Health Highlights

May 23, 2016

Actions to Advance Infant and Early Childhood Mental Health
Supporting Informed Decision-Making in the Health Insurance Marketplace
No Agreement Left Unturned: FTC Maintains Aggressive Stance Against Pay-For-Delay Deals Between Drug Manufacturers
Massachusetts Long-Term Services and Supports: Achieving a New Vision
New Webinar: What Are the Top Legal Developments Life Sciences Companies Need to Watch?
Now You Have a Second Chance to Benefit From "Top 10 Medicaid Trends to Watch."
U.S. Supreme Court Reaffirms Broad Preemptive Effect of ERISA

Actions to Advance Infant and Early Childhood Mental Health

By Melinda Dutton, Partner | Arielle Traub, Manager

Editor's Note: Children's earliest experiences—both positive and negative—impact their brain formation and in turn their social and emotional, physical, cognitive, communication, and sensory and motor skill development. Recognizing the tremendous opportunities—and risks—associated with this critical period of brain development, policymakers are increasingly investing in what experts call "infant and early childhood mental health" (I-ECMH). In a new policy brief for ZERO TO THREE, summarized below, Manatt Health explains what I-ECMH is, documents why investments in I-ECMH matter, and identifies specific actions that state policymakers should take to support the healthy development of young children. Click here to download the full brief free.

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What Is I-ECMH?

In the first three years of life, a child's brain grows faster than any other time, charting the course for all areas of brain development. Promoting an optimal environment for brain growth is paramount to influencing healthy development. Conversely, negative early experiences, often referred to as adverse childhood experiences (ACEs), have long-lasting impacts on health outcomes, educational performance and even criminal justice involvement throughout children's lives. Understanding that children's earliest experiences matter, policymakers are increasingly focused on I-ECMH, defined as the capacity of a child from birth to five to:

Experience, express and regulate emotion;
Form close, secure interpersonal relationships; and
Explore his/her environment and learn, within the context of family and cultural expectations.

Experts regard I-ECMH as a cornerstone to healthy, lifelong development. Fortunately, I-ECMH can be positively impacted through a continuum of targeted strategies focused on promotion, prevention and treatment:

Promotion—strategies aimed at encouraging positive I-ECMH development, such as public awareness campaigns and help lines.
Prevention—services seeking to identify risk factors, mitigate the effects of ACEs and intervene in child/caregiver dynamics that threaten healthy development, such as parenting education and home health visits.
Treatment—evidence-informed services and supports to address mental health disorders directly, such as child-parent psychotherapy or parent-child interaction therapy.

Why Is I-ECMH Important?

I-ECMH is directly linked to the formation of a child's brain architecture. If not addressed in early childhood, I-ECMH disorders have implications for all facets of adulthood. Research has documented the impacts of ACEs and mental health problems in childhood across multiple dimensions:

Physical and behavioral health. Children's exposure to ACEs has been shown to impact long-term physical and mental health outcomes and substance use. Researchers have documented a direct relationship between the number of ACEs and the likelihood of having heart disease, cancer, chronic bronchitis or emphysema, hepatitis or jaundice and skeletal fractures in adulthood, even in the absence of health-compromising behaviors, such as smoking. Adults who experienced four or more ACEs are at significantly increased risk of depression, suicide attempts, alcoholism and illegal drug use.
School readiness and educational attainment. Success in school is strongly linked to healthy social and emotional development. For children who experience ACEs, school readiness and educational attainment are often negatively impacted.
Juvenile justice involvement. ACEs also contribute to juvenile delinquency, increasing children's risk of juvenile arrests and felony charges.
State spending. The Centers for Disease Control and Prevention estimates that childhood abuse and neglect result in a lifetime cost of more than $200,000 per child, amounting to approximately $124 billion in total lifetime costs as a result of new child maltreatment cases in the U.S. each year.

What Can Policymakers Do to Advance I-ECMH?

To strengthen I-ECMH policy and support the healthy development of children, policymakers should take the following actions:

1. Establish cross-agency I-ECMH leadership. To ensure coordination and accountability and drive a statewide I-ECMH strategy, the state should designate an accountable person or team to develop I-ECMH policies, make programmatic and funding recommendations, manage implementation and monitor progress.

2. Ensure Medicaid payment for I-ECMH services. Since nearly 50% of children under six years old receive healthcare coverage through Medicaid or the Children's Health Insurance Program (CHIP), states should leverage Medicaid payment to support I-ECMH prevention and treatment services for children and their families.

