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Teaching Hospital Update - November 14-18, 2011

Email Alert
November 18, 2011
By Amy Kaufman

Supreme Court to Hear Challenge to Obama's Healthcare Overhaul

On Monday, the U.S. Supreme Court decided to review President Barack Obama's 2010 healthcare overhaul, promising a high-profile hearing on the question dominating American politics: the constitutional limits of the federal government's power. No initiative has exemplified President Obama's progressive domestic agenda or inflamed his conservative opponents like the Patient Protection and Affordable Care Act. The Republican presidential candidates have taken an oath to dismantle what they derisively call Obamacare, and the Court's decision will deliver an unmistakable--if unpredictable--jolt to the political system in the midst of next year's national elections.

Next March, around the second anniversary of the act's passage, the nine justices will hear arguments in the case, taking on the role of constitutional referee between those who see the law as a trespass on individual and states' rights and those who consider it an extension of a safety net to Americans regardless of where they live or work. A ruling on whether the Constitution gives Congress the power to require nearly every American to obtain health insurance or pay a penalty will define the Court under the still-new tenure of Chief Justice John Roberts. It will probably be the Court's highest-profile decision since Bush v. Gore ended the presidential contest of 2000.

As a mark of the case's importance, the justices said they will hear five-and-a-half hours of oral arguments on the constitutional question and related issues. That appears to be a modern record: in 2003, the Court devoted four hours of oral arguments to the McCain-Feingold campaign finance act, a sweeping law aimed at controlling the influence of money in elections.

Even as aspects of the healthcare law have been implemented, opponents and supporters have awaited the Court's decision. Oral arguments will most likely be held over one or two days, with a ruling expected before the court recesses in late June.

The Court accepted appeals from a decision by the U.S. Court of Appeals for the Eleventh Circuit in Atlanta--the only appellate court to say the law is unconstitutional--in a case filed by a business group and twenty-six states that object to the legislation.

Robert Barnes, Supreme Court to Hear Challenge to Obama's Healthcare Overhaul, The Washington Post (Nov. 14, 2011).

Massachusetts Research Funding at Risk

Massachusetts university and hospital officials, determined to prevent erosion of the research and development pillar of the state's economy, have joined a lobbying slugfest over congressional efforts to slash hundreds of billions from the projected national debt.

The state stands to lose more than $680 million in federal research funding in 2013, or nearly 9% of the approximately $7.7 billion it is now estimated to receive, if a bipartisan deficit reduction panel does not hammer out a deal by November 23 and automatic cuts to defense and domestic spending are triggered. The cuts, the latest in a series, could imperil parts of the state's medical and scientific sectors, which have become a critical economic driver. The sectors have sustained the Bay State through the recession, supported tens of thousands of jobs, trained young scientists with hopes of discovering cures, and anchored the life sciences industry in Massachusetts, the officials contend.

Even if the so-called congressional supercommittee reaches an agreement, leaders of Massachusetts universities and other institutions expect their research funds to be a part of its budget reduction calculus. At stake is no less than Massachusetts' future and the underpinnings of the nation's economic competitiveness, say university presidents, hospital executives, and industry representatives who have been making regular trips to the capital to lobby Congress to preserve research money. Boston and Cambridge, with one of the densest concentrations of biotechnology and pharmaceutical companies in the country, is the epicenter for medical research. And Boston is home to the five independent hospitals receiving the most funds from the National Institutes of Health (NIH) in the nation, said John Erwin, executive director of the Conference of Boston Teaching Hospitals. Only California receives more NIH funds overall.

Tracy Jan, Mass. Research Funding at Risk, The Boston Globe (Nov. 14, 2011).

Senate Bill to Encourage Generic Drug Market

Generic drugs would have an easier path to U.S. markets under a bill due to be introduced in the Senate, said Democratic Senator Jeff Bingaman (NM), a sponsor of the bill. The bill also has the support of Republican Senator David Vitter (LA) and was to be introduced this past Wednesday, Bingaman's office said.

It would amend the 1984 Hatch-Waxman Act, which was supposed to empower generic drug companies by allowing them to challenge pharmaceutical patents if they thought they were weak. If the generic company challenged a drug patent and won, it was rewarded with a 180-day window of exclusivity to sell a generic.

