Apple and Google Announce Digital Contact Tracing Partnership Amid Privacy Concerns

Apple and Google have announced their partnership to enable Bluetooth technology to help interested stakeholders such as healthcare agencies and governments to fight COVID-19. The announcement describes the tech companies’ intent of “releasing draft documentation for an Exposure Notification system in service of privacy-preserving contact tracing.” The most important thing to note is that the companies will not be building contact tracing apps but will be providing tools around a unified programming interface that will allow these aforementioned stakeholders to create their own contact tracing applications. And while this partnership and others like it are a much needed resource during our fight against COVID-19, privacy concerns with how these companies are using our information loom in the background. 

So what is contact tracing? It can come in two forms. The first form is human to human tracing, which is described in the Centers for Disease Control and Prevention’s (CDC) list of core principles. 

• Contact tracing is part of the process of supporting patients with suspected or confirmed infection.

• In contact tracing, public health staff work with a patient to help them recall everyone with whom they have had close contact during the timeframe while they may have been infectious.

• Public health staff then warn these exposed individuals (contacts) of their potential exposure as rapidly and sensitively as possible.

• To protect patient privacy, contacts are only informed that they may have been exposed to a patient with the infection. They are not told the identity of the patient who may have exposed them.

• Contacts are provided with education, information, and support to understand their risk, what they should do to separate themselves from others who are not exposed, monitor themselves for illness, and the possibility that they could spread the infection to others even if they themselves do not feel ill.

• Contacts are encouraged to stay home and maintain social distance from others (at least 6 feet) until 14 days after their last exposure, in case they also become ill. 

As you can see this is a very specialized skill that needs to be timely executed to prevent further spread of disease. 

According to the CDC digital tracing on the other hand is another set of tools that can be used to “expand the reach and efficacy of contact tracers.” This is what we are seeing from the Apple-Google partnership, as well as other applications (apps) that we see flooding the market in an effort to provide additional tools to combat COVID-19. 

Digital contact tracing can theoretically be more efficient because it doesn’t rely on memory, but requires user cooperation where people would have to download the relevant apps on their phones. In order for something like this to have an almost “real time” effect, a large number of people would have to adapt to this technology. Are we as a society ready for this? While emergencies like this would seem like the answer would be a common sense “yes” there are a lot of other issues at play such as are positive alerts to a user accurate and will a user’s information be protected? A great example of user worry could come in the form of potential genetic discrimination of which we wrote a prior blog post.  

To date the skepticism of technology companies being able to use healthcare data has been rampant. For example, several industry stakeholders were surprised by the Wall Street Journal’s (WSJ) article  that Google has been working since 2018 on a "secret" project involving patient data with Ascension, the St. Louis-based nationwide health system. 

Project Nightingale would involve having Google be provided with millions of health records of U.S. citizens, which has prompted a recent follow up letter by three U.S. Senators to gain additional insight into the project’s specifics. Facebook has a new tool called Preventive Health that seeks to “connect people to health resources and checkup recommendations from leading health organizations.” And while Microsoft launched Microsoft Cloud for Healthcare; whose program applies “flexible capabilities to power individualized experiences, improve team collaboration, and unify data to unlock real-time insights,” demonstrates that while technology and healthcare are merging, the need for addressing privacy concerns remains at the forefront. 

We need all the tools we can get our hands on during this difficult struggle against COVID-19, especially when it comes to digital contact tracing. There is no doubt that we need the efficiencies that technology has to offer. The potential is there, but there has to be buy in from a majority of people in order for this to work. Not only do we have to continue to work to ensure that everyone has access to smartphone technology, but we have to put some additional “safety checks” in place to ensure that ‘anonymized’ aggregated data isn’t sold, that sensitive protected health information (PHI) is guarded and the proper laws/regulations are put in place so that we can learn from the painful lessons that COVID-19 has taught thus far. 

Lanton Law Interviews the Massachusetts Pharmacists Association on DIR & Provider Status

We are excited to have Lindsay De Santis; Executive Vice President of the Massachusetts Pharmacists Association (MPhA) do a blogcast with us. Our conversation covers pharmacy DIR (direct and indirect remuneration) fees, pharmacy provider status and COVID-19.