3. Invest in prevention through mental health consultation. An early childhood mental health consultation system—in which a consultant with mental health expertise works collaboratively with programs, their staff and families to improve their ability to prevent and identify mental health issues among children in their care—helps reduce problem behaviors in young children and promotes positive social and emotional development.

4. Train the workforce on I-ECMH. Embedding I-ECMH educational and competency standards in mental health, social work, healthcare and early childhood education professionals' training, coursework and ongoing professional development provides opportunities to build a workforce that understands I-ECMH and is prepared to identify situations that threaten children's healthy development.

5. Raise public awareness of I-ECMH. Developing public health campaigns, educational materials and other efforts can help build public awareness of the importance of I-ECMH. States should conduct public awareness campaigns, develop and distribute parent educational materials, encourage public-private partnerships with local foundations, and host learning collaboratives with stakeholders to share best practices and address barriers to advancing I-ECMH goals.

Conclusion

Implementing the actions outlined above will position states to have a meaningful impact on the lives of young children, their families and communities.

Supporting Informed Decision-Making in the Health Insurance Marketplace

By Jocelyn Guyer, Managing Director | Edith Coakley Stowe, Senior Manager | Naomi Shine, Senior Analyst

Editor's Note: As implementation of the Affordable Care Act (ACA) moves forward and the marketplace continues to evolve, the focus on consumer behavior and decision-making is growing. A key question for both advocates and policymakers is whether consumers have the tools required to support informed choices with regard to health plan selection in the marketplace. Recognizing that the selection of the right plan—one that meets a family's healthcare needs and preferences and aligns with its financial reality—is key to consumer satisfaction, there is increased interest in ensuring that consumers have easy access to reliable information about plan options and the tools that support informed decision-making.

For a new report by the National Partnership for Women and Families, Manatt Health evaluated how well the marketplace is providing consumers with key information about available health plans. Manatt Health reviewed marketplace websites—including the federally facilitated marketplace (HealthCare.gov) and all 13 state-based marketplace websites—in early 2016. Manatt Health's review was supplemented by focus groups conducted by the National Partnership for Women and Families in five states with consumers who had firsthand experiences with marketplace websites. Key findings are summarized below. Click here to download the full report free.

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Summary of Key Findings

The report found that, overall, marketplace websites made significant strides during the third open enrollment period in offering more consumer-friendly shopping tools within window shopping. Most notably, HealthCare.gov added new tools to support informed consumer decision-making, including a customized cost estimator, an integrated provider directory and a simple, but useful, prescription drug directory. A number of state-based marketplace websites took similar steps, offering tools that allow consumers to provide information on their financial and/or health circumstances and receive tailored cost estimates and/or plan listings. However, the marketplace is still young and there is considerable room to improve its support for informed consumer decision-making.

The report addressed the tools available on marketplace websites across six "key elements of consumer-friendly marketplace design":

1. Cost transparency: Marketplace websites increasingly offer tools to help consumers estimate their total out-of-pocket costs, but these tools are relatively new. A clear majority of marketplace websites—HealthCare.gov and 7 out of 13 state-based marketplace websites—now offer tools that allow consumers to see how much they are likely to spend in total, through premiums and cost-sharing, given their expected healthcare utilization. Although valuable in helping consumers look beyond premiums alone, these new customized cost estimators offer only very rough estimates of total out-of-pocket costs, failing to take into account specific medications or treatments that consumers know they will need.

2. Accessible providers and prescription drug information: Integrated provider and prescription drug directories are becoming more common and are offered by HealthCare.gov, but are not standard practice among state-based marketplace websites. Currently HealthCare.gov and 5 out of 13 state-based marketplace websites offer integrated provider directories, making it easier for consumers to identify plans that include their providers. HealthCare.gov and only two state-based marketplace websites offer integrated prescription drug directories that show which plans cover various medications. The new directories are relatively simple, generally identifying only whether a provider is in-network or a medication is covered, and not the level of cost-sharing consumers will face if they use the provider or medication.

3. Useful information about quality of plans: At present only four state-based marketplace websites provide information on the quality of plans; HealthCare.gov and nine state-based marketplace websites do not display quality information. However, more quality ratings will begin to appear on marketplace websites through a pilot program during the fourth open enrollment period for the 2017 coverage year, with all marketplaces scheduled to include quality ratings for the fifth open enrollment period. Quality ratings can help inform consumer decision-making, and marketplace websites can do more to display this information in prominent ways and explain the basis for the ratings.

