Singularity Health Law Blog

SCOTUS AND OBAMACARE II: WINDS OF KATRINA

The Affordable Care Act as adopted contains 906 pages. It is a complex statute made necessarily so by industry and congressional efforts to block provisions that would have simplified it such as a move to a single payer option. To satisfy all of the various stakeholders including insurance and pharmaceutical companies and their minions, it became strategically necessary to make complex what would otherwise be simple by creating a system of state insurance exchanges and low income subsidies to increase enrollment.

The case of King v. Burwell pending in the Supreme Court of the United States is an effort to scuttle the Act by focusing on four words out of the 906 pages. Part of the changes to the tax code contained in the Act provides for a calculation of a tax credit that depends upon the number of months that the taxpayer has been enrolled in a health insurance plan purchased on an insurance exchange “established by the State.”

States, under the Act have the option to establish their own exchange or to rely on exchanges set up by the federal government. 34 states have opted to use the federal exchanges.  

The argument goes that if a state fails to set up its own exchange and relies on the federal default exchange those states have not utilized an exchange established by the State and therefore there can be no tax credits provided for those subsidized insureds living in the 34 federal option states. If successful, the plaintiffs in King will have engineered the loss of $29 Billion dollars in tax credits in those states impacting primarily poor and middle income people on subsidies.

 Interestingly, the proponents of the abrogation of the Act provide no specific alternatives for the federal government to deal with what appears likely to be the largest public service and human suffering disaster since Katrina.  In order for the Supreme Court to kill the Act on these grounds it would need to abandon any semblance of judicial restrain and proceed on strictly political grounds. The country be damned.

Federal exchanges adopted by a state in lieu of one created by the state is one established by the state in the context of the Act as a whole.

Digital Medicine - A LIFESAVER?

Robin Cook and Eric Topol had an interesting article in the Wall Street Journal today entitled “How Digital Medicine Will Soon Save Your Life.” They predict that digital medicine will arrive soon with “force of a hurricane. The promise of individualized “tailored” medicine’s advance with the prospect of cheap gene decoding, nanotechnology and smart phone’s playing the role of physician avatars, silently monitoring our body chemistry and organ functioning is certainly appealing and probably within the realm of near realization. They note the recent FDA approval of VISI, a device that monitors heart electricity, respiratory rate, blood oxygen, and blood pressure without a cuff and transmits the data to a medical office. They predict that the advent of digital medicine will democratize medicine permitting patients to own or control their medical data which they can transmit over the web. They see this as a shift away from the “medical - industrial complex.”

 

The authors see problems and unanticipated problems related to privacy, misuse of information and patients being overwhelmed by the information available to them. They suggest that the FDA will have to play a major role to ameliorate those issues. This is somewhat funny. The reality is that if the FDA plays a major role in this futuristic model it is far more likely to be the problem than the solution. It still clings to the 19th Century approach to approval of medicines that work for the majority, but not all of the public and to obstruct the access to drugs that work for a minority of patients, with appropriate molecular structures, but not for the majority.  To reach the great advances and lower costs that the author’s envision there will need to be a hurricane running through the FDA.

Peter W. Huber. The Cure in the Code.

Book Review: Peter W. Huber. The Cure in the Code: How 20th Century Law is undermining 21st Century Medicine.Basic Books (Nov. 2013).

Mr. Huber provides an intense guide to the exploding scientific developments in molecular medicine and the legal and regulatory impediments that threaten to cripple its promise of cheaper and more effective medicine through individualized treatment applications. Modern molecular and genomic advances in medicine, coupled with the exponential increases in computing power and attendant increase in algorithmic data analysis capability opens up the potential for great leaps in medical knowledge and treatment effectiveness.

Standing in the way, however, is the federal Food and Drug Administration with an antiquated system of approvals for new developments in medicine. Mr. Huber argues that the gold standard for FDA approval, the double blind based studies of broad effectiveness against a placebo, are too expensive, too time consuming, too unethical and too narrow. They are too narrow in the sense that they are too broad, requiring a demonstration of effectiveness in a large population, dealing with a specific medical issue, without focusing on the drugs applicability to specific molecular potential in individual cases.

The author refers to this as the “old magic bullet” model, with a single simple cause directly linked to a single effect. He asserts,

 

[A] high level of complex and statistically elusive biochemical diversity likewise makes it impossible to judge a drug’s efficacy or most of its potential side effects using a conventional, one dimensional statistical analysis of data in biochemically indiscriminate Trials.

 

Mr. Huber notes that the FDA relaxed the reins somewhat in dealing with the multi-virus issues inherent in HIV treatment, speeding drugs to market like AZT and the creation of “drug cocktails” for attacking the virus, when one drug alone was insufficient.  Since then, the FDA has retreated to a more regressive pattern of focus on testing large scale applications of individual drugs to broad populations rather than providing support for wider experimentation by doctors and patients based upon biomarkers and molecular diversity to generate the type of success and failure information that can provide meaningful advances in medical knowledge. The answer he suggests requires a radical reorientation of the FDA, with the focus of Baysean statistical analysis on a broad range of evidence.

 

CAN THE FDA REGULATE YOUR STEM CELLS?

