Health Care

This July, we detailed the Supreme Court’s surprising revival in United States ex rel. Polansky v. Exec. Health Resources, No. 21-1052 (S. Ct. June. 16, 2023), of the question of whether 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. In Polansky, a lengthy dissent by Justice Thomas questioned whether the False Claims Act qui tam provisions violated the Appointments Clause and Take Care Clause of Article II of the United States Constitution, arguments that had been endorsed by the Department of Justice (“DOJ”) in the 1989, though ultimately repudiated by DOJ just seven years later. A concurrence by Justice Kavanagh, joined by Justice Barrett, stated that “the Court should consider the competing arguments on the Article II issue in an appropriate case.” Shortly after Polansky was decided, a defendant in a declined qui tam case pending in the United States District Court for the Northern District of Alabama accepted Justice Kavanagh’s invitation, and moved to dismiss on Article II grounds. In a decision entered in November, the District Court rejected that challenge.

As we wrote about in our prior blog post, on September 29, 2023, John D. Bates of the U.S. District Court for the District of Columbia struck down a federal rule that permitted health plans and pharmacy benefit managers (PBMs) to exclude drug manufacturer copayment (copay) assistance from a patient’s cost sharing limits. In two separate filings this week, HHS signaled that it intends to support the continued use of copay accumulator programs as the industry has been using them since 2021.

In the inaugural episode of our new series of Health Law Diagnosed titled Women Leaders in Health Care, host Bridgette Keller speaks with in-house attorneys Leah Pollema of InhibRx and Serene Katranji of Orchard Laboratories about the importance of mentorship.

California’s new Office of Health Care Affordability (OHCA) is set to begin advance regulatory review of certain health care transactions beginning January 1, 2024. As further explained in our previous post, subject to certain exceptions, a broad range of health care entities (collectively, Health Care Entities) will soon be subject to potential prospective transaction review. OHCA initially published proposed regulations for the new transaction review process in early August (for more details, see our prior post and podcast).  As further discussed in our previous post, these proposed regulations were revised in October and made available on the OHCA website, with a comment period that ended on October 17, 2023. In response to October’s public comments, OHCA has further revised the proposed regulations (Revised Regulations), which are available here. This time however, OHCA has also provided notice of proposed emergency regulatory action, indicating that this version of the regulations will be submitted to the California Office of Administrative Law (OAL) for approval. Once submitted, the public will have five days to provide comments to the OAL. If the OAL approves the regulations, it will file them with the California Secretary of State and the regulations will become effective as emergency regulations for five years as of the filing date. During this period, OHCA will proceed with regular rulemaking action addressing prospective health care transaction review.

On November 13, 2023, Governor Kathy Hochul announced plans to regulate cybersecurity for New York general hospitals regulated under Article 28 of the Public Health Law. As proposed, the regulations will provide an additional level of security for hospitals, which have been increasingly targeted for cybersecurity scams and breaches. The proposed regulations would be additive to those requirements of the federal Health Insurance Portability and Accountability Act (HIPAA), which already includes a variety of requirements meant to safeguard Protected Health Information (PHI). Accompanying the proposed regulations, a $500 million dollar fund has been appropriated under Governor Hochul’s FY24 budget to assist hospitals in complying with the proposed cybersecurity regulations. The funds will be made available through a Health Care Technology Capital program, which will be established by the New York State Department of Health (DOH).

The U.S. Food and Drug Administration (FDA) recently released a proposed rule that would seek to regulate laboratory developed tests (LDTs) as medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA). This rule could reshape the landscape of LDTs and, as expected, has generated substantial attention and feedback from the public, with both supportive and negative comments flooding in. We previously provided a summary of the proposed rule and FDA’s lengthy justification for it here. In this blog post, we will examine some of the key arguments presented in the public comments submitted to Docket FDA-2023-N-2177, as well as public statements published by industry trade associations.

