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.  

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. 

What Will Happen to Biosimilars in the USMCA Agreement in 2020?

Back in August I started an analysis of how biosimilars will be impacted in the new United States-Mexico-Canada Agreement (USMCA). To refresh, in a follow up on a 2016 campaign promise to renegotiate the North American Free Trade Agreement (NAFTA), the Administration has been engaging Mexico and Canada in an effort to create and ratify the USMCA. 

One of the major points of contention in the negotiation centered on the exclusivity period of biologics. Biosimilar manufacturers raised concerns about the fact that the USMCA would award biologic manufacturers 10 years of market exclusivity. 

Fast forward to December 19, 2019 when the U.S. House of Representatives approved the USMCA with a bipartisan vote of 385-41. When it comes to biologics, the status quo remains as the exclusivity period continues to be 12 years. A provision that would have guaranteed 10 years of market exclusivity for biologic drugs was stripped out of a deal between Congress and the Administration. 

Senate Majority Leader McConnell (R-KY) stated that the U.S. Senate would consider the measure in early 2020. The reason for the delay according to the Senator is due to the looming impeachment trial for President Trump. Stay tuned for developments.

If your organization intends to either start or increase your utilization of biologic/biosimilar products or you are interested in understanding how to invest in these emerging products, contact us today. 

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. 

U.S. Solicitor General Advocates for writ of certiorari to be granted in Rutledge v. PCMA

One case that pharmacy stakeholders have been closely monitoring is  Rutledge v. Pharmaceutical Care Management Association. 

According to the U.S. Supreme Court blog (SCOTUSblog), the issue in this case is “whether the U.S. Court of Appeals for the 8th Circuit erred in holding that Arkansas’ statute regulating pharmacy benefit managers’ drug-reimbursement rates, which is similar to laws enacted by a substantial majority of states, is pre-empted by the Employee Retirement Income Security Act of 1974, in contravention of the Supreme Court’s precedent that ERISA does not pre-empt rate regulation.”   

As part of his response to the Court’s “CVSG” or “Call for the Views of the Solicitor General” to provide a position on an issue such as this, U.S. Solicitor General Noel Francisco on December 4, 2019 submitted his brief recommending that the Court review the Eighth Circuit’s holding that ERISA preempts state laws that regulate PBM-pharmacy reimbursements. The Solicitor General’s position advocates for the overturning of the appeals court decision. The brief can be read here.  Having this letter from Solicitor General can help push the Court into granting cert to hear the merits of this case. 

Lanton Law uses law and government affairs to advocate on behalf of supply chain clients, which includes retail, specialty, LTC pharmacies as well as home infusion providers. All of these providers have ties to PBM business practices via reimbursement. Lanton Law will continue to monitor the developments of Rutledge v. PCMA and will advise our clients accordingly. If you have an issue that we can assist you with such as us being your in house counsel or lobbyist, contact us and we’ll be happy to walk through your options.   

Not knowing what’s in your contracts can stop your business expansion

No matter if you are a hospital, physician, pharmacist, manufacturer, SAAS or Health IT provider, the lifeblood of your business is in your contracts. As an attorney what amazes me time after time is how contracts are often overlooked by businesses.

When I speak with clients, many of them tell me that either they will just sign a contract to get access to something or on the back side, they will simply plan to get out of a contract if they aren’t happy with the party they contracted with. Situations like this are when things get interesting.

For clients contemplating entering into a contract, I usually ask the following: 

• Were you were able to negotiate your priorities into the contract? 

• Are you using standard terms and conditions from prior agreements?

• Are you thinking about how your business may evolve over time? 

On the flip side for clients that plan on exiting a contract I ask:

• Do you know what happens if you plan to get out of the contract? 

• Are there penalties for terminating?

• Are you prohibited from re-entering a certain market?

Many businesses don’t know the answers to these questions. Not knowing your rights before making a decision to either enter or exit a contract can cost your business thousands of dollars. 

