Update on Closely the Watched U.S. Supreme Court Case of Rutledge v. PCMA

We have been providing occasional updates through our blog on the U.S. Supreme Court case of Rutledge v. PCMA, whose outcome could have wide ranging policy and legal ramifications on pharmacy and pharmacy benefit managers. 

This issue in this case according to the Court 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 preempted by the Employee Retirement Income Security Act of 1974, in contravention of the Supreme Court’s precedent that ERISA does not preempt rate regulation.”

The case will now be heard on October 6, 2020 in front of the U.S. Supreme Court. Additional information on this case can be found here.  

Lanton Law is a national boutique law and government affairs firm that focuses on healthcare/life sciences, technology and finance. If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.

EXIM Policies Impacting Biotechnology & Life Science Stakeholders

The Export-Import Bank of the United States (EXIM) has established some new policies that will impact several stakeholder groups, especially biotechnology, biomedical sciences and life sciences stakeholders. 

According to the EXIM’s release, the “EXIM’s historic seven-year reauthorization (P.L. 116-94), signed into law December 20, 2019, directs EXIM to establish a new “Program on China and Transformational Exports” (see Sec. 402). The Program’s purpose is to support the extension of loans, guarantees, and insurance, at rates and on terms and other conditions, to the extent practicable, that are fully competitive with rates, terms, and other conditions established by the People’s Republic of China or by other covered countries (as designated by the Secretary of the Treasury). The law charges EXIM with a goal of reserving not less than 20 percent of the agency’s total financing authority (i.e., $27 billion out of a total of $135 billion) for support made pursuant to the program, with a focus on specific industries.” 

To achieve full implementation, EXIM will hold a July 16th call with Biotechnology and Biomedical Sciences. Additional information on this call can be found here. 

Lanton Law is a national boutique law and government affairs firm that focuses on healthcare/life sciences, technology and finance. If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.   

Tech Companies to Testify At House Judiciary Antitrust Subcommittee on July 27th

The House Judiciary Antitrust Subcommittee has scheduled a July 27, 2020 hearing for the CEO’s of Amazon, Apple, Google and Facebook (Big Tech) to testify regarding the Committee’s ongoing investigation of digital marketplace competition. The hearing is titled “Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Facebook, Google and Apple.”  

The Committee’s press release has a joint statement from House Judiciary Committee Chairman Nadler (D-NY) and Antitrust Subcommittee Chairman Cicilline (D-RI) which states “Since last June, the Subcommittee has been investigating the dominance of a small number of digital platforms and the adequacy of existing antitrust laws and enforcement. Given the central role these corporations play in the lives of the American people, it is critical that their CEOs are forthcoming. As we have said from the start, their testimony is essential for us to complete this investigation.”

The Committee’s investigation launched its antitrust investigation last June. The Committee’s efforts are bipartisan and the Committee is attempting to address whether Congressional oversight is needed to pass tighter antitrust laws to ensure a more balanced marketplace. The Committee’s investigation will focus on documenting where competition is lacking in digital markets; exploring whether large companies are suppressing competition; and determining whether Congress and regulators need to do more to address Big Tech's dominance. If Congress decides that legislation is needed, it could lead to the first major policy revisions of U.S. antitrust law in decades.

Additional policy threats to technology companies remain besides Congress. In a mix of business and political reasons for determining whether a new class of start ups is being stifled by Big Tech, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) last year have announced joint efforts to investigate Big Tech. The FTC will have responsibility for investigating Amazon and Facebook while the DOJ will investigate Google and Facebook. It is looking as though some kind of regulatory action is coming by year end. Not to mention Big Tech has been receiving a lot of antitrust scrutiny from overseas. 

It is no secret that oversight over technology stakeholders is near. It’s best to look at your risks to determine whether you have the tools to protect your business and be nimble enough to navigate the changing policy currents. 

Lanton Law is a national boutique law and government affairs firm that focuses on technology and healthcare. If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.   

National Association of Insurance Commissioners release PBM Model Legislation Draft

The National Association of Insurance Commissioners’ (NAIC) Pharmacy Benefit Manager (PBM) Regulatory Issues Subgroup has released a draft of its model PBM legislation. The model is called the [State] Pharmacy Benefit Manager Licensure and Regulation Act and “it seeks to establish the standards and criteria for the licensure and regulation of pharmacy benefit managers providing claims processing services or other prescription drug or device services for health benefit plans.”

The Task Force began discussion on this issue last year as the proposed model seeks to build on state legislative and regulatory efforts surrounding PBMs. The draft model addresses issues such as PBM licensure, the prohibition of gag clauses, state insurance commissioner enforcement, clawbacks, affiliate compensation and spread pricing to name a few.

A conference call is scheduled for July 16th to discuss this issue further.      

Lanton Law is a national boutique law and government affairs firm that focuses on healthcare and technology. If you are an industry stakeholder with questions about the draft or if you would like to discuss how your organization’s strategic initiatives might be impacted by the NAIC’s actions, contact us today.  

New Legislation Targeting Technology Liability Shield Under Section 230

Earlier this year we started our conversation with the technology industry urging stakeholders to be aware of the growing policy attacks on the responsibilities of an Internet Service Provider (ISP) via the technology law 47 U.S. Code § 230. 

The law which is part of the Communications Decency Act (CDA), also called Title V of the Telecommunications Act of 1996, provides ISP’s with federal immunity to any cause of action that seeks to make ISP’s liable for information that originated with a third party service user. 

