States Begin to Hold Hearings on the Proposed CVS/Aetna Merger

Posted in Antitrust, Government Affairs, Licensure & Regulatory, Health Insurers & Managed Care Organizations, Healthcare Law, Healthcare M&A, Joint Ventures, Transactions & Health Ventures, Pharmacy, Drugs, Medical Devices & Equipment

In December of 2017, CVS Health and Aetna announced their intention to merge. The transaction, if approved by regulators, would combine the country’s second largest pharmacy benefit manager (PBM), Caremark – a CVS subsidiary – and the nation’s third largest commercial health insurer, Aetna, and has been valued at $69 billion. Since the announcement, federal and state regulators have been investigating whether this “vertical merger” raises any significant antitrust concerns, and a hearing at the federal level – before a United States Judiciary Committee subcommittee – was held in late February. More recently, a good deal of activity has started to occur at the state level.

Specifically, on June 19, California Insurance Commissioner Dave Jones held a lengthy hearing on the deal, inviting over ten witnesses to appear and express their views on the deal.  Commissioner Jones heard from representatives from the merging parties, academia, various provider groups (including the AMA and the California Medical Association), and consumers (including Consumers Union and Consumer Watchdog) regarding their views of the proposed deal. Continue Reading

Will President Trump’s Supreme Court Pick Have an Influence on The Healthcare Industry?

Posted in Antitrust, Government Affairs, Licensure & Regulatory, Health Insurers & Managed Care Organizations

On July 9, 2018, President Trump announced his intention to nominate D.C. Circuit Court Judge Brett Kavanaugh to replace retiring Justice Anthony Kennedy on the Supreme Court. Since the announcement, there has been considerable discussion about what Judge Kavanaugh’s views are on several “hot button” issues, including free speech, religious-rights and abortion, and how Judge Kavanaugh might influence the law on those subjects if confirmed. Less attention has focused – at least so far – on Judge Kavanaugh’s healthcare-related decisions, notwithstanding that he has authored several high-profile decisions in that area. If confirmed, these opinions may well provide a window into Judge Kavanaugh’s thinking on several high-profile antitrust issues in healthcare, including the proposed mergers between CVS and Aetna and Express Scripts and Cigna.  Continue Reading

Florida Imposes new ID Requirements for Pharmacist Dispensing of Controlled Substances

Posted in Healthcare Law, Pharmacy, Drugs, Medical Devices & Equipment

The Florida legislature passed HB 21, which imposes a number of new requirements on prescribers and pharmacists regarding controlled substance prescribing and dispensing. Part of the law requires pharmacists to verify the identity of the person named on the prescription. These requirements do not apply in an institutional setting or to a long-term care facility, including assisted living facilities or in-patient hospitals.

The following steps are required to satisfy the identification requirements when dispensing controlled substance prescriptions in Florida.

  1. If the patient is known to the pharmacist, then verifying a government issued photo ID is unnecessary;
  2. If the patient is not known, the pharmacist must:
    • Have the patient present valid government issued photographic identification or other verification of his or her identity of one of the types of identification set forth in 8 C.F.R. s. 274a.2(b)(1)(v)(A) and (B) – this is a detailed list of ID types that can be used; or
    • If the patient does not have proper ID, verify the validity of the prescription and identity of the patient with the prescriber or his or her agent; or
    • For prescriptions billed through insurance, the pharmacist may query the system to determine health plan eligibility through a real-time inquiry or adjudication system.

Click here to view a graphical description of the ID process.

FDA Ponders Health and Safety of Lab-Grown Meat

Posted in Government Affairs, Licensure & Regulatory

The hamburger of the future might be less Old MacDonald and more sci-fi – and it might be here sooner than you think. Several startups are working to scale up animal cell culture technology to grow meat tissue for human consumption. Proponents hail the nascent industry’s potential to reduce foodborne illnesses such as E. coli, lessen the environmental impacts of conventional animal agriculture, and prevent animal suffering. As a result, the U.S. Food and Drug Administration is exploring how to regulate such products.

