Health Care

The U.S. Department of Justice and U.S. Health and Human Services Office of Inspector General recently announced the indictment of a pharmacy marketer who allegedly received and paid kickbacks in violation of the federal Anti-Kickback Statute (AKS). While the alleged fraudulent scheme isn’t anything new, the actions that the marketer allegedly took to try to cover up the scheme serve as a good lesson.

On Wednesday, August 26th, the Centers for Medicare & Medicaid Services (CMS) issued a notice extending the deadline to finalize significant proposed changes to the Physician Self-Referral Law (commonly known as the Stark Law) announced last year. CMS published the proposed rule on October 17, 2019 in tandem with a companion proposed rule issued by Department of Health and Human Services (HHS) Office of Inspector General (OIG) with equally sweeping changes to the Anti-Kickback Statute (AKS). Both rules were issued as part of CMS’s Regulatory Sprint to Coordinated Care and offer a number of industry-friendly changes designed to reduce regulatory burden associated with the Stark Law and the AKS and allow for increased adoption of value-based arrangements.

Before we continue our Bioethics in a Pandemic series, we thought it would be helpful to provide a quick overview of the various principles that inform ethical decision-making in the health care setting.

As you might imagine, providing health care to individuals with diverse background and values presents ethical choices for health care professionals every day, throughout the entire health care system – providers, administrators, policymakers, insurers, employers, and even the health care lawyers! Well-recognized bioethics scholars Tom Beauchamp and James Childress offer a principle-based approach to guide ethical decision-making in health care. The four principles are (1) Respect for Autonomy, (2) Nonmaleficence, (3) Beneficence, and (4) Justice.

As we discussed in our previous blog post, the Department of Health and Human Services’ Office for Civil Rights (OCR) released guidance this past June to address how health care providers could contact, in a HIPAA-compliant manner, recovered COVID-19 patients to provide them with information about donating blood and plasma to potentially help other COVID-19 patients. On August 24, OCR released an updated version of that guidance to address similar communications from health plans. The amended guidance provides that health plans may also reach out to recovered COVID-19 patients about blood and plasma donation, subject to the same restrictions applicable to health care providers.

The Seventh Circuit Court of Appeals recently decided a case that created a new standard to assess requests by the Department of Justice (DOJ) to dismiss declined qui tam (whistleblower) suits under the False Claims Act (FCA). See U.S. ex rel. CIMZNHCA LLC V. UCB Inc. et al., No. 19-2273 (7th Cir. 2020). Prior to this decision, federal Courts of Appeals applied either the Sequoia Orange standard or the Swift standard, discussed below. In this decision, the Seventh Circuit opined that the standard should be informed by Federal Rule of Civil Procedure (FRCP) 41, and this standard “lies much nearer to Swift.” The Seventh Circuit also decided a key jurisdictional issue: whether the United States can appeal a denial of its motion to dismiss a declined qui tam action. Again, taking a new tack, the panel resolved this issue by construing the motion to dismiss also as a motion to intervene and construing the district court’s decision as a denial of that motion, thus obviating the need to invoke the collateral order doctrine.

Clinical trial sponsors and principal investigators can consider themselves on notice that the Food & Drug Administration (FDA) is poised to ramp up enforcement activity relating to responsible parties’ obligations regarding clinical trial registration and results reporting. In a new guidance it released on August 12, 2020, FDA outlines how it intends to identify parties who have failed to register a clinical trial on, or submit results to, the ClinicalTrials.gov databank, as required by the FDA Amendments Act of 2007 and final regulations promulgated in 2016 by the National Institutes of Health (NIH).

After months of stay-at-home orders, quarantine protocols, social distancing, and back-to-school planning, the ever- present question on everyone’s mind is, When will we get back to business as usual?  For many, the answer involves discussion of a safe and effective vaccine, including when it will be available and who will be able to get it. Even though a vaccine likely won’t be available until 2021 at the earliest, experts are already thinking about how to distribute it.  This post is the first in a blog series that will consider the various bioethics issues and principles related to the COVID-19 pandemic.

Comments made by Department of Justice attorneys during a recent webinar provided insight into the government’s civil enforcement priorities related to the coronavirus pandemic. In particular, government attorneys expect that civil enforcement related to COVID-19 relief funds will focus on certifications made by applicants seeking loan forgiveness and anticipate increased investigations into telemedicine services.

On August 4th, the Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) published the 2021 Hospital Outpatient Prospective Payment System (OPPS) proposed rule. The rule proposes to cut Medicare Part B reimbursement for 340B drugs by an additional 6% in 2021 and comes days after the D.C. Court of Appeals upheld a 340B rate reduction of nearly 30% in the 2018, 2019, and 2020 OPPS rules. The agency is relying on data collected through a recent 340B acquisition cost survey to justify the additional rate reduction.

