Health Care

January 1, 2024 is rapidly approaching, which is when California’s new Office of Health Care Affordability (OHCA) is set to begin advance regulatory review of certain health care mergers, acquisitions, affiliations, and other arrangements that result in material changes of assets, control, or governance. The law establishing OHCA left many details regarding the types of transactions that would be subject to review to be established by emergency regulations, which have been proposed and are available here. A public workshop will be held on August 15, 2023 (more information here), allowing for public comment and the written comment period will be open until August 31, 2023. The final emergency rulemaking package is expected to be submitted in October 2023.

Health care providers furnishing dementia care should take note of a new payment model announced by the Centers for Medicare & Medicaid Services on July 31, 2023, called Guiding an Improved Dementia Experience (GUIDE). GUIDE is designed to improve dementia care, reduce strain on unpaid caregivers, and help people with dementia remain in their homes and communities. Providers participating in GUIDE receive monthly per-beneficiary per-month payments, can bill for respite care services, and are eligible for one-time payments to support infrastructure.

A little over a year after the Dobbs v. Jackson Women’s Health Organization decision, the Food and Drug Administration (FDA) continues to be at the forefront of addressing reproductive health concerns. An example of this activity came just a few days after the FDA approved the first nonprescription daily oral contraceptive for marketing in the U.S. when the agency sent a warning letter to Wise Women’s Choice (WISE) in connection with the marketing and sale of its “birth control cream.” Among other things, this warning letter highlights for consumers the importance of confirming that birth control methods are safe, effective, and FDA-approved for their intended uses.

As we previously reported, Perrigo Company’s subsidiary HRA Pharma submitted an application to the Food and Drug Administration (FDA) in the summer of 2022 to switch an existing prescription-only progestin birth control pill to over-the-counter (OTC) status. On July 13, 2023, FDA approved the application, based in part on a unanimous advisory committee vote in May that the potential benefits of nonprescription norgestrel daily tablet contraception availability outweighed its potential risks. OTC marketing of the pill will proceed without any innovative regulatory controls or requirements that could have added burdens on consumers’ ability to access the drug at the point of sale. In other words, the agency determined that the Drug Facts Label (DFL), enclosed package leaflet, and other information on the carton (i.e., the Principal Display Panel) provided sufficient mitigation measures for known risks associated with the drug.

Covered entities, business associates, and any entities that collect health information about consumers online should carefully review the latest joint letter from the Office for Civil Rights (OCR) and the   Federal Trade Commission (FTC). On July 20, 2023, the agencies sent a joint letter to approximately 130 hospital systems and telehealth providers warning them about “serious privacy and security risks related to the use of online tracking technologies” such ad Google Analytics and Meta/Facebook Pixel. That letter was subsequently shared publicly and should be reviewed by any entity subject to regulation by either agency.   

Since the federal No Surprises Act took effect in January 2022, many pieces of legislation have been, and continue to be, geared toward promoting price transparency in health care. One such example is seen in the momentum of state legislative activity surrounding the billing of facility fees. These fees are typically charged to cover the overhead costs associated with the operation of a health care facility, such as payment of staff, maintenance of the facilities, and administrative costs. Patients, however, are often unaware that such costs will be factored into their medical bills. In response, New York and Connecticut, among other states, have recently enacted and expanded laws regulating facility fee billing.

The Federal Trade Commission’s (FTC) recent press release marks a continuation in government action against manufacturers of products infused with delta-8 tetrahydrocannabinol (delta-8). In May 2022, the U.S. Food and Drug Administration (FDA) issued warning letters to companies advertising delta-8 products as treatments for various medical conditions (see our prior post here). The more recent action came on July 3, 2023, when the FTC and FDA announced that they had jointly issued warning letters to manufacturers marketing products infused with delta-8 that appear similar to Cheetos, Doritos, Nerds, and other snacks and treats popular with children.