A new battle is emerging in the fight for health equity, and it’s centered on the humble pulse oximeter. On November 1, 2023, 25 state attorneys general sent a letter to the Food and Drug Administration (FDA) demanding that the agency take urgent action to address pulse oximeter inaccuracies that continue to create health care risks for people of color. The letter comes exactly one year after a public meeting held by the Anesthesiology and Respiratory Therapy Devices Panel of the FDA’s Medical Devices Advisory Committee titled “Pulse Oximeter Accuracy and Limitations,” and nearly 21 months after the agency issued a safety communication about pulse oximeter inaccuracies when used on people with dark skin pigmentation (see our previous blog post on pulse oximeter performance here).

Since the Modernization of Cosmetics Regulation Act of 2022 (MoCRA) was signed into law, cosmetics companies have spent the past year preparing to comply with its provisions. This includes the facility registration and cosmetic product listing requirements that have were mandated by Congress in the new law. Under MoCRA, the statutory deadline for meeting these foundational requirements is set at December 29, 2023 (one year after MoCRA’s enactment). However, on November 8, 2023, the Food and Drug Administration (FDA) issued Guidance for Industry: Compliance Policy for Cosmetic Product Facility Registration and Cosmetic Product Listing (Compliance Guidance) and announced that enforcement of facility registration and cosmetic product listing requirements will be delayed six months.

The Department of Health and Human Services’ Office of Inspector General (OIG) published a General Compliance Program Guidance (GCPG) on November 6, 2023, marking the first update to OIG’s compliance program guidance documents (CPGs) since 2008 and advancing OIG’s Modernization Initiative first announced in a September 2021 Request for Information.

Public Act No. 23-171: An Act Protecting Patients and Prohibiting Unnecessary Health Care Costs (Act) took effect in Connecticut on October 1, 2023. Under the Act, a pharmaceutical manufacturer (PM) that employs pharmaceutical sales representatives (PSRs) is required to register with the Connecticut Department of Consumer Protection (Department) as a so-called “pharmaceutical marketing firm” (PMF). As discussed in our previous blog post, there are few jurisdictions in the United States that require registration or licensure of PSRs, and up until now, these obligations were placed on PSRs at the individual level. However, this new Connecticut law deviates from the typical regulatory scheme. In this post, we will provide an overview of the affirmative obligations that the Act imposes on PMs, PMFs, and PSRs and compare them to the laws, regulations, and ordinances of other United States jurisdictions.

Governor Newsom signed 890 bills and vetoed 156 bills in 2023. Every year, California passes multiple laws that impact health care practitioners and health facilities and, as further described below, 2023 is no exception. From physician assistant supervision to nursing facility informed consent requirements, these laws will present various new compliance considerations for health care practitioners and health facilities as soon as January 1, 2024.

In coordination with the Centers for Medicare & Medicaid Services (CMS), the Department of Health and Human Services (HHS) and Office of the National Coordinator for Health Information Technology (ONC) proposed a much-anticipated framework to establish and manage “appropriate disincentives” for health care providers under the Information Blocking Rules. As described in more detail in the blog post, the proposed rule (Appropriate Disincentives Proposed Rule) includes proposed disincentives for (i) hospitals and critical access hospitals (CAHs) participating in the Medicare Promoting Interoperability Program; health care providers eligible for Merit-Based Incentive Payment System (MIPS) adjustments; and health care providers participating in the Medicare Shared Savings Program (MSSP).

On October 30, 2023, the Biden Administration released and signed an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (Executive Order) that articulates White House priorities and policies related to the use and development of artificial intelligence (AI) across different sectors, including health care.

Perhaps, unsurprisingly, the Office of Inspector General for the Department of Health and Human Services (OIG) rejected a manufacturer’s proposal to provide free hearing aids to certain patients if they receive one of the manufacturer’s cochlear implant devices (Proposed Arrangement). In reaching its determination, the OIG reiterated its longstanding concern about free items or services to Medicare and Medicaid beneficiaries because such arrangements could result in steering and unfair competition. Of note, the free hearing aids have a retail value of $1,180 to $2,240 which far exceeds the $570 limit imposed under the only potentially relevant safe harbor – the patient engagement and support safe harbor.