Click here to access the Lanton Law blogcast.

Will Immunity Passports Lead to Future Genetic Discrimination?

There is no need to rehash the harsh societal effects that COVID-19 has had not only on our psychological and financial wellbeing, but also on the vulnerable population’s immune system. Those having to deal with underlying health conditions such as diabetes, obesity, hypertension have been especially at risk, including some young and healthy individuals. As we race to understand the rationale behind why such an erratic disease impacts some but not others, the question that frequently comes up is whether a person’s genes has something to do with becoming infected?

While it seems like we have been discussing gene therapy for some time, understanding how to harness the potential of the human genome is still in the “early innings.” According to the National Human Genome Research it was found that there are about 20,500 genes in human DNA. This information had taken 13 years to find and was completed in 2003. There are so many things to learn about our genes in order to be precise enough to fully realize how we can get to the ultimate improvement in patient outcomes. Unfortunately, it seems as though time is not on our side when needing to understand how our genes play a key role in fighting this terrible disease. It seems like the best thing to mitigate our circumstances until we get a vaccine is how to contain it. From social distancing to contact tracing, one idea that has been gaining steam on re-opening the economy is the possibility of immunity passports. 

So what are immunity passports? The World Health Organization (WHO) states “Some governments have suggested that the detection of antibodies to the SARS-CoV-2, the virus that causes COVID-19, could serve as the basis for an ‘immunity passport’ or ‘risk-free certificate’ that would enable individuals to travel or to return to work assuming that they are protected against re-infection. There is currently no evidence that people who have recovered from COVID-19 and have antibodies are protected from a second infection.”

Currently there is so much fear and mistrust regarding information on COVID-19 that in order for this to work in my opinion, we would have to have certainty in antibody testing, as well as a 100% understanding about how long immunity actually lasts. Aside from a vaccine, this would certainly move economies forward as a way to slowly start to recoup the financial losses we have witnessed worldwide. But could well intentioned things like immunity passports lead to something unintended such as genetic discrimination? 

According to the National Institutes of Health (NIH), genetic discrimination occurs when people are treated differently by their employer or insurance company because they have a genetic mutation that causes or increases the risk of an inherited disorder or they have a familial history of a specific health condition. Surprisingly, this issue could determine whether someone gets hired or fired and could mean the difference between receiving comprehensive coverage.

GINA does provide a solution to genetic discrimination. The Genetic Information Nondiscrimination Act (GINA) provides for protection against this type of discrimination. Title I of GINA prohibits genetic discrimination in health insurance, and Title II prohibits genetic discrimination in employment.

Under the first part of the act, it is illegal for health insurance providers to use or require genetic information to determine whether a person is eligible for coverage. The second part prohibits employers from using a person’s genetic information in making decisions about hiring, promotion, and various other terms of employment.

However, GINA and similar laws do not protect individuals from genetic discrimination under every circumstance, such as an instance in which an employer has fewer than 15 employees. The act also does not apply to those serving in the military or those insured under the Veterans Health Administration or Indian Health Service. Furthermore, the act does not protect against genetic discrimination in other forms of insurance, including life, disability, and long-term care, according to the NIH.

While GINA’s development was designed for genetic discrimination, I believe that we have not yet seen how this law could potentially evolve from its original intent, especially in this circumstance. Constantly looking through both a policy and legal lens, I see potential problems with an immunity passport. While I understand how this is designed to get the economy back on track, how will individuals be judged regarding obtaining an immunity passport. Is this something you will be required to have by an employer? Are there privacy issues that will evolve from having to declare whether you have an immunity passport? Will employees be looked at differently if they have a passport versus those that don’t? Will an employee’s cost of insurance increase because they happened to get COVID-19?

COVID-19 has changed our lives in ways that we cannot yet imagine. As we start transitioning back towards living with this complex disease until there is a cure, our minds are currently undergoing small yet lasting changes that will unconsciously shape the way we make decisions going forward. It is very foreseeable that society will try and mitigate risks to businesses, meaning that it is not unforeseeable that companies may try and understand any genetic risks that may exist to employees. Whether this is the new normal, a threat to privacy or something else remains to be seen. 