Fortunately, there is something you can do about this. Clients have been using Lanton Law to help them understand not only what’s in their contracts, but Lanton Law gives you suggestions on how to negotiate a better deal, while also giving you a risk assessment for clients considering leaving a contractual relationship. Having a contract strategy will definitely save you from making a costly decision. 

Click here to contact Lanton Law now to schedule a contract risk assessment. Taking this small proactive step will not only help protect your interests, but it will allow you to more confidently plan for your future business expansion.

Lanton Law Quoted in New Medscape Article On Biosimilar Insulin

Lanton Law was quoted in a new Medscape article on biosimilar insulin. Click here to read the article

If you are having trouble accessing the link we have included the article for you below:

A new US Food and Drug Administration (FDA) policy may help get novel biosimilar insulins to market more quickly, but it will be no guarantee that the products will be significantly less expensive than branded insulins, say analysts.

The FDA recently issued new draft guidance for insulin biosimilar manufacturers.

The recommendations "may result in a more efficient development program that could ultimately bring biosimilar or interchangeable insulin products to the market more quickly," said Brett P. Giroir, MD, acting FDA commissioner, in a statement by the agency. 

"The availability of approved biosimilar and interchangeable insulin products is expected to increase access and reduce costs of insulin products," he added.

Meanwhile, the Republican leaders of the US House Energy and Commerce Committee have written to the nation's largest insurers to demand that they provide information on their involvement in the rising price of insulin.

The committee wrote to Anthem, Blue Cross Blue Shield, CVS Health, Cigna Corporation, Kaiser Permanente, and UnitedHealth Group seeking transparency on rebate programs with pharmacy benefit managers (PBMs); detailed information on how they design their benefit plans and formularies; how much enrollees in high-deductible plans pay out of pocket for insulin; and whether the insurers offer patient assistance programs to help defray the cost of insulin.

"Unfortunately, even though the average net price that manufacturers are receiving for many insulin products is decreasing and PBMs are working with health plans to help reduce the cost of insulin for health plans, many Americans are facing increased out-of-pocket costs for their insulin at the pharmacy counter," the members of Congress wrote.

"Floodgates Opening": Clearer Path to Market for Biosimilar Insulins 

Analysts and one industry group applauded the FDA draft guidance, stating that it gives a much clearer picture of how products can be developed and approved.

The new guidance — which will be made final once the agency takes public comments into account — has been expected for some time. The FDA issued final guidance on interchangeability of biosimilars in May and held a public hearing specifically on interchangeability of insulin biosimilars not long after.

The Association for Accessible Medicines (AAM) said it was continuing to review the draft guidance but believes it reflects much of the concerns and feedback it gave the agency at the May hearing.

"We find FDA's flexibility on the implementation of statutory interchangeability requirements to be particularly positive," Christine Simmon, AAM senior vice president for policy and executive director of the Biosimilars Council told Medscape Medical News.

"This really was the floodgates opening," said Ron Lanton, III, a Washington, DC-based attorney who studies regulatory policy and has represented primarily small pharmacy chains.

"The United States is not an easy place for doing business when you're talking about biosimilars," he told Medscape Medical News.

The FDA has approved 26 biosimilars, including two insulins which, to date, have been labeled "follow-ons", Basaglar (insulin glargine, Lilly) and Admelog(insulin lispro, Sanofi), as they were brought to market under a different regulatory pathway, but are considered to be copycat or biosimilar versions of the respective branded insulin products.

The guidance "is one step forward for manufacturers" to say, "now that we know what the rules are, we can start to compete," said Lanton.

He believes the draft guidance, if ultimately adopted, will get biosimilars to market faster.

Dave Clissold, a food and drug lawyer with Washington, DC-based Hyman Phelps McNamara, which has represented biosimilar and branded insulin manufactures, also believes the policy will speed up new product development.

Also important, said Clissold, is the FDA's decision that manufacturers won't necessarily have to conduct studies that compare immunogenicity to the reference product.

That goes further than what had been expected but will be welcomed by biosimilar makers, Clissold told Medscape Medical News.

The FDA is communicating that "insulins are special biologics. They're small, they're not very complicated, we know a lot about them. There are all different types of insulins on the market right now, so we've got a ton of clinical experience with these things," he added.