4. Effective smart choice architecture: Some marketplace websites are beginning to use "smart choice" architecture to help consumers take all costs into account when selecting a health plan. The order in which marketplace websites present plan options and other website architecture decisions can have a powerful impact on consumer choice. Several marketplace websites still default to sorting plans by premium, but five state-based marketplace websites instead sort based on estimated out-of-pocket costs. Of particular note, four state-based marketplace websites now help consumers eligible for cost-sharing reductions see savings by preferentially displaying Silver plans.

5. Integrated assistance: Marketplace websites consistently offer assistance to customers in a variety of ways as they shop for plans online. Recognizing that some customers want in-person assistance or help over the phone, marketplace websites universally inform consumers about how they can contact a Navigator or other in-person assister. HealthCare.gov and 10 out of 13 state-based marketplace websites utilize "hover" technology to define terms and assist consumers as they shop. The Colorado, California and Washington marketplace websites also offer assistance via live chat, a feature that may be particularly appealing to young customers or others who are more technologically savvy.

6. Usability and reliability of information: Marketplace websites continue to improve on language accessibility and general usability, but may not always ensure the accuracy of the information they provide. HealthCare.gov and all but two state-based marketplace websites now offer their entire websites in Spanish at a click, and California and Massachusetts are among the state marketplaces that have gone well beyond, offering their websites and related materials in a wide array of languages. Although it was beyond the scope of this analysis to conduct a systematic review, the reviewers noted marked improvements in the look, feel and flow of the sites, including HealthCare.gov's design, which now makes it much easier for consumers to determine where they are in the window shopping process at any given time. However, problems remain with the accuracy of information: a review of 36 plans from 12 marketplaces that provided links to the Summary of Benefits and Coverage (SBC) uncovered 7 instances in which information on a plan's cost differed between the marketplace website and the plan's SBC.

No Agreement Left Unturned: FTC Maintains Aggressive Stance Against Pay-For-Delay Deals Between Drug Manufacturers

By Lisl Dunlop, Partner, Litigation | Ashley Antler, Associate, Health | Shoshana Speiser, Associate, Litigation

A recent complaint filed by the Federal Trade Commission (FTC) indicates that the agency is continuing its aggressive pursuit of agreements between drug manufacturers that delay the entry of generic pharmaceuticals into the market. In FTC v. Endo Pharmaceuticals Inc., the FTC alleges that Endo Pharmaceuticals Inc. (Endo) and other pharmaceutical manufacturers entered into "pay-for-delay" settlements that raised costs for consumers, in violation of the antitrust laws.¹

The Endo case reveals two key elements of the FTC's ongoing, aggressive strategy against pay-for-delay agreements. First, the FTC is taking an increasingly broad view of what constitutes an unlawful pay-for-delay settlement, in this case by attacking a noncash settlement for the first time. Second, the FTC is likely to pursue the remedy of disgorgement in pay-for-delay cases.

Background

When a pharmaceutical manufacturer wants to launch a new drug, it must file a New Drug Application (NDA) with the Food and Drug Administration (FDA) before it can market and sell that drug. While this process is very expensive and time-consuming, the drugs are typically protected by patents, giving the manufacturers a period of exclusivity to reap the rewards of their investment in the drug development and approval process.

The Hatch-Waxman Act (Act) encourages the introduction of generic versions of popular drugs by 1) permitting generic manufacturers to gain approval through filing a less cumbersome application, known as an Abbreviated New Drug Application (ANDA), and 2) providing a 180-day statutory exclusivity period to the first generic drugmaker to file an ANDA (known as the first filer) when its drug goes to market. During the first filer's exclusivity period, no other generic manufacturer can sell the drug; however, the branded manufacturer can continue to sell the original branded drug, as well as license its own generic version, known as an "authorized generic." The existence of a second generic on the market decreases the first generic's profits, as sales of generics (promoted by various state mandatory substitution laws) will be split between both generic versions.

The Act also includes procedures that govern patent disputes between generic and branded drug manufacturers. When a generic manufacturer tries to launch its product before the brand manufacturer's patent has expired, the brand manufacturer may sue the generic for patent infringement. This suit automatically prevents the generic manufacturer from entering the market for 30 months. Alternatively, the generic may also sue the branded manufacturer alleging that its patent is invalid.

