Court Cases

CMS revealed on Aug. 29 the list of the initial 10 drugs that will be subject to drug price negotiations in the Medicare program starting in 2026. However, even before the agency’s announcement, several pharmaceutical companies and other stakeholders filed lawsuits seeking to curtail the negotiation program’s implementation.

During a KFF webinar on Sept. 12, a Medicare policy expert and two attorneys discussed the legal challenges and potential ramifications.

Zachary Baron, associate director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute, said that if courts rule in favor of the drug manufacturers, there could potentially be changes in how Medicare reimburses hospitals and providers, among other consequences.

The Centers for Disease Control and Prevention on Sept. 12 recommended that everyone 6 months and older receive the latest versions of COVID-19 mRNA vaccines developed by Pfizer Inc.-BioNTech SE and Moderna Inc. — which will be the first wave of COVID vaccines that won’t be paid for by the federal government. During the public health emergency, private payers only had to reimburse providers for administering the vaccines. Per the Centers for Disease Control and Prevention, “people who don’t have health insurance or with health plans that do not cover the cost can get a free vaccine from their local health centers; state, local, tribal, or territorial health department; and pharmacies participating in the CDC’s Bridge Access Program.” Most private health plans and all government-backed plans cover CDC-recommended vaccinations without cost sharing for members.

The Center for Medicare Advocacy and the Community Legal Services clinic at the University of the Pacific, McGeorge School of Law filed a class action lawsuit (Case 2:23-cv-01932-DB) against HHS on Sept. 8 on behalf of Medicare beneficiaries who have lost coverage of certain Medicare Part B drugs. Plaintiffs were receiving the Janssen Pharmaceutical Companies of Johnson & Johnson’s Stelara (ustekinumab) in an outpatient clinic, where the agent was administered by health care professionals and covered under Part B as an agent provided “incident to” a physician’s service due to disabilities that prevent them from self-administration. In October 2021, HHS denied coverage of Stelara under Part B because it had determined that the drug is “usually self-administered by the patient.” HHS did not notify patients about the change, and it did not require providers to issue a notice. One plaintiff had four injections of more than $40,000 each, while another had two injections of about $58,000 each, before they realized that they were responsible for the full cost of the drug. Plaintiffs are seeking “timely, adequate notice” be required when a Part B drug that has been furnished incident to a practitioner’s service is added to the self-administered drug (SAD) list, as well as a modification to Medicare allowing beneficiaries who cannot self-administer a medically necessary drug due to a disability to be able to receive Medicare-covered medications administered by a health care professional, among other requests.

Oscar Health, Inc. on Sept. 6 announced that it added two new executives to its leadership team from CVS/Aetna, the former employer of Oscar CEO Mark Bertolini. Kerry Sain joined the firm in August as executive vice president of the technology platform +Oscar, and Steven Kelmar will assume the role of executive vice president and chief of staff to the CEO later this month, Oscar said. Before coming to Oscar, Sain was Aetna’s chief commercial growth officer, while Kelmar was chief of staff, executive vice president and head of strategy for the office of the chairman and CEO at Aetna, as well as senior vice president of strategy implementation at CVS Health. Bertolini was Aetna’s CEO prior to its acquisition by CVS Health Corp. in 2018; after the deal closed, he served on CVS Health’s board until leaving in 2020.

Since the January release of CMS’s controversial final rule on Risk Adjustment Data Validation (RADV) audits, all has remained quiet on the litigation front. But in a complaint filed in a federal court on Sept. 1, Humana Inc. opens old wounds regarding the years-long leadup to the final rule and invokes the Administrative Procedure Act (APA) in asking the court to vacate the rule. In doing so, it seeks to stop CMS from applying its new audit policy of seeking extrapolated recovery amounts.

Issued on Jan. 30, the final rule (88 Fed. Reg. 6643, Feb. 1, 2023) pertains to contract-level audits that CMS began conducting more than a decade ago to verify the accuracy of payments made to MA organizations and recover improper payments. In that rule, CMS codified its plans to begin extrapolating RADV audit findings with payment year 2018 — but not findings for payment years 2011 through 2017, as once proposed. And the agency confirmed it would not adopt a “fee-for-service adjuster” to account for any impact from unaudited diagnosis codes in FFS data that are used to calibrate the MA risk adjustment model.

