Author: Samantha Schram

The ACA Twilight Zone

Death by a thousand cuts has been the Trump Administration’s approach to the Affordable Care Act (ACA).  To be sure, President Trump  tweeted on April 23, 2017 that “ObamaCare is in serious trouble.”  On October 13, 2017, he tweeted, “ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”  On May 30, 2018, he stated: “For the most part, we will have gotten rid of a majority of Obamacare.”  And on June 4, 2018, he tweeted, “We had Repeal & Replace done (and the saving to our country of one trillion dollars) except for one person, but it is getting done anyway. Individual Mandate is gone and great, less expensive plans will be announced this month.”

In the courts, the ACA has certainly been no stranger to the artful attack.  But two lawsuits, one filed in Texas and the other in Maryland, have gained nationwide traction and hold nationwide consequences.  The first suit, Texas v. US, made its way to U.S. District Court Judge Reed O’Connor’s bench in the Northern District of Texas.  The 20-state GOP led suit was filed on February 26, 2018 by Texas Attorney General Ken Paxton.  It argues that since the ACA was only upheld by the Supreme Court in NFIB v. Sebelius because the individual mandate was a tax, and now that the Tax Cut and Jobs Act of 2017 (TCJA) zeroed-out the individual mandate penalty, the entire ACA is unconstitutional.  The Plaintiff-states also argue that since the ACA does not have a severability clause – a clause that would allow the rest of the statute to live if one part is stricken – the ACA as a whole must fall.

Under Attorney General Jeff Sessions direction, the government will not defend the ACA’s constitutionality.  Defending the ACA, and its patient protections like the prohibition on insurers from discriminating against patients with pre-existing conditions, are 17 Democratic attorneys general representing their respective states as Intervenor-Defendants.  A slew of patient groups and scholars filed amicus briefs in support of the Intervenor-Defendants, but only Citizens United filed as amicus in favor of the Plaintiff-States.  The American Cancer Society Cancer Action Network filed as amicus, urging the court to uphold the ACA and to “recognize Congress’s clear intent to improve access to lifesaving health care for millions of Americans.”  A bipartisan group of law professors filed as amicus, arguing that “[t]he arguments of both the plaintiff States and the United States on the severability of the insurance mandate from the other provisions of the ACA are inconsistent with settled law.”  On July 19, 2018, Senate Democrats introduced a Senate resolution that would authorize Senate Legal Counsel to intervene in Texas v. US to defend the ACA’s patient protections for people with pre-existing conditions.

The second suit, City of Columbus v. Trump, filed on August 2, 2018 by the Cities of Baltimore, Chicago, Columbus, and Cincinnati in the U.S. District Court for the District of Maryland alleges that the Trump Administration’s actions over the last several years amount to an unconstitutional sabotage of the law the President is required to faithfully execute.  The suit makes two claims: the first claim that the Administration is acting arbitrarily and capriciously, and the second that President Trump is violating the “Take Care” Clause of the Constitution.  Under the Take Care Clause of the U.S. Constitution, the President and his or her Administration must “take care that the laws be faithfully executed.” U.S. Const. art. II, § 3.  The suit cites a range of administrative actions taken to sabotage the ACA and have the aim and effect of weakening ACA exchanges, driving up premiums, and driving out issuers, ultimately increasing the rate of the uninsured and underinsured.

Judge O’Connor, after first announcing that oral arguments in Texas v. US would take place on Monday, September 10, moved up oral arguments to Wednesday, September 5, at 9:30 a.m.  At the same time in Washington, D.C., Supreme Court nominee Brett Kavanaugh will be testifying before the Senate Judiciary Committee for potential confirmation.  As some have noted, the fate of the ACA could turn on Kavanaugh’s appointment to the Supreme Court.  Kavanaugh’s preeminent views on separation of powers and his textualist-meets-originalist approach to statutory interpretation is consistent and can be expected to appear in his opinions, but is alarming to health care advocates and patients.  Kavanaugh’s jurisprudence shows that he cares deeply about administrative law and is unlikely to “deconstruct the administrative state,” but he is likely to “put a tighter leash on the regulatory state.”  In all, the fate of the ACA remains to be seen.




