privacy rights, outlaws harmful and deceptive practices, and improves data security safeguards for consumers shopping or conducting business online.” The release discusses specifics stating that (COPRA) “gives Americans control over their personal data; prohibits companies from using consumers’ data to harm or deceive them; establishes strict standards for the collection, use, sharing, and protection of consumer data; protects civil rights; and penalizes companies that fail to meet data protection standards. The legislation also codifies the rights of individuals to pursue claims against entities that violate their data privacy rights.” 

The question is whether this legislation will be able to pass in a hotly contested election year. At this point it is unknown. This bill thus far has no Republican co-sponsors so it has yet to gain bi-partisan traction. However; with the new and increasing scrutiny surrounding tech companies and their treatment of consumer data, we anticipate that the political winds may shift against technology companies. It’s better to be aware of trends instead of being caught off guard by them. 

Lanton Law helps tech and fintech stakeholders navigate both the regulatory and legislative landscape on a state and federal level. If you have questions about compliance, new potential business strategies or what the policy landscape will look like for your business, contact us to learn about your options.  

Conflicting CBD Activity Calls for Increased Compliance and Business Planning

Lanton Law gave a December 2019 webinar with the American College of Apothecaries ACA on CBD. Since then we have seen two significant developments. 

The first was with the U.S. Food and Drug Administration (FDA) itself. In November 2019, the industry saw the agency’s announcement of 15 warning letters it sent to companies for illegally selling products containing CBD in “ways that violate the Federal Food, Drug, and Cosmetic Act (FD&C Act).

The FDA shortly afterwards issued a revised Consumer Update detailing safety concerns about CBD products more broadly. In the document titled “What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD,” FDA indicated that “Based on the lack of scientific information..., it cannot conclude that CBD is generally recognized as safe (GRAS) among qualified experts for its use in human or animal food.” 

With the industry already facing several compliance questions, this new information from FDA has definitely made this issue even more confusing. 

States on the other hand have been pressing forward with making their own policies. In New York, Governor Cuomo signed (S.6184/A.7680) which establishes a regulatory framework for the production and sale of hemp and hemp extract in New York State. 

According to the Governor’s press release “The measure also requires the hemp industry to test and label their products, protecting consumers from potential harm. The legislation was signed pursuant to a chapter agreement, which provided for a more streamlined regulatory pathway for hemp products, granted the Department of Agriculture and Markets supervision over hemp growers and the Department of Health supervision over hemp extract; created a registration requirement for sellers of hemp extract products; made conforming regulatory changes to the 2018 Farm Bill; and defers decision making on hemp extracts, including CBD, as additives for food and beverages.” 

The state will host a hemp summit in January to continue policy discussions on this issue.

With the collective market for CBD sales expected to exceed $20 billion in the United States by 2024, according to BDS Analytics and Arcview Market Research, there are many stakeholders who would benefit from clarity in this area. If you are either thinking about or are currently selling CBD and are unsure how your business model fares, contact Lanton Law so that we can go over your business model, assess potential risks and help you plan for both pending legislative and regulatory actions.