Two recent federal court cases signal new significant developments with respect to the 340B Drug Pricing Program. Specifically: (1) new federal district court litigation challenging a recent HRSA Notice involving 340B Program “child site” registration and eligibility; and (2) a court decision in other litigation that implicates the scope of the 340B “eligible patient” definition. Details regarding these developments are in the client alert.

Read the client alert here.

In October 2021, we reported on an uptick in the passage of state drug price transparency legislation. As an update to that report, as of October 2023, approximately 22 states have now passed drug price transparency laws creating new requirements for drug manufacturers.

Each state has its own unique set of requirements, but reporting is often completed via an online portal administered by the state’s implementing agency. Generally, these laws require manufacturers to report pricing and other information related to the cost, development, and sale of drugs to the state or state-affiliated entities. Some states will use this data to produce public reports about the cost of prescription drugs with the goal of creating pricing transparency for drug manufacturers as well as to educate the state legislature and public about the drug pricing process.

Read the full alert here.

Our Life Sciences Regulatory & Compliance team has launched a new resource page, keeping you up-to-date on the latest regulatory developments affecting laboratory developed tests (LDTs). Our dedicated LDT page provides foundational materials, legislative and regulatory history, and updates and analyses regarding initiatives to increase oversight over LDTs, including FDA’s LDT Proposed Rule (October 2020). Our Life Sciences Regulatory & Compliance team will continue to keep this page updated with the latest happenings.

Read the full announcement here.

The U.S. Food and Drug Administration (FDA) has announced an upcoming webinar on its proposed rule on the regulation of laboratory developed tests (LDTs).

The webinar is scheduled for October 31, 2023 from 1:00 – 2:00 PM ET and will include an overview of the proposed rule, a description of the proposed phaseout of FDA’s general enforcement discretion approach to LDTs, and a question and answer session. Stakeholders must submit questions by October 23, 2023 to be considered for the discussion.

For our detailed analysis of the 83-page proposed rule, please see our two-part Insight series: Part I: Underpinnings of FDA’s Proposed Rule and Part II: FDA’s Proposed Phaseout Policy – Key Considerations & Open Questions.

If you have questions on the proposed rule or its potential impact, contact the authors or a member of the Goodwin Life Sciences Regulatory & Compliance team.

After an over decade-long discourse amongst interested stakeholders, on October 3, 2023, FDA unveiled its proposed rule and policy to increase oversight over LDTs.

If finalized as proposed, FDA would implement a new “phaseout policy” that would, across five stages and within four years, apply the same regulatory requirements applicable to in vitro diagnostics (IVDs) on the majority of clinical laboratories offering tests as LDTs. Once implemented, tests offered as LDTs that do not meet the applicable regulatory requirements, including premarket review and the quality system regulation, may be expected to come off the market.

In our first post in this Insight series, we recapped the underpinnings of the proposed rule and policy, including the significant discussions contained in the proposed rule on (1) the rationale for the agency’s proposed phaseout policy and (2) FDA’s legal authority for issuing the rule.

In this Insight, we provide our full analysis of FDA’s proposed five-stage phaseout policy and the open questions that remain. Read the full Insight here.

Summary:

On September 29, 2023, the U.S. District Court for the District of Columbia vacated a Trump-era rule from 2021 that allowed insurers to exclude drug manufacturer co-pay support coupons and assistance from a patient’s annual cost-sharing caps.  This practice, commonly referred to as a copay accumulator program, is typically used by insurance companies and pharmacy benefit managers to control drug spending, especially for high-cost specialty drugs, like those required by HIV patients.

Under typical prescription drug insurance programs, patients are obligated to pay a deductible and cost-sharing (i.e. a copay) throughout the plan year, up to an out-of-pocket spend cap.  Once the patient hits that spend cap, the insurance company is responsible for the patient’s prescription drug costs.