Round Two: Right-To-Try Legislation Passes in House

Last Wednesday, the House of Representatives passed a bill that aims to give terminally ill patients the “right-to-try” drug treatments that have not yet been approved by the Food and Drug Administration (FDA). The Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2018, introduced as H.R. 5247, received a majority vote of 267 to 149. The previous week, the bill failed to receive the required two-thirds majority vote in the House to proceed. As reintroduced, the bill required only a simple majority vote to pass.

During debate on the House floor Wednesday, Representative Frank Pallone Jr. (D-N.J.), the top Democrat on the House Energy and Commerce Committee, asserted that allowing patients to access investigational treatments that have only completed a phase 1 clinical trial would expose patients to treatments with little or no efficacy data. The American Cancer Society Cancer Action Network (ACS CAN), along with over 75 organizations representing millions of patients, expressed concern and opposition to the bill, saying not only would it remove FDA approval and consultation, but it would also fail to increase access to promising therapies since the bill does not address primary barriers to access to investigational therapies. ACS CAN further stressed opposition since the proposed bill would remove FDA’s role in consultation on dosing, route of administration, dosing schedule, and other safety measures under the current program.

Proponents of the legislation, such as House Energy and Commerce Committee Chairman Greg Walden (R-Ore.), note that 38 states have right-to-try legislation and point to additional monetary federal support. Supporters maintain that the bill strikes the right balance for patients and their safety, arguing that those with a terminal illness should have every tool at their disposal. However, critics of the legislation fear it could lead to a slippery slope of bypassing FDA regulations. Holly Fernandez Lynch, a professor of medical ethics at the University of Pennsylvania, said the bill probably would not increase access to investigational drugs beyond what the FDA already allows. According to Professor Lynch, “[t]he bigger challenge is this attack on the FDA’s very reason for existence.”

The bill will now move back to the Senate for approval. Last August, the Senate approved similar legislation. If approved, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2018 would introduce legislation across state lines. Whether the federal bill will increase access to unapproved treatments for terminal patients remains an open question.


Clarity in the Emerging Biosimilars Market

Blockbuster biologics have represented the forefront of the biopharmaceutical industry for nearly two decades. Biologics are drug products that are derived from natural sources and include a wide range of products such as vaccines, allergenics, gene therapies, and recombinant therapeutic proteins. Biologics offer treatments for diseases that conventional drugs have been unable to sufficiently treat or have previously been considered untreatable altogether. Indeed, biologics, which are coined “blockbusters” upon generating over $1 billion in annual sales, have dominated U.S. markets recently. For example, Humira, a biologic drug, has been considered the top-selling drug since 2013. Despite the widespread success of biologics among manufacturers, this progress has not yet translated to the pockets of patients. Instead, biosimilars, which are therapeutic drugs that are similar but not structurally identical to an approved brand-name biologic, tout expected savings of $54 billion from 2017 to 2026. The emerging biosimilars market promises significant cost reductions and increased clarity regarding the approval of new biosimilars.

Enacted as part of the Patient Protection and Affordable Care Act (ACA) in 2010, Congress developed a new regulatory approval pathway for biosimilars through the Biologics Price Competition and Innovation Act (BPCIA). Specifically, the BPCIA created an abbreviated licensure pathway for biosimilars that are highly similar to already approved “reference” biologics in terms of safety, purity, and potency. The BPCIA also set forth FDA-administered periods of regulatory exclusivity for certain brand-name biologics and biosimilar products, as well as procedures to resolve patent disputes. The primary goals of the BPCIA include increasing access to lifesaving medications, providing more treatment options, and lowering health care costs through increased competition. As well, comparable to how generic drugs avoid duplicating costly clinical trials to attain approval, biosimilars also avoid these costs.

By way of background, and to better understand the events leading up to creating a biosimilar pathway, generic drugs merit discussion. In 1984, the Hatch-Waxman Act was enacted by creating an abbreviated regulatory pathway for generic chemical drugs. The generic drug industry subsequently exploded and the changes in regulation have allowed generics to capture significant market share from brand-name drug manufacturers. The generics market share has increased from merely 19% of dispensed drugs in 1984 to nearly 89% in 2015. The Hatch-Waxman Act allows generic drugs to piggyback off of the efficacy and safety data of a brand-name drug. Central to the Hatch-Waxman Act are the competing interests of medical innovation and access to medicine. Accordingly, the U.S. patent system plays a significant role in the pharmaceutical industry. During the time of congressional debate and subsequent implementation of the Hatch-Waxman Act, the biotechnology industry was still in its infancy, and biologic drugs were specifically not included under the pathway.