In July, 2012, Rosemary N, Collyer, a United States District Court Judge for the District of Columbia, ruled that autologous stem cells re-injected into a person’ body following a acculturation of the cells with the use of another drug product shipped in interstate commerce is a “drug” subject to regulation by the U.S, Food and Drug Administration. The purpose of the re-injection is to stimulate the regrowth of bone, cartilage and other human tissue to regenerate them in lieu of joint transplants and other orthopedic surgical procedures.

 

IRS SPOILS PHYSICIAN RECRUITMENT CONTRACTS

One of the hallmarks of physician recruitment contracts offered by hospitals and physician groups is the incentive of "foregiveness" of "loans" offered t phy;sicians who are financially underwritten as an inducement to relocate and entier profesioal practice ina particular location. Typically, there is a subidiy of the practice for a few years followdd by a three year or so period of continuing practice ofbligaiton in the community, during which the origional subsidy "loan" is written of over time and the physician is given Form 1099C (cancellation of dept) in the later years of the guarantee arrangement.

Last April, a United States District Court judge in the State of Washington, agreed with the Internal Revenue Service that those kinds of "loans" were in fact compensation and not loans at all. It held that the physician group was liable for failure to withhold from the payments to its physicians. The case was The Vancouver Clinic, Inc. v. The United States of America, 111 AFTR 2d paragraph 2031-632 (2013 DC Wash.).

The Hon. Rondal B. Leighton entered summary judgment in favor of the IRS,holding that because both the group and the physician at the inception had no expectatoin that the incentives would be repaid and that there would never be a repayment of the "loan", it was not in fact a loan.

These kind of incentive arrangments will in the future likely to be designed to have the look and feel of actual loans with effective promissory notes and periodic payments over the term of the loan agreements, including the early years. This is just aother level of complexity in the three dimensional chess game of the multiagency oversight regulation of health care systems.

SCOTUS REELS IN “STATE ACTION” ANTITRUST IMMUNITY DEFENSE

The United States Supreme Court, in a unanimous opinion written Justice Sotomayor, overturned an Eleventh Circuit Court of Appeals and Georgia District Court finding “state action” antitrust immunity in the case of FTC v. Phoebe Putney Health System, Inc. et al, No. 11-1160. Had they ruled otherwise there would have opened a huge whole in the FTC’s ability to regulate anticompetitive conduct by state sub-entities under a general grant of state authority. Georgia like many states has a hospital authorities law that permits counties and or municipalities to create quasi governmental entities with broad grants of powers to operate health care facilities.

WHEN WILL COMPUTERS THINK?

The Obama Administration recently announced the formation of the “Brain Activity Map Project” to be funded by the National Institutes of Health and other public and private foundations and organizations to undertake a ten year study of the human brain. The effort, which is similar to the organized effort to map the human genome is expected to cost at least 300 million dollars a year over the ten years. It is anticipated by scientists that it will be much for complex and difficult to undertake than the genome project. The hope is to develop a complete model of brain activity and the process of neuron firings that lead to cognition.

 

ARE GENE’S PATENTABLE?

The United States Supreme Court will decide the question of whether genes are patentable in the coming term. The decisions has broad implications for the biotechnology industry, for researchers and for patients.  The case at hand is Association for Molecular Pathology v. Myriad Genetics, Inc. originally filed in the U.S. District Court for the Southern District of New York by the ACLU and the Public Patent Foundation.  The object of the case is to challenge a number of patents granted to Myriad, a Utah biotechnology company, by the U.S. Patent and Trademark Office. The patents granted were on DNA isolated from two human genes that increase the risk to women for breast and ovarian cancer.

 

TROUBLING U.S. HEALTH CARE STATS.

The Institute of Medicine and the National Research Counsel announced the pre-publication release of their report on their recent comparison of health care data between the U.S. and 16 other countries which crosses all age categories. The other countries include Canada, Japan, Australia, Germany, Austria, Denmark, Finland, Norway, Portugal, Sweden, Switzerland, the Netherlands, the United Kingdom and Spain. This is a fascinating read entitled U.S. Health in International Perspective: Shorter Lives, Poorer Health is currently available to read on line for free at the National Academies Press website. The U.S. generally finished near the bottom in most categories for the population under the age of 75.  Our post 75 population, outscores their peers elsewhere. 

“OFF LABEL” DRUG PROMOTION CONVICTION VIOLATES 1ST AMENDMENT

160 Common U.S. Food and Drug Administration (“FDA”) approved drugs which are used for “off label” purposes represent approximately 21 percent of all prescriptions in the United states. Physicians may prescribe FDA approved drugs for any therapeutic use that is appropriate in their medical judgment. The FDA, however, prohibits pharmaceutical companies and their employees from promoting the use of FDA approved drugs for “off label” use. Although there is no express prohibition in the Food Drug and Cosmetic Act or its regulations prohibiting the promotion of drugs for off label use, the government uses a criminal statute which prohibits the introduction of “misbranded” drugs into interstate commerce ( 21 U.S.C. 331(a) and 333(a)(1) to prosecute pharmaceutical companies, their employees and sometimes physicians who are “promoting” the off-label use of drugs.