However, one result of that half-year of exclusivity is that brand name and generic companies will settle a patent lawsuit but sometimes make a deal in which the generic company will stay out of the market for a period of time, according to critics of the practice. Meanwhile, no other generic may come to market. In some cases, the brand name company paid the generic company to delay production, a type of deal the Federal Trade Commission (FTC) calls pay for delay.

The Bingaman-Vitter bill would permit any generic company that successfully challenges a drug patent to enter the market, allowing more than one generic company to come to market.

"Everyone who's focused on this set of issues believes that there's a major flaw in the current law, unintended obviously," Bingaman told Reuters. "We think we have a solution to that flaw."

The FTC, which has been fighting the deals, says there were twenty-eight pay-for-delay deals in the 2011 fiscal year that resulted in slower generic entry. The U.S. agency says the deals violate antitrust law if brand name pharmaceuticals pay generic drug makers to stay off the market. It has had mixed success before the courts in opposing the deals.

Diane Bartz, Senate Bill to Encourage Generic Drug Market, The Chicago Tribune (Nov. 15, 2011).

Senator John Kerry Co-sponsors Medical Device Bill

Senator John Kerry (D-MA), along with a bi-partisan group of his colleagues, sponsored a bill Thursday to accelerate the U.S. Food and Drug Administration (FDA) approval process for medical devices by making it easier for the agency to consult with experts, along with other provisions.

The bill, The Patient Access to Medical Innovation Act, would require FDA to comply with the same conflict of interest requirements as the National Institutes of Health and all other federal agencies.

The FDA requires up to eighteen advisory panels be summoned to evaluate new medical technologies when the agencies lacks their own experts to do so. But stringent restrictions on panel members now often prevent the best experts from reviewing specific devices or technologies, according to Kerry's staff, and thus significantly slow the approval process.

The bill would also lift the current profit cap on devices used to treat rare conditions and diseases that go through a special approval process.

"This legislation strengthens the approval process while cutting the red tape that keeps these critical devices from the hospitals, doctors and nurses who can use them to save lives," Kerry said in a statement. "Massachusetts has long been at the heart of these technological innovations."

Kerry, along with FDA Commissioner Margaret Hamburg, met with Massachusetts medical device and biotechnology leaders in Boston in July to discuss key issues facing the industries.

Other sponsors of the bill are: Senators Al Franken (D-MN), Lamar Alexander (R-TN), and Kay Hagan (D-NC).

Tracy Jan, Senator John Kerry Cosponsors Medical Bill, The Boston Globe (Nov. 17, 2011).

Readmission Penalties Unfairly Hurt Urban Hospitals, Critics Say

Hospitals nationwide are trying to keep patients from returning to their facilities, especially with Medicare penalizing institutions with high readmissions rates starting in 2013. But urban hospitals could lose millions of dollars under Congress' Hospital Readmissions Reduction Program, and not necessarily because of inferior healthcare.

The most repeat readmissions are linked with high-poverty locations, according to a study by Memphis, TN-based Qsource, reported The Tennessean yesterday. That's why Dr. Sunil Kripalani, chief of hospital medicine at Vanderbilt University, wondered whether it's fair to measure inner-city hospital readmissions like those in affluent suburbs. He noted that the readmission rate formula doesn't take into account race, education, or access to healthcare.

Under the formula, hospitals in Nashville would see significantly reduced reimbursement, as the North Nashville ZIP codes of 37218 and 37207 both have "high repeat utilizers" who rack up at least four readmissions a year, according to the article. To combat these inequalities, urban hospitals should focus on improving follow-up care and establish programs that ensure discharged patients get the necessary meals, medicine, and transportation, noted The Tennessean. Hospitals and community groups also can apply for part of $500 million in federal grant funds.

Similarly, a September report from the American Hospital Association suggested that correlating factors such as socioeconomic class, support, and comorbidity may influence readmission rates. "Payment penalties intended to shrink readmission rates could exacerbate inequities and leave hospitals with fewer resources to make needed investments in improving patient care," states the report.

Alice Caramenico, Readmission Penalties Unfairly Hurt Urban Hospitals, Critics Say, Fierce Healthcare (Nov. 14, 2011).

AHLA Teaching Hospital Updates are intended to provide quick summaries of cutting-edge issues of interest to teaching hospitals and their counsel. Additional information and more in-depth coverage on these topics may be available from AHLA Health Lawyers Weekly and appropriate AHLA Practice Groups.

*We would like to thank Amy Kaufman, Esquire (In-House Counsel, Nashville, TN), for providing this week's update.

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