There are several key differences between the drugs regulated under the BPCIA as compared to the Hatch-Waxman Act. Biologic and biosimilar drugs are more complex than chemical drugs. Biosimilar drugs are often compared to generics and even called “generic biologics,” but this label is improper. Strictly speaking, a pharmacist can swap a generic drug for a brand-name drug, but biosimilar drugs cannot be swapped. However, many states have laws addressing pharmacy-level substitution, which is a practice that permits a pharmacist to substitute one drug product for another without consulting the prescriber. Another distinguishable aspect between the BPCIA and the Hatch-Waxman Act is how patent rights are enforced. Unlike the Hatch-Waxman Act, the BPCIA does not tightly link FDA approval with patent rights. Nonetheless, patent disputes have been the subject of every lawsuit concerning the BPCIA to date. Currently, there are nine approved biosimilars in the United States, but only three have launched on the market. Patent litigation envelops the approval process for biosimilars and although uncertainty remains in the biotechnology industry, the biosimilar approval pathway has gained clarity.

Derma Fraud with a Side of Greed

South Florida represents a hotbed of health care fraud and abuse and is often referenced as “ground zero” for Medicare fraud. Indeed, South Florida has garnered national attention for the pervasiveness of health care fraud schemes. Recently, the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force involved charging seventy-seven defendants in the Southern District of Florida. Unfortunately, this is a mere snapshot of the long-term consequences for health care fraud in the South Florida Community.

Since 2003, Gary L. Marder, D.O., has enrolled his clinic in Medicare, a federal health care program. Dr. Marder, the owner and operator of the Allergy, Dermatology & Skin Cancer Centers in Port St. Lucie and Okeechobee, treated Medicare beneficiaries via radiation oncology and other clinical laboratory services. Notably, Marder was the sole physician to render services to patients in both offices. During Marder’s absences, no other physician was present.

On December 13, 2013, Theodore A. Schiff, M.D., brought a qui tam action under the False Claims Act (FCA) on behalf of the government. 31 U.S.C. § 3730(b)(1). In the whistleblower suit, Marder allegedly violated the FCA by knowingly creating and submitting false claims to Medicare for reimbursement of dermatology and pathology services. Dr. Schiff noticed an alarming trend in patients that came to him after seeing Marder at one of his offices because many lacked a serious dermatological condition. On October 14, 2014, the United States intervened in the Civil Action.

More recently, on October 18, 2017, Dr. Marder was charged with obstruction of a federal criminal investigation of a health care fraud scheme by delivering falsified and altered patient files subpoenaed by a federal grand jury. Prosecutors claim that Marder submitted false and fraudulent claims to insurance companies for the services of a medical physicist to advise on dosages for radiation treatments from about January 2011 through January 2016. However, at no time did Marder actually have a medical physicist working in his offices. A Qualified Medical Physicist is an individual who is competent to practice independently in one or more of the subfields in medical physics. Instead, Marder instructed his employees to create false patient files with fabricated radiation dosages and calculations with the forged signature of a medical physicist in attempts to hide the alleged fraud.

According to statements made by Marder’s lawyer, the dermatologist will give up his medical license as part of a plea deal that is expected to be finalized later this month. As part of the plea deal, Marder agreed to post a $1 million bond using his $28 million oceanfront property in Palm Beach, Florida as collateral.

In September 2016, the Court granted summary judgment in favor of the United States finding that Dr. Marder knowingly submitted false claims to Medicare by requesting reimbursement for services that he never actually performed or directly supervised. Marder’s frequent absence, including expansive periods of foreign travel, amounted to days corresponding to over fifty percent of the payments he received from Medicare. United States ex rel. Schiff v. Marder, 208 F. Supp. 3d 1296 (S.D. Fla. 2016). According to the qui tam action, Medicare was billed over $69 million and $15.8 million was paid from January 2008 through September 2014. The United States have stipulated to a consent final judgment of over $18 million to settle False Claims Act allegations against Dr. Marder. Prosecutors noted at the time that “outright fraud of the scope and magnitude seen in this case is rarely seen, especially when supported by such irrefutable evidence,” and that “the pervasiveness of Marder’s practices resulted in virtually every reviewed claim being false.”