Court Cases

News Briefs: Public Health Emergency Is Slated to End in May

The COVID-19 public health emergency (PHE) will end on May 11, the Biden administration said. Emergency authorities flowing from the PHE have required insurers to make certain COVID-19 testing and treatment available to plan members at no additional cost; expanded access to telehealth in Medicare, Medicaid and CHIP; increased funding to states for Medicaid; and barred states from disenrolling Medicaid members. In December, Congress authorized states to begin disenrolling Medicaid members starting in April, with enhanced funding declining and zeroing out on a set schedule starting then. The Biden administration’s announcement comes as Republicans, newly in control of the House of Representatives, have introduced bills that would end the PHE much sooner. The May 11 end date “align[s] with the Administration’s previous commitments to give at least 60 days’ notice prior to termination of the PHE,” according to a White House statement.

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Insulin-Pricing Lawsuit Adds to Growing Pressure on PBMs

The state of California filed a lawsuit this month against three major PBMs and three pharmaceutical companies, accusing them of inflating the cost of insulin and violating the state’s Unfair Competition Law.

Other states have had similar legislation pertaining to insulin costs, and the Federal Trade Commission (FTC) announced in June that it was examining the business practices of the six largest PBMs in the U.S., including the use of rebates for insulin medications. Still, David Kaufman, an attorney with Laurus Law Group LLC, tells AIS Health that the case in California could be significant and add to the growing pressure to make the PBM industry more transparent.

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Industry Will Continue to See 340B, Patient-Paid Prescription Impact as IRA Looms

The pharmaceutical industry and the broader health care services market currently are experiencing a series of trends that are likely to persist into 2023, said Adam J. Fein, Ph.D., CEO of Drug Channels Institute, during a Dec. 16 webinar titled Drug Channels Outlook 2023. These include pressure on insurers’ traditional coverage of generics from patient-paid prescriptions, ongoing 340B litigation and providers’ increased presence within the specialty pharmacy market. But the impact of the biggest disruption, the Inflation Reduction Act (IRA), is yet to come. In this second of a two-part series, AIS Health highlights these trends projected by the longtime industry expert.

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News Briefs: Ohio County Sues Express Scripts, OptumRx Over Opioids

Summit County, Ohio, recently filed a lawsuit accusing Cigna Corp.’s Express Scripts and UnitedHealth Group’s Optum Rx PBMs of enabling the opioid addiction epidemic. The lawsuit calls out the “public nuisance” caused by the PBMs “facilitating the use of opioids by favoring, and failing to restrict” the use of opioids in their formularies while “collaborating with opioid manufacturers to deceptively and dangerously promote and fail to disclose the risk of opioids.” The suit also accuses the PBMs of “failures to maintain effective controls to prevent diversion in their own dispensing of opioids and to monitor their own claims data to prevent suspicious or inappropriate prescriptions.” The lawsuit does not seek to form a class of other local governments, but it represents perhaps the first attempt by a local government to seek damages from PBMs for epidemic levels of opioid addiction. Federal lawsuits have resulted in opioid epidemic damages paid to state and local governments, but the defendants in those suits have been manufacturers, such as Purdue Pharma L.P., and pharmacies, such as Walgreens Boots Alliance Inc. and CVS Health Corp. In settlements, CVS agreed to pay $5 billion to states over 10 years, and Walgreens agreed to pay $5.7 billion to states over 15 years. Purdue (and the Sackler family, which controls the company) agreed to pay $6 billion to states as part of its settlement.

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Ruling on Transgender Care May Have Major Impact on Third-Party Administrators

A district court judge in Washington state ruled on Dec. 19 that Blue Cross and Blue Shield of Illinois violated the anti-discrimination provision of the Affordable Care Act when it served as a third-party administrator (TPA) of health benefits and refused to cover medically necessary gender-affirming care for a transgender boy.

The decision “is something that could have a big impact on administrators” of health benefits, David Kaufman, an attorney with Laurus Law Group LLC, tells AIS Health, a division of MMIT. It came one month after the court certified the case as a class-action lawsuit, meaning other individuals who had their gender-affirming care denied could potentially be involved, “so the case probably has a long way to go before it’s settled law,” according to Kaufman.

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Union Suit Against Insurer May Be ‘Tip of the Iceberg’ Amid Plan Sponsor Discontent

If a new lawsuit filed by two Connecticut union locals against Elevance Health, Inc. is successful, health insurers managing self-funded plans could face a torrent of litigation from unhappy plan sponsors. Plan sponsor trade groups and the attorneys handling the Connecticut lawsuit argue that carriers across the country systematically overcharge administrative services only (ASO) plan sponsors for procedures — and that newly available price transparency data proves it.