*Disclaimer: The information provided in this blog post is an opinion and is for informational purposes only and not for the purpose of providing legal advice. Access to this information does not create an attorney client relationship between Lanton Law and the viewer. You should contact your attorney to obtain advice with respect to any particular issue or problem.

PBM U.S. Supreme Court Case Rescheduled for this Fall

We at Lanton Law along with many other pharmacy stakeholders have been closely monitoring the events surrounding the pending U.S. Supreme Court case of Rutledge v. Pharmaceutical Care Management Association.

We released our first blog about this case in December 2019 and are proud to be quoted in the January 2020 Pharmacy Times article regarding Rutledge.

To refresh the U.S. Supreme Court has provided a brief summary of the facts: 

Thirty-six States have enacted legislation to curb abusive prescription drug reimbursement practices by claims-processing middlemen-known as pharmacy benefit managers (PBMs)-who make money on the spread between the rates at which they reimburse pharmacies and the drug prices they charge health plans. In response, Respondent Pharmaceutical Care Management Association (PCMA), a PBM trade association, has launched a barrage of litigation across the country arguing that state regulations of PBMs generally, and state drug-reimbursement regulations specifically, are categorically preempted by the Employee Retirement Income Security Act of 1974 (ERISA). Disregarding this Court's ERISA precedent (and contrary to the First Circuit's conclusion that PBM regulations are categorically not preempted by ERISA), the Eighth Circuit embraced that argument.

The question presented is “Whether the Eighth Circuit erred in holding that Arkansas's statute regulating PBMs' drug-reimbursement rates, which is similar to laws enacted by a substantial majority of States, is preempted by ERISA, in contravention of this Court's precedent that ERISA does not preempt rate regulation.”

Due to COVID-19 the U.S. Supreme Court has rescheduled arguments for this case to its October 2020 term. 

Lanton Law will continue to monitor the developments around Rutledge v. PCMA and will advise our clients accordingly. If you have an issue that we can assist you with please feel free to contact us.    

The New Concerns of a Digital Workplace

We are honored to have worked with STACK for Pharmacy on a great and timely webinar titled “The New Concerns of a Digital Workplace. COVID-19 has changed the way that we work, communicate and transfer information and finances. We discuss the early trends of what we are seeing from a transitioning marketplace.

Click here to access the webinar

Upcoming Webinar with STACK and Lanton Law

STACK will be teaming up with Lanton Law to do an April 22, 2020 webinar at 1:00 PM EST titled “The New Concerns of a Digital Workplace.” Join Jonathan Ogurchak, Founder & CEO of STACK and Ron Lanton III, Esq, Principle of Lanton Law to discuss the following:

Challenges facing healthcare organizations with a rapid deployment to “work from home” environments

Considerations to ensure ongoing compliance and ensure appropriate use

Future areas for advancement related to the “new normal” organizations are likely to face

Click here to register

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.

Private Equity Presence Grows in Physician Practices As Well As Congressional Scrutiny

The Changing Market

As the consolidation of independent physician practices continues, one finds that there is a new player in the corporatization of medicine. While hospitals, health systems and insurers continue to make physician practice acquisitions, these entities suddenly find themselves competing against private equity firms.

Several physicians are finding themselves struggling in today’s reimbursement landscape. Whether you are in orthopedics, oncology, dermatology, urology, women’s health and gastroenterology for example, not only are reimbursement pressures much worse than in prior years, but transitioning to value based care has caused these and other physician practices to struggle with acquiring specialized personnel, new workflows and innovative technology.

What is Private Equity?

Private equity firms are backed by money from high net worth individuals, sovereign wealth funds, pensions funds, etc. that seek to invest in specialized sectors for an average return of 20% within 5-7 years. Once these firms take a majority stake in these practices and scale down costs to make the practice efficient, these same firms exit their positions after a short period while the remaining physician owners profit from the resale. The goal is to target a market, region or to create a multi-specialty practice. Besides the goal of financial returns, these firms can use their market clout to negotiate better rates and compete for more contracts with payers. 

To date, there are many questions surrounding private equity firms purchasing physician practices. Do they improve patient outcomes? Do all employees within these new scaled practices work for the private equity firm? What legal liabilities exist for the physicians? Are physicians considered owners or employees in these newly acquired entities? 