While patent infringement suits are usually settled by payments from the infringer to the patent holder, in branded/generic patent litigation, suits are often settled by the branded drug manufacturer paying the generic manufacturer company—a "reverse payment." In return for the payment, the generic manufacturer will delay its immediate entry into the market for some period of time. Although such payments were typically in cash, parties have grown more creative in crafting settlements so that cash payments are not included. For instance, when the brand manufacturer agrees not to license an authorized generic during the first filer's 180-day exclusivity period, this is known as a no-AG agreement.

In 2013 the Supreme Court held in FTC v. Actavis that patent settlements involving unjustified or unexplained large reverse payments are subject to antitrust scrutiny under the antitrust rule of reason.² Conduct subject to the rule of reason is not automatically illegal; rather, a court must consider the surrounding facts and circumstances to weigh the potential benefits to consumers against its harms. The Court's opinion in Actavis, however, did not specify whether this rule applies to noncash payments. Although lower courts have struggled with whether or not noncash payments constitute "pay-for-delay" settlements, the FTC has consistently declared that all settlements that delay generic entry are anticompetitive.³ Since Actavis, the FTC has essentially engaged in a game of "whack-a-mole," striking each attempt by drugmakers to craft a patent litigation settlement that avoids antitrust condemnation.

The Endo Case

The Endo case represents the FTC's latest challenge to pharmaceutical companies' pay-for-delay settlements. According to the FTC's complaint, Endo paid several generic drug manufacturers and entered into no-AG agreements to delay generic entry and prolong its monopoly profits for two of its blockbuster drugs, Opana ER and Lidoderm:

In June 2010 Endo agreed to pay Impax Laboratories, Inc. (Impax) to settle its patent challenge and delay its entry into the market by 2.5 years. The payment consisted of Endo's 1) agreement not to launch an authorized generic and provision of a cash payment if market conditions changed, and 2) payment of up to $40 million for a development and co-promotion deal that made no economic sense for Endo if Impax was on the market. To date, these agreements have yielded payments of over $112 million to Impax.
In May 2012 Endo and its partners, Teikoku Pharma USA, Inc. and Teikoku Seiyahu Co., Ltd., agreed to pay Watson Laboratories, Inc. (Watson) (now Allergan plc) to settle its patent challenge and delay its entry into the market by over a year. The payment here consisted of Endo's 1) agreement not to launch an authorized generic for 7.5 months after Watson's entry, and 2) provision of branded products to Watson "at no cost," which Watson could sell for pure profit.

The FTC is seeking a permanent injunction to block these agreements and restitution or disgorgement to compensate consumers and prevent the companies from engaging in similar behavior in the future.

FTC's Use of Disgorgement

As we discussed in our June 2015 newsletter, from 2003 through 2012 the FTC adhered to its Policy Statement, which reserved disgorgement as a remedy for "exceptional" competition cases. During the nine years that the Policy Statement was in effect, the FTC sought disgorgement in only two cases. In 2012, however, the FTC withdrew its Policy Statement and in so doing effectively lowered the bar for seeking a disgorgement remedy. Since then the FTC has sought disgorgement in four cases, all of which were against pharmaceutical companies, and three of which involved pay-for-delay settlements.⁴ In fact, since the Policy Statement's withdrawal, the FTC has sought disgorgement in all of its pay-for-delay cases.

Takeaways

After attacking pay-for-delay settlements for years without gaining much traction, the FTC's victory under Actavis in 2013 shifted the tides. In the wake of the Supreme Court's decision, the FTC has maintained an aggressive "post-Actavis agenda[,]" and "continues to devote significant resources to combatting anticompetitive pay-for-delay agreements."⁵

The FTC's challenge against Endo reflects its continued aggressive stance against pay-for-delay agreements in two notable ways:

It is the FTC's first case challenging a no-AG agreement as an unlawful pay-for-delay agreement. The FTC's position in this regard is particularly notable because the law is unsettled, and consequently courts are split on whether noncash payments such as no-AG agreements qualify as anticompetitive pay-for-delay agreements.
This case demonstrates the FTC's disproportionate pursuit of disgorgement in the pay-for-delay context. The use of such a remedy in this case is particularly surprising in light of the unsettled law regarding whether noncash payments, such as no-AG agreements, constitute such an agreement.

