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Second Circuit Rules on Copay Assistance Programs and CMS Announces Maternity Care Action Plan

August 16, 2022

For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

CMS Announces Maternity Care Action Plan, Approves Expanded Medicaid and CHIP Coverage

The Centers for Medicare & Medicaid Services ("CMS") recently announced its Maternity Care Action Plan to support the implementation of the Biden-Harris Administration’s Blueprint for Addressing the Maternal Health Crisis. The action plan is designed to implement a holistic and coordinated approach across CMS to improve health outcomes and reduce inequities for people during pregnancy, childbirth, and the postpartum period.

Additionally, CMS further approved new actions in Hawaii, Maryland, OhioConnecticut, Kansas, and Massachusetts to extend Medicaid and Children’s Health Insurance Program ("CHIP") coverage for 12 months after pregnancy. At present, the following twenty-one states, and Washington, D.C., have extended postpartum Medicaid and CHIP coverage from 60 days to a full 12 months after pregnancy: California, Connecticut, Florida, Hawaii, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Ohio, Oregon, South Carolina, Tennessee, Virginia, and Washington.

These efforts build on CMS’ 2023 Inpatient and Long-term Care Hospital Prospective Payment System proposed rule, 87 FR 28108, which was released this year. Under this proposed rule, CMS has announced measures to build on key priorities to better measure healthcare quality disparities and to improve the safety and quality of maternity care.

A fact sheet on the CMS Maternity Care Action Plan can be accessed here. A fact sheet on the maternity health proposals under proposed rule 87 FR 28108 can be accessed here.

Second Circuit Rules on Copay Assistance Program

A three-judge panel for the Second Circuit recently upheld a finding by the United States Department of Health and Human Services ("HHS") Office of the Inspector General ("OIG") that a planned copay assistance program for Medicare beneficiaries would violate the Anti-Kickback Statute ("AKS"). The Second Circuit’s ruling involves Pfizer’s new drug, Tafamidis, a treatment for a rare, progressive heart condition known as transthyretin amyloid cardiomyopathy.

Medicare beneficiaries stand to pay $13,000 out of pocket for one year of Tafamidis. Pfizer proposed a Direct Copay Assistance Program to assist with these costs. On June 27, 2019, Pfizer sought an OIG advisory opinion regarding the legality of its proposed program. However, on September 18, 2020, the OIG issued OIG Advisory Opinion No. 20-05, which concluded that Pfizer’s program was problematic under the AKS.

Pfizer challenged the OIG’s interpretation in the United States District Court for the Southern District of New York ("SDNY"). The SDNY granted summary judgment in favor of the OIG. Pfizer subsequently appealed to the Second Circuit, but the Second Circuit held that Pfizer’s proposed program fell “squarely within the AKS’s prohibitions.”

The full text of the ruling may be found here. This ruling is the latest in a series of governmental lawsuits challenging the legality of copay subsidy programs which have arisen in the past several years, including Actelion Pharmaceuticals, Astellas Pharma and Amgen, and Gilead Sciences.

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