This week’s ML Strategies Health Care Update highlights the recent Department of Health and Human Services (HHS) forum on prescription drug costs, which featured players from every corner of the industry, including top government officials.
HHS Secretary Burwell kicked off the event by calling for greater support for prescription drug innovation, access, and affordability. ML Strategies reports that there seemed to be agreement that payments based on the value of care delivered should be increased across health care delivery. But, what value is, and how it should be defined, is still up for debate.
Transparency and increased competition are key issues brought up throughout the forum. Some stakeholders argued that increased transparency can already be seen by the level of scrutiny some have faced this year from drug price increases. While others contended that increased competition is what is needed.
Last Tuesday, Dr. Jeffrey Shuren, director of the Food and Drug Administration’s Center for Devices and Radiological Health, announced at a hearing before the House Energy and Commerce Committee’s Subcommittee on Health that FDA would move forward with finalizing its plan to regulate laboratory developed tests (LDTs) sometime in 2016. FDA provided notice of its intent to take action on LDTs when it published a draft guidance document in October 2014, setting forth the agency’s plan for regulatory oversight of LDTs. FDA’s decision to regulate LDTs would be a significant policy shift in this area because, historically, the agency has chosen not to exercise its enforcement power over LDTs. FDA cites the increased complexity and higher patient risks involved with more modern LDTs as the impetus for its decision. Despite pushback from clinical laboratories and some other stakeholders, Shuren’s statements during Tuesday’s House hearing demonstrate that the agency is committed to finalizing and implementing a new regulatory framework for LDTs.
FDA’s draft guidance defines an LDT as a type of in vitro diagnostic (IVD), which is a test that detects a disease, condition, or infection. LDTs are IVDs that are developed and used within a single laboratory and intended for clinical use. Continue Reading
Last week, pharmacy benefit manager (PBM) and independent pharmacy representatives provided testimony to the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law in a congressional hearing examining the state of competition in the pharmacy and PBM marketplace. You can watch the hearing and read the filed testimony here. This was the third in a series of congressional hearings examining competition in healthcare markets. While the focus was on PBMs and pharmacies, some panelists and committee members recognized that a full discussion of certain issues, like drug pricing, needs to involve other players in the prescription drug supply chain.
The witness panel included 2 PBM industry representatives, an independent pharmacy owner, and an antitrust attorney who represents the interests of independent pharmacies:
- Amy Bricker, Vice President of Retail Contracting & Strategy, Express Scripts
- Natalie A. Pons, Senior Vice President and Assistant General Counsel, CVS Health
- Bradley J. Arthur, Owner, Black Rock Pharmacy
- David A. Balto, Law Offices of David Balto
Each panelist gave testimony aligned with his or her role in the debate and voiced well entrenched opinions regarding the role PBMs play in the health care industry. Ms. Bricker and Ms. Pons each focused on their PBM’s ability to use scale to keep prescription drug costs down for patients and their clients, and stressed that they rely on independent pharmacies to participate in their networks. Mr. Arthur focused on the scale of the PBMs compared to his independent pharmacy, while Mr. Balto pointed to market trends, like rising profit margins, to claim that the entire PBM marketplace is broken and needs regulation to require more transparency. Continue Reading
On Tuesday, ML Strategies (MLS) posted its weekly Health Care Update, which provides information from the previous week on a variety of important health-care-related topics.
In addition to covering a number of events related to the Affordable Care Act, telemedicine, and the nationwide opioid coverage crisis, this week’s Update covered the workshops held by the Food and Drug Administration (FDA) for genome scientists on the technical aspects of integrating Next-Generation Sequencing (NGS), a DNA-sequencing method, into clinical practice. Joanne Hawana, Eli Greenspan and Erin Kathleen Morton also published an alert on these workshops last week.
While the FDA has not yet developed a new regulatory framework for NGS that is different from the process for more traditional diagnostic tests, its goal is to institute “appropriate oversight, in a way that is more suitable to the complexity and data-richness of this new technology.” This focus on NGS is being driven by President Obama’s Precision Medicine Initiative, bipartisan and bicameral interest on Capitol Hill, and the desire of patients and physicians to be able to choose the right treatment, at the right time, with hopefully minimal side effects. A number of federal agencies have taken steps to implement the Precision Medicine Initiative, including the National Institutes of Health which seeks to enroll one million volunteers in the next five years in a study that will evaluate the risk of developing a disease by looking at both genetic and environmental factors. The FDA workshop last week was also in step with the President’s initiative. Continue Reading
On November 16, 2015, the Centers for Medicare and Medicaid Services (“CMS”) published the most significant changes to the physician self-referral law (“Stark Law” or “Stark”) regulations since 2008. Because this rulemaking is the fifth substantive rulemaking under the Stark Law amendments of 1993, it will likely become known as Stark Phase V. This rule, which is part of a larger package of annual regulatory adjustments to the Medicare Physician Fee Schedule, contains important changes that clarify or ease the burden of existing exceptions, solicits comments on new exceptions in light of health care reform, and introduces two new exceptions.
For a more detailed analysis of the impact of these changes, please see our Client Alert.