Private Equity Transactions Debated by Congress

Transactions such as the ones described above are now being debated by Congress. The House Ways and Means Committee is debating whether transparency is warranted by private equity firm ownership of physician practices. Should these firms have to file disclosures with the Internal Revenue Services (IRS) on Medicare payments, as well as provider rents and mortgages? Additionally, the question of whether an increase in patient surprise billing is the result of private equity ownership is also currently being examined.    

How Can Lanton Law Help?

Lanton Law’s advocacy and legal services  can help physician practices think about your options in this changing marketplace. If your position is not to sell your firm, we can help you with both legal and advocacy options that will assist with better reimbursement and network access. If you are thinking of selling your practice we can help walk you through your strategies. Once you sell, your practice will transition not only operationally, but also how you care for your patients. Not having complete managerial control will likely occur after the transaction so making sure that you sell to the right stakeholder is crucial. Contact us today for more information.  

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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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.

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.  

Texas v. United States (An ACA Ruling)

Lanton Law has been both monitoring and advising clients on a controversial case winding through the federal courts called Texas v. United States, which focused on the constitutionality of the Affordable Care Act (ACA). 

On December 18, 2019 the industry witnessed the U.S. Court of Appeals for the 5th Circuit issue its ruling, which found that while the individual mandate is unconstitutional, the federal district court must decide on whether the remaining portion of the ACA could remain intact. The previous federal district court ruled that the ACA’s individual mandate is no longer considered a tax, meaning that Congress does not have a constitutional authority to enforce the individual mandate. Ultimately the district court stated that since the mandate was not a severable provision from the rest of the ACA, the remainder of the ACA was thus unconstitutional.      

In contrast, the U.S. Court of Appeals for the 5th Circuit reasoned:     

“First, there is a live case or controversy because the intervenor-defendant states have standing to appeal and, even if they did not, there remains a live case or controversy between the plaintiffs and the federal defendants. Second, the plaintiffs have Article III standing to bring this challenge to the ACA; the individual mandate injures both the individual plaintiffs, by requiring them to buy insurance that they do not want, and the state plaintiffs, by increasing their costs of complying with the reporting requirements that accompany the individual mandate. Third, the individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power. Fourth, on the severability question, we remand to the district court to provide additional analysis of the provisions of the ACA as they currently exist.”

 So what happens next?

First the status quo remains for now as the individual mandate has been repealed by Congress. And while it is anticipated that the U.S. Supreme Court will have a say again on this issue in 2020, the defendants in this case comprised of a coalition of Democratic state attorneys general are considering asking the Supreme Court to examine the ACA for a third time since 2012. The question is whether the U.S. Supreme Court would issue any decision before the lower federal courts have completed their review of the case. Whether the Court grants an expedited review is currently unknown. 

If you have additional questions about this issue or you are trying to comprehend how this case will impact you as a stakeholder, contact us by clicking here. 

New Draft Importation Rule Released

A new pilot program that allows states to import from Canada and allow manufacturers to voluntarily import has been announced via a draft rule through HHS and the FDA. 

The program would give states and nonfederal government entities the ability to import from Canada by applying to the FDA. Higher priced drugs such as biologics are not included in the draft rule. Here are some of the main points: 

• The drugs must be approved in Canada. 

• It does not include, controls, biologics or intravenously injected drugs. 

• States can work with wholesalers and pharmacies to create an application.

Canadian officials have already stated that the plan is unlikely to work as Canada is only 2% of the global market versus 44% from the U.S. This means that Canada will not be able to meet demand. 

A separate program that would allow for drug company importation of its own products does not take into account rebates or the best-price rule. The program requires that the drugs go through a separate re-labeling and testing that will have an additional cost. Additional costs may either cancel out any savings or make the drugs more expensive. 

This rule is in response to several states such as Florida who have created legislation in 2019 to allow for the importation of drugs from Canada. 

For more information regarding importation in general click here. 

Here is a link to the proposed rule. 

At Lanton Law we help our clients with business strategy, legal, compliance, as well as regulatory and government affairs issues. We help various entities within the supply chain be prepared for tomorrow by knowing the landscape of today. If you have questions or are looking for innovative ways to realize your organization’s priorities, click here to contact us.