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Healthcare Law Blog

Federal Regulatory Update

February 16, 2023

For more information about this blog post, please contact Khaled J. KleleRyan M. MageeRyan L. O’Neill, William R. Meiselas or Labinot Alexander Berlajolli.

U.S. Agencies Make First Mental Health Parity and Addiction Equity Act Report to Congress

The U.S. Department of Health and Human Services (“HHS”), Department of Labor (“DOL”), and Department of the Treasury (“USDT”) issued their 2022 Report to Congress on the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”) to Congress. Significantly, the report indicates that health plans and health insurance issuers are failing to deliver parity for mental health and substance-use disorder benefits to their beneficiaries. Additionally, the report highlighted the departments' recent emphasis on greater MHPAEA enforcement, guidance to correct those failures, and recommendations for strengthening MHPAEA consumer protections and enhancing the departments’ enforcement abilities.

Significantly, the report outlines the departments' efforts to interpret, implement and enforce the amendments to MHPAEA made by the Consolidated Appropriations Act of 2021. The departments previously issued multiple FAQs and factsheets providing in-depth discussion of the most recent amendments made to the MHPAEA.

The departments expect to focus future enforcement efforts on addressing the following non-quantitative treatment limitations (“NQTLs”):

  1. Prior authorization requirements for in-network and out-of-network inpatient services;
  2. Concurrent review for in-network and out-of-network inpatient and outpatient services;
  3. Standards for provider admission to participate in a network, including reimbursement rates; and
  4. Out-of-network reimbursement rates (plan methods for determining usual, customary, and reasonable charges).

Annual MHPAEA reports to Congress were mandated under the Consolidated Appropriations Act of 2021. The 2022 MHPAEA report to Congress is the first such report generated by the departments.

FDA Permission for Interchangeable Diabetic Drugs Grants Pharmacists Leeway in Diabetic Treatment

The price of insulin has routinely been center stage as both the drug’s price and the number of patients requiring it continue to rise. Most recently, under the Inflation Reduction Act, the price of insulin was capped at $35 for a month’s supply of insulin for Medicare recipients. The insulin price cap for Medicare Part D beneficiaries became effective on January 1, 2023 while the price cap for Medicare Part B beneficiaries takes effect July 1, 2023. The United States Department of Health and Human Services (“HHS”) anticipates these caps will lead to significant costs savings for beneficiaries.

However, rulemaking by the U.S. Food and Drug Administration (“FDA”) should not be overlooked for its impact on improving access to diabetic treatment and reducing costs. Since July 2021, the FDA has permitted pharmacists to substitute “biosimilar” drugs in place of insulin, granting pharmacists the discretion to replace insulin with an FDA-approved drug that provides a similar therapeutic effect, and the FDA continues to add to that list. Under FDA rules, biosimilar drugs meeting FDA criteria for interchangeability may be substituted for the reference drug without the intervention of the prescriber. The FDA permits such substitution decisions to be made by the pharmacist, a practice commonly called “pharmacy-level substitution,” which is similar to how generic drugs are substituted for brand name drugs unless otherwise dictated by the provider.

Pharmacy-level substitutions grant pharmacists additional leeway in helping their diabetic patient population navigate treatment cost issues. As diabetic treatment costs remain a hot button issue among policy makers, diabetic patients and their providers should remain cognizant of the expanded role pharmacists may play in addressing such concerns. Providers and patients may review available interchangeable biosimilar drugs through the FDA’s Purple Book database.

Comments Due on FTC's Non-compete Ban

The public comments due to the FTC’s proposed rule to ban non-compete provisions are due March 10, 2023.  The U.S. Federal Trade Commission (“FTC”) proposed to ban and remove non-compete clauses from U.S. employment contracts. The FTC is basing the proposed rulemaking on Section 5 of the Federal Trade Commission Act, which both declares “unfair methods of competition” to be unlawful and grants the FTC the power to prevent the use of unfair methods of competition from “affecting commerce.”

Under the proposed rule (88 FR 3482), the FTC would add a new chapter to its regulations, broadly defining non-compete clauses as an unfair method of competition and making it unlawful for employers to include them in employment contracts. Moreover, the proposed rule would affirmatively require employers whose employment contracts contain non-compete clauses to rescind such clauses and provide notice to their employees that their contracts’ non-compete clauses have been rescinded and are no longer enforceable. The compliance date by which existing non-compete clauses must be rescinded and after which new non-compete clauses will be unlawful will be 180 days after the publication of the final rule. Additionally, the proposed rule specifically would provide that it supersedes any state law which offers workers less protections.

The proposed rule contains exceptions. Specifically, the proposed rule would permit non-compete clauses that are (i) entered into by a person who is selling a business entity or otherwise disposing of all of the person’s ownership interest in the business entity, and (ii) by a person who is selling all or substantially all of a business entity’s operating assets. Moreover, non-compete clauses would be permitted when the person restricted by the non-compete clause is an owner, member, or partner holding at least a 25 percent ownership interest in the business entity.

A fact sheet and the full text of the proposed rule may be accessed here.

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