The Connecticut lawsuit alleges that Elevance, the company formerly known as Anthem (which still sells plans under that brand name), charged excessive fees for some procedures or negotiated kickbacks with providers in its network. Attorneys for the union locals — International Union of Bricklayers and Allied Craftworkers Local 1 and Sheet Metal Workers’ Local No. 40 — accuse Elevance of “either unlawfully retaining…improperly discounted amounts for itself, or…imprudently overpaying providers. Either way, [Elevance] is in breach of its fiduciary obligations to the Plans” under the Employee Retirement Income Security Act (ERISA), the suit argues.

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News Briefs: Almost 5.5M Sign Up for Marketplace Plans

Nearly 5.5 million people have selected health plans since the Affordable Care Act open enrollment period began on Nov. 1, CMS said in its latest marketplace enrollment update. That total captures signups on HealthCare.gov through Dec. 3 and through Nov. 26 for the state-based marketplaces, and it represents an 18% increase compared to the same time period last year. So far 22% of total plan selections have been from individuals who are new to the marketplaces, while 78% are returning customers, CMS said. The open enrollment period lasts through Jan. 15 for HealthCare.gov states and most state-based marketplaces.

Blue Shield of California — which lost its bid to continue to serve California’s Medicaid managed care program — plans to lay off 373 employees by Jan. 25, Modern Healthcare reported. The decision from California’s Dept. of Health Care Services came in August after the state held its first competitive bidding process for Medi-Cal contracts. Blue Shield was not chosen — prompting the insurer to later sue the state — while Elevance Health’s Anthem Blue Cross Partnership Plan, Centene Corp.’s Health Net and Molina Health Care were selected to participate in varying service areas across 21 counties. The layoffs represent a small portion of Blue Shield’s total workforce of 7,800, Modern Healthcare noted, and the cuts are mostly concentrated at the insurer’s Sacramento-area offices.

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News Briefs: Manufacturers Reset Lobbying Strategy After Medicare Negotiation Loss

Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s most powerful lobbying group, has commissioned a major lobbying firm to review its failure to kill Medicare drug price negotiation, among other drug price reforms included in August’s landmark Inflation Reduction Act (IRA), Politico reported. The lobbying firm, BGR Group, will place its chairman and CEO, former HHS aide Bob Wood, in charge of the review. “Like most organizations, it’s our standard operating procedure to do an after-action review following a large-scale, organization-wide advocacy effort,” PhRMA spokesperson Brian Newell told Politico.

Meanwhile, the Association for Accessible Medicines (AAM), a pharma lobbying group that represents generics manufacturers, is in the middle of leadership turmoil, according to STAT. AAM fired its president, Dan Leonard, and will replace him with the group’s current executive vice president of sciences and regulatory affairs, David Gaugh. Leonard denied he was fired, but anonymous sources told STAT that his ouster was also related to the passage of the IRA.

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Post-Close Appeal in UnitedHealth/Change Antitrust Case Is ‘Unusual’ Move

When UnitedHealth Group completed its acquisition of Change Healthcare, Inc. in early October — a move made shortly after a federal judge dismissed an antitrust complaint against the deal — it seemed as though the companies could finally close the book on their nearly two-year quest to combine. However, last month the U.S. Dept. of Justice (DOJ) and officials from two states then filed a notice of appeal, once again casting uncertainty around the $13 billion deal.

“The fact that, after losing their challenge at the district court level, the DOJ and the states waited until after the deal closed to file their appeal is somewhat unusual,” says Jim Burns, chair of the Williams Mullen Antitrust & Trade Regulation Practice Group. Usually, when regulators lose their case at the district court level, they file an immediate appeal and request that the court bar the parties from closing their transaction while that appeal is heard, he tells AIS Health, a division of MMIT.

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News Briefs: For 2023, UnitedHealth Group Expects Its Overall Medicare Advantage Enrollment to Jump 9%

UnitedHealth Group at its annual Investor Day projected strong Medicare Advantage membership growth of 9% next year, overall revenues in the range of $357 billion to $360 billion and earnings per share between $24.40 and $24.90. Along with financial projections shared on Nov. 29, the company said it expects to serve a total of 7.1 million MA members by the end of 2022, and estimated that figure will grow by another 600,000 to 650,000 next year. That year-over-year growth of 9% reflects a “blended projection across Individual MA and Group MA books,” wrote Barclays Steve Valiquette in a research note. “As such, we expect that Individual MA growth is likely higher than the blended 9% (likely in the low-double-digit range) which remains slightly above market growth.” He also noted that UnitedHealth’s projected medical loss ratio of 82.6% (give or take 50 basis points) was “slightly more conservative than expected” but not surprising given that the company said its MLR guidance reflects an expectation of a slightly elevated flu season in early 2023.

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