Under an accumulator program, on the other hand, an insurance company does not count a manufacturer’s copay support (for example, a copay card that a patient presents at a pharmacy to cover the cost of the copay) towards a patient’s annual deductible or out-of-pocket maximum.  By excluding manufacturer copay support and coupons from patients’ cost-sharing cap, this means that, even after a manufacturer’s copay support is exhausted for the year, patients remain on the hook for all cost sharing obligations up to the insurance plan’s out of pocket maximums.  Many states have implemented laws to ban copay accumulator programs, asserting that such programs actually increase the financial burden on patients, especially with respect to specialty or more expensive drugs.  As of June 2023, 19 states have implemented copay accumulator program bans.

HIV and Hepatitis Policy Institute et al v. HHS was brought by patient advocacy groups including the HIV and Hepatitis Policy Institute and the Diabetes Patient Advocacy Coalition, among others, who challenged a May 2020 rule from HHS, the “Notice of Benefit and Payment Parameters for 2021” (85 Fed. Reg. 29164, 29230-35, 29261 (May 14, 2020)) (the “2021 NBPP”) that permitted insurers to impose accumulator polices.  Plaintiffs opposed the accumulator program, asserting that manufacturer copay support should count towards calculating patients’ cost sharing obligations and should not be excluded from such calculations.

In ruling in favor of the plaintiffs on their motion for summary judgment, the U.S. District Court set aside the 2021 NBPP, largely supporting plaintiffs’ challenges that the 2021 NBPP rule’s language is internally contradictory, that it runs counter to the statutory definition of “cost sharing” found in the Affordable Care Act, and that it runs counter to the agencies’ pre-existing regulatory definition of “cost sharing.”  HHS had previously defined “cost sharing” in a 2012 regulation as “any expenditure required by or on behalf of an enrollee with respect to essential health benefits,” which by its terms includes “deductibles, coinsurance, copayments, or similar charges, but excludes premiums, balance billing amounts for non-network providers, and spending for non-covered services.”  See 45 C.F.R. 155.20.  In other words, the regulation treats cost sharing is an “expenditure” by or on behalf of a plan enrollee.  According to plaintiffs, and as affirmed by the court, this includes manufacturer copay assistance support.

The court disagreed with the government’s technical arguments regarding the language of the 2021 NBPP (i.e. that manufacturer copay support is actually a “reduction” in the amount the patient owes towards cost sharing or a reduction in the “actual economic impact” on the drug manufacturer and not an “expenditure”), concluding that the 2012 regulation was likely intended to define “cost sharing” as costs that are (1) required of an insurance plan enrollee and (2) paid by or on behalf of that enrollee – including manufacturer copay coupons and assistance.

It is unclear if the ruling will be appealed; however, as a result of the District Court’s ruling, the government will use an earlier 2020 version of the rule which allowed insurers to exclude from cost-sharing caps only copay support coupons for branded drugs that have available generic equivalents; if there is no generic equivalent, under the 2020 version of the rule, manufacturer copay support must be counted toward cost sharing.

Conclusions:  The U.S. District Court ruling is a significant development for drug manufacturers who offer copay support as a means of providing relief to patients with respect to cost-sharing requirements under their insurance coverage as opposed to offering significant rebates, discounts, or other contracting strategies.  However, manufacturers of branded drugs with a generic equivalent will still need to consider how copay accumulator programs could affect access in those states that have not yet banned the practice.  Notably, in the wake of this ruling, patient advocacy organizations have indicated that they will continue to advocate for a comprehensive state and federal level ban on copay accumulator programs (e.g. Immune Deficiency Foundation).

Goodwin will continue to monitor any further developments in this case and the impact of copay accumulator programs on the market.

On October 3, 2023, the U.S. Food and Drug Administration (FDA) published its widely anticipated proposed rule on the regulation of laboratory developed tests (LDTs). The proposed rule and policy are the latest in an over decade-long discourse amongst interested stakeholders – laboratories, IVD manufacturers, regulatory agencies, Congress, providers, and patients – as FDA has sought to enhance oversight over LDTs.