Do the qui tam provisions of the False Claims Act (FCA), see 31 U.S.C. § 3730(b)(1), violate the Executive Branch’s exclusive grant of authority under Article II of the United States Constitution? This long-dormant question has been revived in a surprising context. In its recent decision in United States ex rel. Polansky v. Exec. Health Resources, No. 21-1052 (S. Ct. June. 16, 2023), the Supreme Court affirmed the government’s authority to intervene to dismiss a whistleblower action, even after initially declining to intervene in the case. Knowledgeable FCA practitioners expected this result. Less expected was Justice Thomas’s dissent, which argued that the case should have been remanded to allow the parties to brief and argue whether Article II forbids allowing private citizens to maintain FCA claims on behalf of the government. A concurrence by Justice Kavanagh (joined by Justice Barrett), while rejecting Justice Thomas’s call for a remand, nonetheless stated that “the Court should consider the competing arguments on the Article II issue in an appropriate case.” With three justices expressing interest in this question—and only four justices being required to grant certiorari—health care enforcement defense attorneys should now consider whether to raise the constitutionality of the FCA’s qui tam provisions when relators move forward to litigate cases that the government declines to pursue.

Though there has been much speculation and commentary among industry stakeholders, the Office of Inspector General (OIG) and the Office of the National Coordinator for Health Information Technology (ONC) have not yet begun enforcing statutory penalties associated with violations of the Information Blocking Rules. On July 3, 2023, OIG and Department of Health and Human Services (HHS) took a significant step toward enforcement of these penalties when they published long-awaited civil monetary penalty (CMP) final rule (CMP Final Rule) for certain Information Blocking Actors in the Federal Register.

The U.S. Food and Drug Administration (FDA) announced a new pilot program on June 21, 2023 that gives sponsors of oncology products the opportunity to submit validation and performance data for laboratory developed tests (LDTs) intended to support patient selection for such drugs. Although the pilot is limited to only nine participants, it is unclear based on the requirements of the program whether it will generate sufficient interest among oncology product sponsors to meet the objectives that the agency has established for it.

Homeopathic drugs have an unusual status in the United States. On the one hand, they are incorporated into the Federal Food, Drug, and Cosmetic Act (FD&C Act) within the definition of “drug,” which specifically includes articles recognized in the official Homoeopathic Pharmacopoeia of the United States (a historical perspective can be found in this ScienceInsider article from 2015, when government scrutiny was beginning to increase). But on the other hand, there is growing consensus that the effectiveness of such products is not supported by scientific evidence and that they are, in many cases, mere placebos that do not actually treat the patient’s medical conditions; in the worst cases, they contain harmful ingredients that may cause serious injury.

A new Florida law will require certain Florida-licensed providers to ensure that patient information is physically maintained only in the continental United States and its territories or in Canada. Florida SB 264, which goes into effect July 1, 2023, amends the Florida Electronic Health Records Exchange Act, adding a ban on offshoring health information that goes beyond the requirements under HIPAA and most other generally applicable health privacy and security laws. Florida licensees to which the new requirements apply will need to attest upon initial licensure and any renewals that they are in compliance with the new requirements. Applicable licensees will also be required to ensure that no individual or entity with a controlling interest in the licensee has an interest in an entity that has a business relationship with certain foreign countries.

Bipartisan legislative activity related to pharmacy benefit manager oversight is at an all-time high in both the House and Senate. As we noted last week, several bills that address PBM activities are moving through the Senate and House committees with what appear to be high approval rates. There has also been an uptick in general investigations into PBM business practices. This post, which is the second of a two-part series, highlights recent House and federal agency activity targeting the PBM industry.