CMS is growing increasingly concerned that people, particularly children, are being disenrolled from Medicaid and Children’s Health Insurance Program (CHIP) coverage even though they still meet eligibility requirements. The agency said it sent a letter to officials in all 50 states, Washington, D.C., Puerto Rico and the U.S. Virgin Islands requiring them to determine if they have an eligibility systems issue and, if so, to correct the problem and reinstate coverage to the affected people. Since states were allowed to resume Medicaid redeterminations in April after a multiyear pause due to the COVID-19 pandemic, CMS said it “has learned of additional systems and operational issues affecting multiple states, which may be resulting in eligible individuals being improperly disenrolled. These actions violate federal renewal requirements and must be addressed immediately.”

The $2.5 billion deal between Elevance Health, Inc. and Blue Cross and Blue Shield of Louisiana is facing some hiccups, per the New Orleans Times-Picayune. The Louisiana Blues affiliate must reissue ballots to 92,000 policyholders that will allow them to approve or reject the sale and invalidate proxy ballots that it’s already received. The insurer will also reschedule a meeting and official vote until after the state’s Dept. of Insurance has held a two-day hearing on the proposed sale. Louisiana Insurance Commissioner Jim Donelon and Attorney General and gubernatorial frontrunner Jeff Landry — both Republicans — have been critical of the deal, the Times-Picayune reported. The newspaper also said that attorneys in the state Dept. of Insurance “fully expect litigation” over the proposed transaction, which Elevance announced in January.

CVS Health Corp. on Aug. 23 launched a subsidiary called Cordavis, which will work with drug manufacturers to “commercialize and/or co-produce biosimilar products.” CVS said it has contracted with Sandoz to bring Hyrimoz, a Humira biosimiliar, to market in the first quarter of 2024 under a private Cordavis label. The list price of Cordavis Hyrimoz, the company said, will be “more than 80% lower than the current list price of Humira.” Sandoz launched a branded, high-concentration formulation of Hyrimoz on July 1, joining several other Humira biosimilars that launched in the same month.

On Aug. 21, Pfizer Inc.’s Abrysvo became the first vaccine approved by the FDA for use in pregnant people to prevent respiratory syncytial virus (RSV) in infants. The vaccine, which is administered in one dose, is approved for use at 32 through 36 weeks gestational age of pregnancy, and it can prevent lower respiratory tract disease caused by RSV in infants from birth through six months old. In May, the FDA approved Abrysvo for the prevention of lower respiratory tract disease cause by RSV in people age 60 and older. The FDA in July approved AstraZeneca and Sanofi’s Beyfortus (nirsevimab-alip) for preventing RSV in infants, and the Centers for Disease Control and Prevention in early August recommended the vaccine be given to all infants under 8 months and some older babies at increased risk of severe illness starting this fall.

A federal appeals court on Aug. 16 delivered a significant victory for the under-fire PBM industry, ruling that an Oklahoma law regulating PBMs is preempted by federal statutes. Officials at lobbying groups that are closely watching the case say that the dispute may wind up before the Supreme Court — and if that occurs, employer plan sponsors will arguably have more at stake than PBMs themselves.

“I think it is highly likely to be appealed and to be pursued further,” says Dillon Clair, director of state advocacy and litigation at the ERISA Industry Committee (ERIC), which represents the employee-benefits interests of large employers. “This is a big case, not just for Oklahoma and their law and the employers that are going to have to comply with that, but for all the other state laws that have [been] enacted” and for states looking to follow suit.

Connecticut’s top law enforcement official is coming out swinging against big rate hikes requested by health insurers that sell plans in the state’s individual and small-group markets. In an Aug. 15 letter to Connecticut Insurance Commissioner Andrew Mais, Attorney General William Tong points out that the state’s Insurance Dept. may only approve rates that are not “excessive, inadequate or unfairly discriminatory,” and insurers must provide “transparent, factually supported actuarial analysis” to justify their rates. “In at least the case of Cigna’s 14.9 percent increase in the small group market, Anthem’s 9.8 percent increase in the individual group and 14.9 percent increase in the small group market, and ConnectiCare’s 17.5 percent increase in the individual market, the insurers have failed to meet that burden and their requests must be rejected,” Tong wrote.