Based on the FTC's most recent figures, the total number of patent litigation settlements involving potential reverse payments dropped from 40 in 2012 to 29 in 2013 and to 21 in 2014, a nearly 50% drop in just two years.⁶ Despite this substantial decline in the overall number of pay-for-delay agreements since Actavis, the FTC has not stepped down its efforts. Rather, the agency has pursued two pay-for-delay cases in the past two years and continues to devote resources to investigating pay-for-delay cases. The FTC's repeated use of disgorgement and attack on no-AG agreements in Endo suggests that the FTC will closely scrutinize pharmaceutical settlements and aggressively pursue any agreements that resemble unlawful pay-for-delay settlements. Looking ahead, what remains to be seen is which pay-for-delay mole the FTC will whack next.

_{¹No. 2:16-cv-01440 (E.D. Pa. Mar. 30, 2016).}

_{²133 S. Ct. 2223 (2013).}

_{³E.g., Jamie Towey, Quo Vadis Post-Actavis?, FTC Blog Competition Matters (Mar. 30, 2016), https://www.ftc.gov/news-events/blogs/competition-matters/2016/03/quo-vadis-post-actavis.}

_{⁴FTC v. Cardinal Health, No. 15-cv-3031 (S.D.N.Y. Apr. 20, 2015); FTC v. AbbVie, Inc., No. 2:14-cv-05151 (E.D. Pa. Sept. 8, 2014) (pay-for-delay matter); and FTC v. Cephalon, Inc., No. 2:08-cv-2141 (E.D. Pa. Nov. 18, 2013) (same).}

_{⁵Jamie Towey, Quo Vadis Post-Actavis?, FTC Blog Competition Matters (Mar. 30, 2016), https://www.ftc.gov/news-events/blogs/competition-matters/2016/03/quo-vadis-post-actavis.}

_{⁶Dana A. Elfin, Should FTC Seek Disgorgement of Profits in Pay-for-Delay Cases?, Bloomberg BNA (Apr. 18, 2016), http://www.bna.com/ftc-seek-disgorgement-n57982069953/.}

Massachusetts Long-Term Services and Supports: Achieving a New Vision

By Stephanie Anthony, Director | Keith Nevitt, Senior Analyst | Carol Raphael, Senior Advisor

Editor's Note: In late 2014, Manatt Health authored a paper titled The Future of MassHealth: Five Priority Issues for the New Administration with support from the Massachusetts Medicaid Policy Institute (MMPI), a program of the Blue Cross Blue Shield of Massachusetts Foundation. The paper explored how the incoming administration could strengthen MassHealth, the Commonwealth's Medicaid program and one of its largest healthcare insurers. It identified comprehensive long-term care reform as one of the highest-priority areas to address.

MMPI subsequently engaged Manatt to prepare a new report to lay out a vision for MassHealth long-term services and supports (LTSS) that is person-centered, integrated, sustainable, accountable and actionable—and presents options for Massachusetts policymakers to consider when tackling some of the most intractable challenges facing the LTSS system. Below is a summary of key highlights. Click here to download the full report free.

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LTSS enables hundreds of thousands of people of all ages in Massachusetts to live with independence and dignity, participate in their communities and increase their overall quality of life. MassHealth, the Commonwealth's Medicaid program, is the largest payer of LTSS, spending nearly $4.5 billion on LTSS in 2015, representing nearly one-third of all MassHealth expenditures and 12 percent of the state budget. Although the demand for LTSS is projected to skyrocket, few people are aware of the likelihood that they will need LTSS in their lifetimes and few viable LTSS financing options exist beyond MassHealth.

The increasing demand for LTSS, rising costs and building pressure on the workforce, coupled with a care delivery system that is fragmented and lacks meaningful quality measures, create an LTSS system in Massachusetts that may be providing suboptimal care while creating serious budget pressures on the MassHealth program. In addition, the fragmented LTSS system is difficult to navigate and may be increasing avoidable hospitalizations and ER visits and replacing much-needed functional supports with more expensive medical interventions. While Massachusetts is widely recognized as a leader among states in healthcare reform, it is near the middle of the pack on LTSS system transformation.

Establishing a Quality-Driven, Affordable LTSS Strategy

Massachusetts has a unique opportunity to address these issues and become a bellwether state on LTSS transformation, as state policymakers and stakeholders are coalescing around LTSS reform. Not only have stakeholders unanimously identified LTSS reform as one of the top five priorities facing the MassHealth program, but demographic trends predicting increased LTSS demand and spending are also propelling LTSS closer to the center of MassHealth policy debates.