As promised, the Food and Drug Administration (FDA) updated the Purple Book: Database of FDA-licensed Biological Products, providing greater transparency and a more user-friendly search functionality for the biological product and biosimilar industries. Earlier this year, FDA transitioned the Purple Book to a searchable online database. The August 3, 2020 release offers additional information on all FDA-licensed allergenic, cellular and gene therapy, hematologic, and vaccine products regulated by the Center for Biologics Evaluation and Research (CBER) expanding the dataset used by the database. FDA also updated the available exclusivity information for further industry ease of reference. This update is the next phase of the agency’s plan to improve the accessibility of information related to biological products through expansion and digitization.

On August 4, CMS posted a proposed rule on CY 2021 Payment Policies, which included important updates about the expansion of Medicare covered telehealth services due to the COVID-19 pandemic. Here, we cover this and other important developments related to telehealth access during the pandemic and beyond.

This week, the Friday surprise came courtesy of the D.C. Court of Appeals. In a long-awaited split decision, the court ruled that the U.S. Department of Health and Human Services (HHS) acted lawfully when it reduced Medicare Part B reimbursement to hospitals for 340B drugs by nearly 30%. The reduction in Part B reimbursement was originally proposed in the 2018 Outpatient Prospective Payment Services (OPPS) rule. HHS estimated it would reduce total Part B spending by $1.6 billion annually, and save Medicare beneficiaries millions in copayments. Covered entities sued to overturn the rate cut, and litigation has been ongoing since the rate cut was implemented in early 2018.

United States Attorney Andrew E. Lelling recently announced that the U.S. Attorney’s Office for the District of Massachusetts entered into a Memorandum of Understanding with Special Inspector General Brian D. Miller of the Office of the Special Inspector General for Pandemic Recovery to investigate and prosecute fraud in the distribution of the funds authorized by the Coronavirus Aid, Relief, and Economic Security.

Although health care may be well positioned to weather an economic downturn as an industry, certain sectors, including ambulatory surgery, vision, dermatology, dental, and other physician practices will bear the brunt of COVID-19 stay-at-home orders and patients delaying non-emergency care. While the onset of COVID-19 has delayed or derailed many transactions, strategic buyers should consider all of the different transaction tools available them to help maximize value and successfully get to closing. For knowledgeable investors and strategic buyers, now is the time to position yourself to acquire valuable health care assets at steep discounts.

For those unfamiliar with 363 Sales, a 363 Sale couples a flexible and fast process with ample liability protection for willing buyers. The primary benefit to a 363 Sale is that a buyer can acquire the debtor’s assets free and clear of virtually all liens, claims and encumbrances burdening the assets and the debtor. When a target is experiencing severe financial distress, the benefit of acquiring assets “free and clear of all liens” is extraordinarily valuable.

The Trump Administration issued a series of Executive Orders (“EOs” or “Orders”) Friday afternoon related to drug pricing.  Several of the EOs seek to restart stalled or withdrawn policy initiatives previously announced by the Administration.  Brief summaries of the EOs are below, and we will provide more detailed analysis this week.

Sarah Beth Kuyers discusses the actions taken at the federal and state level to increase access to telehealth in response to the COVID-19 pandemic and takes a look at the recent movement to make some of these changes permanent.  

Despite the COVID-19 pandemic, the House Energy & Commerce Committee continues work on several health policy issues, including Orphan Drug Act reform and continuous manufacturing.

About a month ago, I predicted on this blog that Food and Drug Administration’s November 2020 enforcement discretion deadline announced as part of its Comprehensive Regenerative Medicine Policy Framework would most likely not be extended. My view was based on a June 17 editorial by agency leadership discussing the risks of unapproved cellular therapy products, which didn’t suggest an extension was forthcoming, as well as an increase in Warning/Untitled Letters related to such products as compared to this time last year. In that earlier blog post I wrote: “Nothing in this newly published editorial suggests that [the Food and Drug Administration (FDA)] will be taking its proverbial foot off the pedal to slow down its efforts towards further oversight of the private stem cell clinic industry after November 2020.”

On July 2, a bipartisan group of six senators introduced legislation to waive 340B eligibility requirements for hospitals participating in the program during the COVID-19 pandemic. S. 4160 permits hospitals that are 340B-eligible based on their disproportionate share (“DSH”) adjustment percentage to maintain eligibility even if their DSH adjustment percentage falls below the requisite threshold.

The U.S. Department of Health and Human Services (HHS) recently released a final rule further amending 42 CFR Part 2 regulations (Part 2) to allow greater sharing of patient records related to substance use disorder (SUD) treatment. For the past few years, we have seen a push to better align the incredibly strict requirements of Part 2 with HIPAA in order to increase care coordination and promote patient outcomes, particularly in light of the opioid epidemic, which has unfortunately escalated during the COVID-19 pandemic.   HHS has been inching toward the harmonization of Part 2 with HIPAA and has now adopted a final rule to address some of the confusion caused by differences between the two regulatory schemes. In conjunction with the release of the final rule, HHS also issued a helpful fact sheet explaining the major changes.