Specifically, §230 states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” The additional specifics of this law describe the liability shield that these companies currently enjoy which is further protected by federal preemption law. 

A few weeks back we highlighted how politicians on both sides of the aisle have been more assertive in how tech companies are not living up to their expectations under Section 230. Now in addition to recent U.S. Department of Justice scrutiny, U.S. Senator Hawley (R-MO) has introduced the Limiting Section 230 Immunity to Good Samaritans Act, which seeks to provide accountability for bad actors who abuse the Good Samaritan protections provided under that Act. 

According to the Senator’s press release the bill “would prohibit Big Tech companies from receiving Section 230 immunity unless they update their terms of service to promise to operate in good faith and pay a $5,000 fine (or actual damages, if higher) plus attorney’s fees if they violate that promise.” This legislation makes it easier for Americans to sue tech companies that censor political speech or hide competitor content. This bill mirrors more conservative politicians who feel that tech companies are censoring conservative viewpoints.

Regardless of your political viewpoint, if you are a tech stakeholder that has ISP capabilities or you are providing services that deal with the exchange of ideas, you should be monitoring this type of legislative action to avoid unnecessary surprises to your business model. We at Lanton Law can help. 

Our legal and policy tools can help offer your organization a clear path forward to navigate what will be changing policies for technology stakeholders. Contact us today to discuss your options.     

FCC to Vote in June on Commissioner Carr’s 5G Upgrade Order

The Federal Communications Commission (FCC) has announced that it will vote on Commissioner Carr’s 5G Upgrade Order as part of an initiative to accelerate U.S. wireless infrastructure improvement plans. 

According to the FCC “The 5G Upgrade Order clarifies the FCC’s 2014 rules by:

• Explaining when the 60-day shot clock for local approval begins 

• Specifying what new equipment qualifies for streamlined approval

• Clarifying how local governments’ concealment and aesthetic conditions of approval apply  

• Asking for public comment on what activity related to a modification can occur outside of a wireless site”

The full Commission will vote on the 5G Upgrade Order at its next open meeting on June 9, 2020. 

New Lanton Law Specialty Drug Blogcast with Ken Kaitin of Tufts University

We are excited to interview Kenneth Kaitin; Professor and Director for the Tufts Center for the Study of Drug Development at Tufts University School of Medicine in Boston, Massachusetts.

Our conversation touches on a wide variety of specialty drug issues such as oncology, orphan drugs, value based care, innovative payment models and Boston’s pharmaceutical R&D expansion.

Click here for the interview.

Pharmacy Times Interviews Lanton Law On How COVID-19 May Lead to the Expansion of Practice Laws for Pharmacists Across the Country

Alana Hippensteele; Editor, MA of Pharmacy Times interviewed Ron Lanton to discuss how COVID-19 may lead to expansion of practice laws for pharmacists across the country. Click here to access the interview.

Below Is a summary of the interview from Pharmacy Times:

Pharmacy Times spoke with Ron Lanton III, Esq, a regulatory and government affairs professional, about how the coronavirus disease 2019 (COVID-19) could lead to more expanded practice laws for pharmacists across the country.

Lanton noted that actions such as clinical laboratory improvement amendment (CLIA) waivers and additional steps by the Centers for Medicare and Medicaid Services (CMS) and Department of Health and Human Services (HHS) have been encouraging and have allowed pharmacists to be more involved in the pandemic response while beginning to get paid for these services.

“I think that was one of those tools that just wasn’t there before because of where we are, and now it’s there,” Lanton said. “It’s been very encouraging to have HHS and CMS there trying to make sure that this happens for pharmacy.”

Lanton added that although pharmacists have been discussing their value for a long time, the pandemic has pushed that knowledge into the forefront of patients’ and other health care professionals’ minds.

He encouraged pharmacists to follow news from CMS closely, because new policies and announcements are coming out almost daily. The ongoing stimulus packages passed by Congress may also offer a chance for pharmacists to push the field forward, by lobbying for provider status, personal protective equipment, and direct and indirect remuneration fee relief as part of the packages.

Online Political Advertising Legislation to be Introduced

U.S. Congressman Cicilline (D-RI) has announced  his intent to introduce legislation “that tightly restricts the use of personal, online consumer data that is often used to ‘microtarget’ voters with misleading ads.” According to his release, the legislation will be titled the “Protecting Democracy from Disinformation Act” and has the following elements: 

• Restricts Microtargeting: Only allows advertisers and online platforms to use age, gender, and location when targeting political ads. 

• Improves Transparency: Requires disclosure and reporting on who paid for an ad, how much it cost, whom an ad is aimed at, and who saw the ad.

• Holds Online Platforms Accountable: Provides enforcement through the Federal Election Commission’s existing authority, a private right of action, and criminal penalties for online platforms and ad intermediaries that knowingly and willfully violate the Act.

Expect issues such as microtargeting and others to come to the forefront as we enter in the election season of 2020. 

Lanton Strategies; a segment of Lanton Law works to help advance our clients interests before both legislative and regulatory bodies on the state and federal levels. We use sources from the Hill, state houses, agencies, markets and trade associations, to inform our clients and achieve proactive results. Let us know how either our government affairs services or legal services can help you achieve your priorities. 

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.

Pending Antitrust Actions Could Change Biosimilar Dynamics

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

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

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

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

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

FTC Civil Investigation 

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

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

Legislation to Play Significant Role in Drug Pricing Across Specialty Pharmacy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Reference

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

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

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

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