State policymakers are incorporating LTSS into broader discussions about MassHealth payment and care delivery reform. They are recognizing the interdependencies among medical care, LTSS, behavioral health services and social support services in promoting health and well-being for some of MassHealth's most vulnerable members.

To become a leader on LTSS reform, MassHealth must expand its long-standing Community First policy vision and establish a quality-driven, affordable LTSS purchasing and delivery strategy. Implementation of the strategy will require a multiyear commitment and should result in a system with the following features:

Person-centered. It identifies and provides the services and supports that people prefer and need in the locations of their choosing, is flexible to meet the diverse needs of diverse populations, and includes consumers and their families as integral parts of the care delivery team.
Integrated. It has an infrastructure in which provider systems, funding streams, financial incentives, administrative agencies, regulatory structures, and contractual requirements are aligned such that medical and nonmedical providers share information and work together to coordinate and deliver comprehensive care.
Sustainable. It employs purchasing strategies that encourage and reward high-quality, high-value care that ensures individuals receive the right care in the right place at the right time, thereby helping to support the long-term sustainability of the MassHealth program.
Accountable. It designates entities at both the state agency and the delivery system levels to be responsible for administering and managing the care of the LTSS population, actively monitoring provider and plan performance and quality, and continually engaging stakeholders via transparent and publicly available program and data analyses.
Actionable. It leverages technological solutions to collect real-time outcome, quality and safety information from providers, in order for the state and consumers to make more informed decisions and appropriately intervene to improve processes, performance and quality.

Achieving the LTSS System of the Future

The LTSS system of the future likely can be achieved through various models. The best vehicle, however, is one in which a single entity or network of entities assumes financial responsibility and performance accountability for coordinating and delivering comprehensive care to LTSS populations and is vigorously monitored by the state. Options include Medicaid Accountable Care Organizations (ACOs), Senior Care Options (SCOs) or One Care Plans, consortia of community-based organizations, partnerships among such entities or a combination of these approaches.

Regardless of the vehicle, community-based LTSS providers must be at its core, as they have the expertise to service diverse LTSS populations. Such an entity, particularly one paid through a risk-adjusted global or shared savings payment arrangement and accessing Medicare financing for dually eligible populations, will have more flexibility than providers in the current system to address people's needs creatively in a person-centered and cost-effective manner and coordinate physical healthcare, behavioral healthcare and LTSS.

To successfully design, implement and oversee this transformation, the Commonwealth must designate a senior health and human services official to be responsible and accountable for the LTSS system. It must also invest in hiring highly skilled contract management and analytic staff to vigorously monitor integrated care programs and hold them accountable for providing high-quality, effective and accessible care. In addition, the state must monitor the financial performance of contractors, particularly those taking on financial risk and/or reward to ensure effective stewardship of state and federal resources and instill a level of confidence that public dollars are being spent wisely.

To achieve this vision, the Commonwealth must address seven fundamental reforms:

1. Drive integration of LTSS at the provider level
2. Assess and learn from existing programs and data
3. Identify and implement meaningful quality measures
4. Improve access to LTSS
5. Support informal caregivers
6. Enhance direct-care workforce capacity
7. Expand access to affordable housing with supports

In some cases, new investments or reallocation of existing resources will be required to achieve the most lasting and sustainable improvements.

Conclusion

MassHealth's mission is to "improve the health outcomes of our diverse members, their families and their communities by providing access to integrated healthcare services that sustainably promote health, well-being, independence and quality of life." To fulfill this mission, the administration must continue to engage stakeholders in developing LTSS purchasing and delivery system reforms that help create a person-centered, integrated, sustainable, accountable and actionable LTSS system that is fully aligned with the rest of the care continuum. Massachusetts has demonstrated its ability to lead in healthcare system reform and should continue to lead by taking on comprehensive LTSS reform and advancing its legacy of leadership and innovation.

New Webinar: What Are the Top Legal Developments Life Sciences Companies Need to Watch?

Click Here to Register Free—And Earn CLE.

Life sciences companies are facing an increasingly complex legal climate, and it is easy to miss some of the storms on the horizon. It can be a continuing challenge to ensure your organization remains compliant—and protected—in a transforming environment.

