Federal Update: From Proposed Rules to Litigation

For more information about this blog post, please contact Khaled J. KleleRyan M. MageeLabinot Alexander Berlajolli, or Brianna J. Santolli

CMS Delays Best Drug Price Reporting Rule

Pursuant to 86 FR 28742, the Centers for Medicare and Medicaid Services (“CMS”) seeks to delay for 6 months the January 1, 2022 effective date of a final rule that requires drugmakers to report the best prices for drugs when offered as part of a value-based purchasing (“VBP”) arrangement. CMS stated that the delay was necessary to provide CMS, states, and manufacturers more time to make necessary system changes to implement the new best price and VBP program. The proposed rule also proposes to delay for 2 years the April 1, 2022 effective date of inclusion of certain U.S. territories (American Samoa, Northern Mariana Islands, Guam, Puerto Rico, and the Virgin Islands) in the Medicaid drug rebate program. 

HHS Withdraws Advisory Opinion on 340B Discounts

In light of getting sued, the United States Department of Health and Human Services (“HHS”) has withdrawn its Advisory Opinion 20-06, issued December 30, 2020, requiring drug makers to provide 340B discounts to hospitals that use contract pharmacies. Several pharmaceutical companies sued HHS regarding the rule, and the United States District Court of Delaware refused to dismiss the lawsuit. HHS stated that it withdrew the Advisory Opinion because it created confusion and was never intended to create the obligations alleged in the lawsuit. The news of the withdrawal is a blow to hospitals that use contract pharmacies.

HHS Withdraws Rule on Affordable Life-Saving Medication

86 FR 32008: HHS has proposed to withdraw a final rule introduced under the previous administration requiring community health centers to pass on 340B drug discounts for insulin and injectable epinephrine to low-income patients. The community health centers argued that the final rule would create significant administration costs and burdens. HHS initially delayed implementation of the final rule and is now proposing to withdraw it completely instead of proposing changes to address the concerns.  Comments are due by July 16, 2021.

CMS Issues Rule on Affordable Care Act

86 FR 35156: CMS issued this proposed rule to attempt to expand the Affordable Care Act ("ACA"). For example, the proposed rule lengthens the annual open enrollment period for 2022 by an additional 30 days, create a new special enrollment for certain low-income consumers so they may access premium-free or very low-cost coverage available to them because of the enhanced advanced premium tax credit ("APTC") provisions included in the American Rescue Plan Act of 2021, and expands the duties of Federally-facilitated Exchange Navigators to offer more help to consumers. CMS issued a fact sheet on the proposed rule.  Comments are due by July 28, 2021.

Federal Court Upholds Interim Rule Regarding Star Ratings

The U.S. District Court for the District of Columbia recently ruled in favor of the Department of Health and Human Services against three Medicare Advantage Plans that challenged an interim final rule issued by the CMS on how Medicare Advantage star ratings were calculated during the COVID-19 pandemic. Avmed, Inc. et al v. Becerra, Civil Action No. 20-3385 ("JDB").

CMS rates a plan from one to five stars based on certain metrics and, by statute, the higher the rating, the higher the federal payments the plan will receive. The federal rule granted HHS’s motion for summary judgment regarding the interim final rule that was issued on April 6, 2020 that modified the data submission requirements and rating methodology for the 2021 Star Ratings to address the expected disruption to data collection due to COVID-19. Specifically, CMS suspended the requirement that plans submit certain data because it was unsafe to collect and, instead, relied on the previous year’s data as well as new data derived from other sources. On November 20, 2020, three plaintiffs challenged the interim final rule claiming that CMS exceeded its authority. The Federal Court ruled in its opinion that CMS did not exceed its authority and upheld the interim final rule.