Skipping those comparative studies won't be automatic, he said.

"But there is a path forward" that manufacturers can take to justify why they think they don't need to conduct what are usually costly and long studies, he explained.

Price Still a Question Mark

Clissold continued by noting that the FDA cannot dictate pricing, but ideally, "more competition will drive prices down."

"We've certainly seen that for the big blockbuster generic drugs," he said.

Lanton said that although the agency is attempting to harness competition to lower prices, that's not a given in the US market.

"We really don't know what the pharmacy benefit managers are going to do," he said.

Lanton pointed out the lack of transparency in the rebate scheme between PBMs and drug makers.

"What's going to prevent an innovator from coming in, talking to a PBM, and giving a steeper discount?" he said.

"Even if the price is lower, with the rebate still not being addressed, is that going to have an effect on anything?" Lanton wondered.

CMS Star Ratings: Will Biosimilars Benefit?

This article is in Biosimilar Development: Click here to read the article

In case you can’t access the article, here is the text below.

The Centers for Medicare and Medicaid Services (CMS) star ratings system was created in 2007 for insurance plans operating under both the Medicare Advantage and Part D. This 1 to 5 system (with 5 being the highest rating) is a way for CMS to measure the value of a plan and determine whether to continue to allow it to be part of the program. However, it’s more than just the plan, since the plan’s providers play a key role in how CMS evaluates each plan.

Essentially, the system measures other items as well, such as clinical quality, beneficiary satisfaction, and regulatory compliance, in addition to included providers. Plans are incentivized with financial rewards for improving quality performance and achieving the highest rating. What has been interesting to watch over time is how the star ratings system has become the go to evaluator for anything healthcare. The question is whether this concept could be applied to reduce drug costs, specifically, where biosimilars are concerned. 

We received our answer with the introduction of the Star Ratings for Biosimilars Act, otherwise known as H.R. 4629. This bipartisan bill is sponsored by Congressmen Tonko (D-NY) and Gibbs (R-OH), but to date it hasn’t gotten much support. The bill has a U.S. Senate version sponsored by Senators Cassidy (R-LA) and Menendez (D-NJ). According to Senator Cassidy’s press release, “This bill would incentivize insurers to use lower cost versions of drugs by rating the plan based on usage of biosimilar medications. Using lower cost drugs will lead to positive health outcomes with lower out of pocket costs for patients.” We have also seen similar legislative language in S.2543, known as the Prescription Drug Pricing Reduction Act of 2019.

For years now, we have witnessed several debates on how biosimilars could potentially lower drug costs, and this proposed legislation is another example of the potential promise that biosimilars have in helping policymakers lower drug costs. But will this bill help? Specifically, the proposed legislation calls for determining whether a biosimilar is on the formulary, assesses whether and how utilization management tools are applied with respect to a biosimilar, and assesses the percentage of enrollees prescribed the biosimilar biological product when the reference biological product is also available.

While I applaud any idea that attempts to lower costs and promote patient access, the devil is always in the details. For example, will these proposed metrics of incentivizing plans to use biosimilars work? Will there be competing metrics that plans have that may be better measurements than CMS?

Industry stakeholders like physicians and pharmacists may not like having plans with too much autonomy because unfairness and bias in measuring provider compliance may come into play, as plans and their partner pharmacy benefit managers (PBMs) would likely favor their providers and pharmacies, which could result in different star ratings for some. Will hospitals be amenable to this system when they already have complaints against CMS’ star ratings programs due to hospitals not being able to predict quality improvement metrics for operational efficiency? Physician education on biosimilars will have to be increased as well, since their comfort level with biosimilars will help spawn more utilization by their patients. Lastly, what impact will star ratings on biosimilars have on insurer rebates? At this time, it is too early to tell, since without this clarity it is even hard to quantify if biosimilars are already experiencing formulary disadvantages due to innovators offering larger discounts. One thing is for certain, in order to force monumental change, it may be best to do it via mandate. Forced compliance, in my opinion, will bring out the potential bugs in a system fast.