In a new two-part webinar for Bloomberg BNA, Manatt reveals some of the most significant legal issues that life sciences leaders need to watch in the year ahead. Join us on Wednesday, June 15 and Thursday, June 16 from 1:00 – 2:30 p.m. ET. You'll learn how to prepare for a host of emerging legal developments—and navigate safely through today's volatile healthcare landscape. During the session, you will:

Discover some of the most important, and surprising, legal developments for life sciences companies.
Gain key insights into how critical developments are evolving—including many that come from outside the traditional areas in the sights of life sciences counsel.
Explore developments and enforcement trends around antitrust laws, the False Claims Act (FCA), the Foreign Corrupt Practices Act (FCPA), the 340-B program, cybersecurity, direct marketing laws, environmental regulation, and others.
Examine how life sciences companies and their customers can respond to keep their organizations compliant and prepared in a radically changing market.

Even if you can't make the original airings on June 15 and 16, sign up now and receive a link to view the programs on demand. Click here to register free—and earn CLE. (Note: You will need to register separately for day 1 and day 2 to benefit from the full program. You'll find links to both sessions at the bottom of the registration page. CLE is available for both programs.)

Presenters:

Lisl Dunlop, Partner, Litigation
Jordan Hamburger, Partner, Corporate and Finance
Kimo Peluso, Partner, Litigation
Helen Pfister, Partner, Health
Marc Roth, Partner, Co-Chair, TCPA Compliance and Class Action Defense Group
Ian Spatz, Senior Advisor, Manatt Health
Jacqueline Wolff, Partner, Co-Chair, Corporate Investigations and White Collar Defense Group
Ted Wolff, Partner, Co-Chair, Energy and Environment

Now You Have a Second Chance to Benefit From "Top 10 Medicaid Trends to Watch."

Click Here to Download the Presentation and White Paper.

With the number of Americans obtaining health coverage through Medicaid at an all-time high and mounting evidence of the benefits of Medicaid expansion—to people, providers and states—the coming year is expected to bring continued growth and change. In a recent webinar for Bloomberg BNA, Manatt Health revealed the top 10 Medicaid trends to watch in 2016—and beyond. To download a free copy of the webinar presentation or our white paper detailing the top 10 Medicaid trends to watch, click here.

During the session, you have the opportunity to:

Discover the 10 major trends transforming Medicaid—and what new forces are emerging.
Gain key insights into each trend's evolution—from its current status to its anticipated impact.
Explore how the 10 trends will affect the full spectrum of healthcare audiences—including states, providers, plans, pharmaceutical manufacturers and patients.
Find out what State Innovation Waivers have to do with Medicaid—and how they intersect with 1115 waivers.
Understand the reasons behind the growing interest in redefining permissible payment parameters under Medicaid.
Learn what real-world data is showing about the economic impact of Medicaid expansion in "early adopter" states.

If you have questions about any of the trends or would like to discuss the specific issues that your organization is facing, please contact our presenters:

Deborah Bachrach, Partner, Health, at dbachrach@manatt.com or 212.790.4594
Patricia Boozang, Senior Managing Director, at pboozang@manatt.com or 212.790.4523
Melinda Dutton, Partner, Health, at mdutton@manatt.com or 212.790.4522
Cindy Mann, Partner, Health, at cmann@manatt.com or 202.585.6572

U.S. Supreme Court Reaffirms Broad Preemptive Effect of ERISA

By Katrina Dela Cruz, Associate, Litigation

On March 1, 2016, the United States Supreme Court, in Gobeille v. Liberty Mutual Insurance Company, No. 14-181, reaffirmed the broad preemptive effect of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. (ERISA). In enacting ERISA, Congress provided, among other things, for the preemption of "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 136 S. Ct. 936, 939 (2016) (citing 29 U.S.C. § 1144(a)). As is relevant here, ERISA "pre-empts a state law that has an impermissible 'connection with' ERISA plans, i.e., a law that governs, or interferes with the uniformity of, plan administration." Id. In a 6-2 decision written by Justice Anthony Kennedy, the Gobeille Court held that state laws that govern plan reporting, disclosure, and recordkeeping were preempted by ERISA and that preemption in this situation was "necessary in order to prevent multiple jurisdictions from imposing differing, or even parallel, regulations, creating wasteful administrative costs and threatening to subject plans to wide-ranging liability." Id.