In this Insight, we recap the underpinnings of the proposed rule and policy, including the two lengthy discussions contained in the proposed rule on (1) the rationale for the agency’s proposed phaseout policy and (2) FDA’s legal authority for issuing the rule.  Stay tuned next week for our additional analysis of the details of FDA’s proposed five-stage “phaseout” policy and the open questions that remain.

Contact the authors or a member of the Goodwin Life Sciences Regulatory & Compliance team for any questions. Read the full Insight here.

On September 29, 2023, the U.S. Food and Drug Administration (FDA) posted and scheduled for publication its long-awaited proposed rule concerning FDA regulation of laboratory developed tests (LDTs).  If enacted, the proposed rule would amend the Agency’s regulations to make explicit that in vitro diagnostic products (IVDs) are devices under the Federal Food, Drug, and Cosmetic Act; and this includes when the manufacturer of the IVD is a laboratory.

Upon finalization of the rule, FDA proposes to phase out its general “enforcement discretion” approach for LDTs so that tests manufactured by a laboratory would generally fall under the same enforcement approach as other IVDs.

Comments to the proposed rule are due 60 days after the date of publication of the proposed rule in the Federal Register. We will provide our full analysis of the proposed rule in the coming days. Contact the authors or a member of the Goodwin Life Sciences Regulatory & Compliance team for any questions.

Throughout August 2023, the Office of Information and Regulatory Affairs, Office of Management and Budget, Executive Office of the President (“OIRA”) has held stakeholder meetings regarding a proposed rule which, if enacted, would amend the U.S. Food and Drug Administration’s  (“FDA’s”) regulations to make explicit that laboratory developed tests (“LDTs”) are devices under the Federal Food, Drug, and Cosmetic Act. The next stakeholder meeting on the proposed rule is scheduled for September 6, 2023.

Per its website, OIRA received the proposed rule from FDA on July 26, 2023. The proposed rule was initially published this past spring on the Biden Administration’s Unified Agenda of Regulatory and Deregulatory Actions with a target publication date of August 2023. The forthcoming stakeholder meeting on September 6th suggests that OIRA may continue its review process well into September, if not later.

The publication of the proposed rule would mark the first significant FDA action on LDTs since its two 2014 draft guidances (available here and here) and 2017 discussion paper. The proposed rule is also expected to be controversial after prior U.S. Department of Health & Human Services statements concerning regulation of LDTs and legislative attempts to further define the LDT regulatory framework. Once cleared by OIRA, the proposed rule will be published in the Federal Register and subject to public comment.

We will continue to monitor for updates on the LDT proposed rule. Contact Goodwin Life Sciences Regulatory & Compliance team members for any questions.

The Inflation Reduction Act’s Medicare Drug Price Negotiation Program has now officially kicked off. Earlier today (August 29, 2023), the White House announced the list of the first 10 selected drugs under the program, prior to the statutory deadline of September 1.

The first 10 drugs selected are as follows:

• Eliquis
• Jardiance
• Xarelto
• Januvia
• Farxiga
• Entresto
• Enbrel
• Imbruvica
• Stelara
• Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill

The government notes that these selected drugs accounted for $50.5 billion in total Part D drug costs – or about 20% of the Part D spend for June 1, 2022 through May 31, 2023. For next steps, manufacturers of these drugs must enter an agreement with the government to agree to the negotiation program. The government will publish the agreed-upon negotiated prices for these selected drugs by September 1, 2024, with the prices going into effect January 1, 2026.

For those interested in more detail about the IRA, please visit our Goodwin IRA webpage, where you can view and download material from our previous webinars covering additional detail and background on the IRA, including guidance from the Centers for Medicare & Medicaid Services (CMS) on implementation of the Program, presented by Goodwin Life Sciences Regulatory & Compliance partner Matt Wetzel.

We will be monitoring pending legal challenges to the IRA and tracking updates on Goodwin’s IRA resource page.