Regulatory questions abound. For example:

  • What public health and safety hazards might be caused by cultured meat, and how do they differ from those caused by conventional, whole-animal meat?
  • What manufacturing processes should be followed to keep these new products free from pathogens and other contaminants?
  • What additives, preservatives, or other substances, if any, should be allowed in the production of meat from cell culture technology?
  • How should the new products be labeled? Should labels disclose whether a product is grown from cell cultures?
  • Should producers be allowed to call their products “meat”, or should a separate term be used to distinguish conventional meat versus cultured meat?

The FDA announced a public meeting scheduled for July 12, 2018 to address these topics. FDA could choose to propose industry regulations in the near future. Any such regulations would need to be in concert with the USDA, which currently oversees the slaughter and manufacturing of conventional meat products.

Per se versus ‘Rule of Reason’ Standard: Judge in Blue Cross Antitrust MDL Proceeding Certifies His Decision For Interlocutory Appeal

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Litigation

In a somewhat unexpected but highly significant move, United States District Judge David Procter (Northern District of Alabama), who is presiding over the In re Blue Cross Blue Shield Antitrust Litigation (Case No. 2:13-cv-20000, N.D. Alabama), has granted defendants’ request that he certify his ruling that the defendants’ alleged conduct should be assessed under a per se standard (and not the “rule of reason”) for immediate interlocutory appeal to the 11th Circuit Court of Appeals. So, unless the 11th Circuit rejects Judge Procter’s request, it appears that we will receive an appellate court decision on this issue prior to the entry of a final judgment in this massive, and closely watched, action.

The multi-district litigation matter, which is now almost five years old, combined over 80 separate lawsuits from all across the country into two putative classes of plaintiffs – a subscriber class and provider class – and, as Judge Procter has noted, is “reportedly one of the largest (if not the largest) antitrust litigations ever filed.” As Judge Procter has further explained, in all of these cases, “the plaintiffs allege that the defendants (virtually all of the Blue Cross Blue Shield insurers across the nation – “the Blues”) have violated the antitrust laws by agreeing to allocate exclusive geographic service areas, imposing output restrictions, fixing prices for certain products and services secured from health care providers, and boycotting health care providers who reside outside of a Plan’s allocated geographic service area.”  In an April 5 decision, the Court held that “Defendants’ aggregation of a market allocation scheme together with certain other output restrictions is due to be analyzed under the per se standard of review,” a ruling that would permit plaintiffs to prove liability in the case against the Blues simply by showing that the defendants entered into such an agreement, without being required to prove that the effect of any such alleged agreement was anticompetitive and/or counterbalanced by procompetitive benefits (unlike in a “rule of reason” case, which would require such additional proof). Recognizing the significance of the ruling, the Blues quickly filed a request that they be permitted to appeal the decision to the 11th Circuit, rather than await a final judgment in the matter. Continue Reading

Pharmacies Accuse Drug Maker of Anticompetitive Contracting to Restrict Biosimilar Market

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Litigation, Pharmacy, Drugs, Medical Devices & Equipment

Walgreens and Kroger have filed an antitrust action in the United States District Court for the Eastern District of Pennsylvania accusing Johnson & Johnson (J&J) of engaging in anticompetitive conduct designed to stymie the growth of biosimilar alternatives to J&J’s Remicade, a biologic drug used to treat certain chronic immune disorders (Walgreen Co. v. Johnson & Johnson, Case No. 2:18-cv-02357-JCJ, Eastern District of Pennsylvania). The action is only the latest in a string of suits filed against J&J challenging its sales practices relating to Remicade. Pfizer, the maker of Inflectra, a biosimilar alternative to Remicade, previously filed an action against J&J making similar claims, as did a number of union benefits funds. Several of these previously-filed actions have already been consolidated in the Eastern District of Pennsylvania as the In re Remicade Antitrust Litigation, Case No. 2:17-cv-4326, JCJ, before Judge J. Curtis Joyner. In all likelihood, the Walgreens case will be referred to Judge Joyner and become part of the consolidated action as well.    Continue Reading