1. Easing of Regulatory Burdens
With Phase V, CMS seeks to reduce a number of regulatory compliance burdens that have plagued Stark.
CMS concluded that there is substantial uncertainty in the provider community as to what exactly is required by the writing requirement that is found in a number of Stark exceptions. In particular, CMS is often asked whether an agreement must be reduced to a single formal contract. Phase V clarifies that a single formal written contract is not required and that contemporaneous documents evidencing the course of conduct between the parties may be sufficient to satisfy the writing requirement. CMS has revised the wording of various exceptions to clarify this position, by, for example, substituting the word “arrangement” with “agreement.” Continue Reading
In recent years, the Food and Drug Administration has been struggling with how to adapt the regulatory paradigm for in vitro diagnostic devices (IVDs) – any test that detects a disease, condition, or infection – to the rapidly developing world of genetic and genomic testing services. As the health care system continues to move towards the White House’s vision of precision medicine, FDA appears to be doing its part by exercising its medical device authorities over emerging genetic and genomic IVDs in a risk-based and scientifically driven manner. This blog post will highlight some recent actions taken by the Agency that relate to genetic and genomic testing, as well as some ongoing activities in this area that we will continue to monitor for our readers.
Regulatory Actions on Autosomal Carrier Screening Gene Mutation Tests
Early this year, FDA authorized the marketing of an autosomal carrier screening gene mutation test for Bloom Syndrome, submitted by 23andMe as a de novo classification request. The company filed this de novo request because there was no legally marketed device upon which it could rely for a showing of substantial equivalence; such a request triggers FDA’s review of available science and other data provided by the applicant so that it can determine whether to classify the novel device as low-risk (Class I) or moderate-risk (Class II). In the case of 23andMe’s carrier screening test, FDA concluded that the device should be regulated as Class II subject to special controls. 23andMe launched its new Personalized Genome Service direct-to-consumer product last month, touting itself as the “first and only company to receive FDA authorization to market a direct-to-consumer genetic test.” Continue Reading
Last week the Federal Trade Commission (“FTC” or “Commission”) issued an administrative complaint challenging the merger of two West Virginia hospitals that had earlier been cleared by the state’s Attorney General (“W.V. AG”) following the entry of two agreements between the hospitals and the W.V. AG (“Agreements”). While the W.V. AG accepted the conduct remedies contained in the Agreements, the FTC argued that those remedies fall short of replicating the benefits of competition that would be lost as a result of the merger. In the Matter of Cabell Huntington Hospital, Inc., Pallottine Health Services, Inc., and St. Mary’s Medical Center, Inc. (FTC Docket No. 9366) (November 5, 2015).
In November 2014 Cabell Huntington Hospital (“Cabell”) entered into an agreement to acquire St. Mary’s Medical Center (“St. Mary’s”). In its administrative complaint challenging the proposed merger, the FTC alleged that the combined entity would account for more than 75% of the market for general acute care inpatient services, as well as a high share of the market for outpatient surgical services in the adjacent counties of Cabell, Wayne and Lincoln, West Virginia and Lawrence County, Ohio. Based on the high market shares and related HHI market concentration levels, the FTC alleged that the transaction is presumptively unlawful. Continue Reading
On Monday November 2, 2015, ML Strategies released another edition of its Health Care Update. This publication provides timely information on implementation of the Affordable Care Act, Congressional initiatives affecting the health care industry, and federal and state health regulatory developments. This week’s update focuses on the opening for chair of the Ways & Means Committee and the potential impact of this decision. Continue Reading
On October 29th, 2015, the Centers for Medicare and Medicaid Services (“CMS”) issued its final rule (“Final Rule”) for waivers of fraud and abuse laws in the context of the Medicare Shared Savings Program (“Shared Savings Program”). The Shared Savings Program utilizes accountable care organizations (“ACOs”) to encourage better care for individuals, better health for populations, and lower growth in health care expenditures. As discussed in the Final Rule, CMS continues to recognize that participation in the Shared Savings Program may require providers to integrate in ways that potentially implicate fraud and abuse laws. To alleviate these potential concerns, on November 2, 2011, CMS issued an interim final rule (“Interim Final Rule”) providing waivers for certain fraud and abuse laws. The differences between the Final Rule and the Interim Final Rule, are discussed below, along with a summary of the waivers as finalized by the Final Rule. Continue Reading
Last week, the US Attorney’s Office in Boston announced that drug company Warner Chilcott agreed to plead guilty to health care fraud and pay $125 million to resolve criminal and civil liability arising out of allegations involving the promotion of the company’s drugs. Continuing its focus on individuals, the former President of the Company has been charged with conspiring to pay kickbacks to physicians. The government interest in prosecuting illegal drug promotion activities and illegal payments to physicians has been a longstanding priority. However, in a new twist that should be of great interest to the health care community, the government has brought criminal charges under the Health Insurance Portability and Accountability Act (HIPAA) against company employees as well as the physician practice owner for the alleged unlawful access and disclosure of patient medical records. These HIPAA violations could result in prison sentences, significant fines and exclusion from the Medicare program. Continue Reading