U.S. health care attorneys, investors, and industry stakeholders are very familiar with the well-worn mantra that prescription drug and medical device companies are not allowed to “market” or “promote” their otherwise-authorized medical products for unapproved uses, also known as “off-label” uses. Over the past decade or so, this strict rule has been the subject of significant litigation and administrative proceedings seeking to disrupt and ultimately soften the government’s position in this long-standing, complex balancing of competing interests. What has been emerging is a more nuanced modern regime in which a drug or device sponsor’s First Amendment rights to speak responsibly and in a non-promotional way about its own products – as well as health care providers’ interests in gaining access to such information directly from the product sponsor to enhance patient care – are gaining greater recognition than ever before.

On October 10, 2023, the Drug Enforcement Administration (DEA) published another temporary rule extending the COVID-era telemedicine flexibilities that allow physicians and other prescribers to prescribe controlled substances without an in-person evaluation.  With just over a month to go before the expiration of the first set of flexibilities, the DEA announced that the telemedicine flexibilities, which have been in place since March 2020, will be extended through the end of 2024 in order to give the agency more time to consider feedback received in response to the proposed rule, which was announced in March of this year.  As a reminder, under the Ryan Haight Online Pharmacy Consumer Protection Act of 2008, providers may not prescribe controlled substances without an in-person visit, unless an exception applies.  The COVID public health emergency triggered one such exception, which lead to the telehealth flexibilities. 

The Office for Civil Rights (OCR) recently offered covered entities and business associates (Regulated Entities) not-so-subtle reminders in its October 2023 Cybersecurity Newsletter that effective sanction policies can encourage HIPAA compliance.​​​​​​​ Regulated Entities are required by HIPAA to implement sanction policies in which they impose “appropriate sanctions” against their respective workforce members who fail to comply with the Privacy Rule or Security Rule, the Regulated Entity’s privacy policies and procedures, and/or the Regulated Entity’s security policies and procedures, as applicable. These sanction policies are important administrative safeguards meant to ensure there are objective, documented consequences for HIPAA non-compliance among workforce members. The recent proliferation of social engineering attacks and increasingly sophisticated nature of external cybersecurity threats in health care underscore the importance of Regulated Entities consistently reviewing and applying sanction policies.

California’s new Office of Health Care Affordability (OHCA) is set to begin advance regulatory review of certain health care transactions beginning January 1, 2024. As further explained in our previous post, subject to certain exceptions, third party payers and administrators, hospitals, hospital systems, fully integrated delivery systems, pharmacy benefit managers, physician organizations, and other providers (collectively, Health Care Entities) will soon be subject to potential prospective transaction review. OHCA initially published proposed regulations for the new transaction review process in early August (for more details, see our prior post and our podcast). Multiple stakeholders expressed concerns with the proposed regulations during the public comment period, which ended August 31, 2023. In response to these comments, OHCA has published revised proposed regulations (Revised Regulations) allowing for an abbreviated comment period that ends October 17, 2023. The Revised Regulations are available here.

Governor Gavin Newsom recently signed multiple bills into law as part of California’s ongoing efforts to safeguard access to reproductive and gender affirming health care. The new laws are intended to increase protections for health care providers and patients, increase health care provider availability, and improve patient privacy. In a recent press release, California Legislative Women’s Caucus Vice Chair Assemblymember Cecilia Aguiar-Curry noted: “Last year, we enacted 14 bills and budget funding to expand and protect reproductive rights and services in our state. This year, we build on that momentum with legislation that ensures California remains a national leader in the fight for reproductive justice.”

In a significant development with far-reaching implications for health plans and pharmacy benefit managers (“PBMs”), Justice John D. Bates of the U.S. District Court for the District of Columbia has recently struck down a federal rule that allowed health plans to use copay accumulator programs to exclude drug manufacturer copay assistance from a patient’s out-of-pocket costs. This ruling has significant implications for the way health plans and PBMs operate and interact with patients and copay assistance programs.