Ultimately, the other big issue is whether there is enough time to get legislation like this through Congress, along with a presidential signature. It would also help if the bill had more support, through either Congressional members or a push from powerful interested stakeholders. To date, the bill doesn’t have a significant number of cosponsors. It could be that it is December or that lowering drug prices through biosimilars is an idea that is spread throughout too many current Congressional proposed bills.

Theoretically, this seems like a win-win for both parties, but, realistically, we are on the doorstep of campaign season. With the upcoming elections on the state and federal level expected to be explosive, will lawmakers find the will to agree on a bipartisan solution like this before the political rhetoric heats up? We can only hope.  

Lanton Law December 2019 Newsletter Now Available

We are out with our December 2019 newsletter. This edition covers data oversight, a Medicaid white paper and upcoming webinars. Click here to access the December 2019 newsletter.

Additionally, if you are interested in signing up for our newsletter that has trending information on healthcare, technology and fintech, click here to sign up.  

Don’t Ignore the Steady Drumbeat of Drug Importation Part 2

Back in April 2019 we published an article through Specialty Pharmacy Times titled “Don’t Ignore the Steady Drumbeat of Drug Importation?” Click here to read the article

However; we have been noticing lately that there is a lot more chatter on importation, especially from the Administration. It seems as though some state administration officials are moving forward with the idea of providing imported medications for their citizens. Besides the state ideas discussed in the article above, states like Maine, Colorado, Vermont, Michigan, New Hampshire and Florida are all currently debating what an importation program would look like in their states. 

This is all a result of increased discussions initiated by the President who has mentioned the goal of lowering drug prices several times since he took office. The President has been a supporter of importing prescription drugs from Canada, namely following Florida’s importation model that was recently enacted by the state’s legislature.

While there are many solutions to lowering drug prices, importation has been a policy that has supporters on both sides of the aisle. However; there are still questions of safety as well as whether importation will have the cooperation of stakeholders such as drug manufacturers, the supply chain, and the Canadian government.  

While it can be argued that importation may not gain too much momentum with the end of the year quickly approaching and the elections starting to heat up in 2020, we still don’t expect importation to go away. If you are a stakeholder and are interested in learning what either your legal or policy options are contact us at Lanton Law by clicking here.

Lanton Law's Webinar With WellSky Now Available

Our recently recorded webinar with WellSky titled “What home care policies to watch for the rest of 2019” is now available at https://info.wellsky.com/LP-Emerging-SPRX-and-IV-Policies.html Below is a description of the webinar:

Unlike anything we have experienced before, the backend of the legislative calendar year is proving to be louder than ever. While Capitol Hill is embroiled in contentious topics, issues that are more important to home infusion and specialty pharmacy industries are impacted, and slowly working their way through the system. The webinar discussed the following:

DIR and possible policy solutions

• Latest drug price and how these will impact specialty and home infusion stakeholders

• Patient co-payments and biosimilars

• The Home Health Payment Rule

New Lanton Law Webinar on December 4th with the American College of Apothecaries (ACA)

We have a new webinar on December 4, 2019 via the American College of Apothecaries (ACA) on CBD.

Cannabidiol (CBD) products are flooding the market at an alarming rate. Many consumer stakeholders are excited about this new product line, while providers such as pharmacies, natural health food stores, and other retailers are casting a watchful eye; torn between developing market strategies to meet demand while also watching for state and federal regulatory oversight. This webinar will discuss the various aspects of CBD regulations and market trends to give stakeholders a better understanding of the CBD environment for patient and market opportunities.

Register at: https://ce.ppsinc.org/index.cfm?pg=semwebCatalog&panel=showLive&seminarid=10631

What's Next for DIR Policy?

We have a new article in the American College of Apothecaries (ACA) titled “What’s Next for DIR Policy?” We will be having a new white paper on the subject coming out soon. In the meantime, this link will take you to the article in the ACA Fall Magazine 2019. https://acainfo.org/wp-content/uploads/flipbook/22/mobile/index.html#p=9