At issue in Gobeille was the validity of a Vermont statute and regulation that required health insurers, healthcare providers, healthcare facilities, and government agencies to report any "information relating to healthcare costs, prices, quality, utilization, or resources required," to the Vermont Department of Banking, Insurance, Securities and Health Care Administration (the Department), including data relating to health insurance claims and enrollment, for compilation in an all-inclusive all-payer claims database (APCD). The Vermont statute and regulation were intended, among other things, to identify healthcare needs and inform healthcare policy, compare costs between various treatment settings and approaches, determine the capacity and distribution of existing resources, and provide information to purchasers of healthcare. Vermont intended to use the APCD data to better control healthcare outcomes and costs.

Liberty Mutual Insurance Company (Liberty Mutual), which maintained a self-insured health plan for its employees, challenged the Vermont statute and regulation. Liberty Mutual's third-party administrator (TPA) was ordered to transmit its files on eligibility, medical claims, and pharmacy claims for the Plan's Vermont members. Liberty Mutual, voicing concerns that the disclosure of such confidential information might violate its fiduciary duties to its Plan participants, instructed the TPA to refuse to submit the data to the Department and filed suit, seeking a declaration that ERISA preempts application of the Vermont law and an injunction prohibiting Vermont from trying to acquire data about the Plan or its members. Liberty Mutual argued that the Vermont law was preempted by ERISA, as it was a law that governed, or interfered with the uniformity of, plan administration and hence had an impermissible "connection with" ERISA plans. Id. at 943.

The Decision—And the Reasoning Behind It

The United States District Court for the District of Vermont granted summary judgment in favor of Vermont, but the Second Circuit Court of Appeals reversed, holding that Vermont's data-collection law was preempted by ERISA. The Second Circuit reasoned that the reporting of information about plan benefits qualified as a core ERISA function and should therefore be shielded from potentially inconsistent and burdensome state regulation. Liberty Mut. Ins. Co. v. Donegan, 746 F.3d 497, 508 (2d Cir. 2014).

The United States Supreme Court affirmed the Second Circuit's decision and invalidated Vermont's statute and regulation. As part of its analysis, the Court cited the various federal recordkeeping requirements that ERISA and the Department of Labor have imposed on ERISA plans, and explained that ERISA's extensive reporting, disclosure, and recordkeeping requirements are central to, and an essential part of, a uniform plan administration system. 136 S. Ct. at 945.

The Majority reasoned that Vermont's reporting regime, which also attempted to govern plan reporting, disclosure, and recordkeeping, and compelled plans to report detailed information about claims and plan members, intruded upon "a central matter of plan administration" and "interfere[d] with nationally uniform administration." Id. The Supreme Court noted that the implementation of a patchwork of state regulations could create wasteful administrative costs and potentially subject plans to wide-ranging liability, and therefore, "preemption [was] necessary to prevent the States from imposing novel, inconsistent, and burdensome reporting requirements on plans." Id.

The Majority further rejected Vermont's argument that Liberty Mutual had not demonstrated that Vermont's reporting regime had caused it economic loss, reasoning that "[a] plan need not wait to bring a preemption claim until confronted with numerous inconsistent obligations and encumbered with any ensuing costs." Id. The Majority also rejected Vermont's argument that ERISA did not preempt the state law because the state reporting scheme invoked different objectives. Vermont had maintained that in enacting ERISA, Congress's primary concern was with mismanagement of funds accumulated to finance employee benefits and failure to pay employee benefits from accumulated funds. Vermont argued that its law had nothing to do with the financial solvency of plans or the prudent behavior of fiduciaries. The Majority was unconvinced, reasoning that Vermont ordered ERISA plans to report detailed information about the administration of benefits in a systematic manner, which is a core function of ERISA.

The Critics' Views

Critics of the decision point out that because APCD laws and ERISA serve different purposes, ERISA should not preempt these APCD laws. Critics of the decision also point out that prohibiting states from collecting healthcare price and market data from self-funded employee benefit plans puts states at a disadvantage in addressing the growing problems of increasing healthcare costs, consolidation, and price variation. Finally, critics maintain that the decision substantially undermines state efforts to understand and control rising healthcare costs for consumers by depriving states of essential information on healthcare utilization, pricing, and quality.

The Result of the Ruling

As a result of the ruling, health insurers, healthcare providers and healthcare facilities may not have to be concerned about multiple data-reporting jurisdictions creating increased and wasteful administrative costs, as well as threatening to subject plans to state-imposed risk of liability.