In a resounding unanimous 9-0 decision, the Supreme Court rejected the argument that a defendant’s subjective belief is irrelevant under the False Claims Act (FCA) when evaluating whether a defendant “knowingly” submitted a false claim to the government for payment. On June 1, 2023, the Court issued its highly anticipated opinion in the consolidated cases U.S. ex rel. Schutte v. SuperValu, Inc. and U.S. ex rel. Proctor v. Safeway, Inc. (SuperValu) and addressed the question of whether a defendant is liable under the FCA if its conduct is consistent with an “objectively reasonable” interpretation of ambiguous statutory or regulatory language. Justice Thomas, writing for the Court, held that an “objectively reasonable” interpretation does not provide a complete legal defense to liability under the FCA. Rather, a defendant meets the FCA’s intent (scienter) requirement if the defendant’s subjective beliefs indicate it had knowledge that its submission of claims was “false or fraudulent,” regardless of whether the defendant’s conduct could be supported by a later “objectively reasonable” interpretation of the ambiguous legal or regulatory issue. Further, the Court articulated new standards for what might constitute “deliberate ignorance” or “reckless disregard” under the “knowledge” prong of the FCA.

In conjunction with the surge in state legislative efforts to regulate the pharmacy benefit manager (PBM) industry, Congress and federal agencies have ramped up PBM oversight efforts as part of the ongoing battle to lower prescription drug costs. Several bills that address PBM reporting requirements, including increased transparency as it relates to a PBM’s use of spread pricing and the retention of certain rebates and administrative fees, are moving through Senate and House committees. Further, last month the U.S. Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) proposed a rule to increase transparency related to spread pricing in Medicaid-managed care contracts with PBMs and recently, the Federal Trade Commission (FTC) expanded its ongoing investigation into PBM practices to include information requests from two group purchasing organizations.

This blog post highlights recent Senate activity as well as a proposed bipartisan Senate and House bill that would impact PBM activity in the Medicaid-managed care space. This blog post is the first in a series of two posts detailing recent federal activities aimed at increasing oversight of the pharmacy benefit manager (PBM) industry.  

The Center for Devices and Radiological Health (CDRH), the section of the Food and Drug Administration (FDA) responsible for the regulation of medical devices, has issued a request for public comments on expanding patient access to medical technologies intended for use by patients in their homes.

Washington greatly expanded the protection for consumers’ identifiable health information by enacting the “My Health My Data Act” (MHMDA), in an effort to close the gap between HIPAA protections and the laws protecting the privacy and security of other consumer health care data. While MHMDA resembles the California Consumer Privacy Act as amended by the California Privacy Rights Act (CCPA) and the Illinois Biometric Information Privacy Act (BIPA), it broadly applies to health information outside of traditional health care settings. Regulated Entities should consider undertaking additional steps that we outline now to prepare for the March 31, 2024, and June 30, 2024 (small businesses) compliance deadlines.

On May 3, 2023, New York joined Connecticut, Delaware, Massachusetts, Nevada, New Jersey, Oregon, Rhode Island, Washington, and California in enacting legislation that increases oversight over certain health care transactions. Governor Kathy Hochul signed the Fiscal Year 2024 New York State Executive Budget (FY 24 Executive Budget) into law which enacted the final version of Article 45-A of the New York Public Health Law (PHL) titled “Disclosure of Material Transactions.” The law takes effect on August 1, 2023.

As we previously covered, in March 2023, the Drug Enforcement Agency (DEA) announced a proposed rule on prescribing controlled substances via telehealth, aimed at addressing the “telehealth cliff” that was expected to occur once the COVID-19 Public Health Emergency (PHE) ends on May 11, 2023. The proposed rule provided some flexibility, but required a much more restrictive framework for prescribing controlled substances via telehealth compared to the flexibilities available during the PHE. During the 30-day comment period following the announcement of the proposed rule, the DEA received over 38,000 comments, which the agency says it is closely reviewing. Many commentators across the health care industry criticized the proposed rule because the in-person examination requirement would limit access to care. The DEA, working with the Department of Health and Human Services, is also considering revisions to the proposed rule. 

Governor Gavin Newsom signed multiple pieces of mental health treatment-related legislation into law in 2022 that have or will begin to go into effect this year. These laws address mental health commitment timing and hearing rights, involuntary mental health treatment, the CARE program, and substance use disorder treatment client rights. This is a good time for relevant facilities and groups to audit the effectiveness of updated policies and evaluate and address any operational issues that may have cropped up during implementation.