Florida Court Affirms Rejection of CON of a Hospice Operator’s Application, Despite a “Regional Monopoly”

Posted in Antitrust, Government Affairs, Licensure & Regulatory

Florida’s First District Court of Appeals has affirmed a decision by the Florida Agency for Health Care Administration (AHCA) that denied an application by Compassionate Care Hospice of the Gulf Coast (CCH) to open a hospice in Sarasota County.  (Compassionate Care Hospice of the Gulf Coast v. State of Florida, No. 1D16-5062, Fla. Dist. Court of Appeals). Notably, AHCA denied CCH’s request despite noting that there is currently only one hospice operator in Sarasota County (Tidewell Hospice), and thus acknowledging that Tidewell has a ‘monopoly” on such services in the area.  Continue Reading

U.S. Supreme Court Rules That Class Action Waivers Are Enforceable

Posted in Healthcare Law, Healthcare Litigation, Labor Relations & Employment Law

Employers may require employees to enter into arbitration agreements that waive such employees’ ability to participate in a class or collective action lawsuit, the U.S. Supreme Court ruled this week. In a long-awaited decision that represents a significant victory for employers, the Court in Epic Systems Corp. v. Lewis held that such agreements do not violate the National Labor Relations Act and are enforceable.

The employees in the case argued that the NLRA statutorily prevents employees from waiving their right to assert claims as a class or collectively, thus falling within the “saving clause” of the Federal Arbitration Act (FAA), which permits courts from enforcing arbitration agreements that are illegal. At the outset, Justice Neil Gorsuch, writing for the Court’s majority in a 5-4 decision, rejected the employees’ contention, reasoning that the “saving clause” recognizes only defenses that apply to “any” contract, such as fraud, duress or unconscionability. In reaching this holding, the Court emphasized the FAA’s mandate that courts generally enforce, not override, the terms of arbitration agreements. Continue Reading

Derailing the Gravy Train – Trump Unveils Plan to Reduce Drug Prices

Posted in Healthcare Law, Healthcare Reform Legislation, Pharmacy, Drugs, Medical Devices & Equipment

Throughout his presidential campaign, President Trump championed the need to allow the government to negotiate drug prices on behalf of the Medicare program. However, that third rail for pharmaceutical companies was not included as part of the President’s recently released blueprint for lowering drug prices. Instead, the plan takes aim at the entire supply chain that lies between drug manufacturers and patients, including health insurers, distributors, pharmacy benefit managers and even foreign governments.

The Trump administration’s “American Patients First” plan lays out four “key strategies for reform.” These strategies involve two phases. In the first phase, the President may direct the US Department of Health and Human Services (HSS) to issue guidance geared toward accomplishing these strategies. The second phase involves further analysis of the complexities of the system and submitting proposed rules for feedback. The following summary condenses the almost 40-page plan into the most salient points since not all of the ideas are fully fleshed out. Continue Reading

California Attorney General Brings Action Against Sutter Health Contending its Contracting Practices Violate the Antitrust Laws

Posted in Antitrust, Hospitals & Health Systems

The California Attorney General recently filed a precedent-setting antitrust action against Sutter Health, the largest health system in Northern California (People of the State of California v. Sutter Health, Case No. CGC-18-565398, San Francisco Superior Court), contending that Sutter Health’s contracting practices violate the antitrust laws. The action, filed in the San Francisco Superior Court, seeks to “restore competition in healthcare markets in California,” and claims that Sutter Health has “found a way to illegally control price and severely limit competition by compelling [insurers] to enter into contracts that improperly block any and all practical efforts to foster or encourage price competition between Sutter and any rival hospital systems.” To remedy the alleged violations, the State seeks, among other things, to have the Court require Sutter Health to terminate the challenged contracting practices, to “disgorge” previously received “overcharges” that Sutter Health received as a result of those practices, and to require Sutter Health to submit to mandatory arbitration to determine Sutter Health rates going forward. Continue Reading

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