Stephen Kim

It’s Time to Abandon Percentage-Based Compensation Arrangements For 33 years as a health care attorney, I drafted, offered opinions supporting the lawfulness of, and defended percentage-based compensation relationships in #enforcement proceedings. It’s time to abandon percentage based #compensation in the #pharmaceutical space. The government, though not typically taking the step of trying to mandate them out of existence, has long been suspicious of percentage based payments. For our friends at #DOJ, #OIG, #HHS, and #CMS, the word “percentage” pretty reflexively equates to “#kickback”. They see %-based fees as inherently tied to the “volume and value” of #referrals. orders, and other business between contracting parties, with #AKS and #StarkLaw implications. In the final days of my legal practice before I retired, I helped clients assess and think about the implications of developing efforts in #Congress to follow the #VeteransAdministration’s anti-percentage bent in assessing fees for #NFAMP purposes and, potentially, pushing that out to other #pricereporting systems, including #ASP and the #MDRP. Most of my clients quaked at the thought. That would be so “disruptive” of existing #bonafideservicefee payments to so many contractors, they fretted. #Datafees, #GPO fees, #adminfees, and so many other payments would be affected, they complained. At the time, I worried right along with them. But now I see it differently-and not because I believe, as #lawenforcement does, that percentage fees are ultimately inconsistent with #fairmarketvalue. I just can’t see a way to solve the high list/high #rebate problem—that scourge that drives patient #costsharing and #copays ever higher—without putting #percentagefees down for the count. #PBMs—and their affiliated #plans and specialty #pharmacies—suck the life’s blood from #patients, #employers, #Medicare, #Medicaid, and virtually every one else by exploiting percentage fees. It feeds the high lust beast. What #manufacturers have fought to defend—for years—they should now advocate to sunset. The time has come. #lifesciences #managedcare #MedicareAdvantage #biotech #FMV

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I thought I would throw a question out there for fellow False Claims Act geeks. Why did Teva just pay $425 million to settle a case that currently has a key issue of law pending in the First Circuit? A little background for those that don't live this stuff. The United States sued Teva alleging that it violated the AKS by funneling patient assistance payments through non-profits to pay for Teva's drugs. A key issue in the case was what standard of causation is required to determine that false claims "resulted from" the alleged AKS violation. Judge Gorton, handling the case in the district court, ruled for a "loose" standard that was not favorable to Teva, but certified this question for interlocutory appeal in this case. Meanwhile Chief Judge Saylor in a case also about patient assistance programs, but involving Regeneron, ruled that the "but for" causation standard (more limited and defendant friendly) is appropriate in such cases, denied the government's motion for summary judgement, and also certified his decision on the issue for interlocutory appeal. The 1st Circuit took up the question, hearing oral argument on the case on July 22. Some accounts indicate the First Circuit was sympathetic to the "but for" causation standard that would be very favorable to Teva and Regeneron. Add to this that this issue has a good shot at going to SCOTUS given that it is the subject of a circuit split among the Third, Sixth, Seventh, and Eighth Circuits. With the First Circuit joining soon. So, when I heard Teva went ahead and settled for close to half a billion dollars, I was a little surprised. Interested in thoughts anyone might have on this mystery. https://lnkd.in/eYPFE-Ap

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Dull topic. Yet oddly thought-provoking.   The Wall Street Journal observes #CMS #transparency has had little impact on industry payments to physicians. It’s a fair observation about the numbers, even if the article’s characterization of the motivations seems a bit misguided.   Not big news.   But I always wonder whether the #ESG reporting folks are taking notes.   This decade-long #lifescience endeavor has generated an entire cottage industry. Careers have been dedicated to it. Experts have made untold sums setting up #compliance systems.   And the needle has moved. But... ❓Has the movement been on par with the cost? ❓When was the last time you checked the #OpenPayments website before choosing a doctor?    As companies now grapple with defining and reporting on #sustainability metrics, it’s easy for executives and consultants to swarm the shiny issues and then delegate implementation to people who get lost in the task. After a while, the whole thing gets relegated to a “basement department.”    But #climatechange seems infinitely more consequential.   Yes, measuring is important. But it’s only the first piece.  #OperationalImprovement is where the rubber meets the road.   So easy to say. So hard to do…

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Johnson & Johnson's recent legal challenge to HRSA over the controversial 340B rebate model could significantly reshape the landscape of drug pricing and access to medications. This case not only influences how pharmaceutical companies interact with the program but also sets the stage for potential shifts in policy that could have far-reaching effects on vulnerable populations. What makes this time even more interesting is the change in power with the incoming Trump Administration, which takes office in January. How will the new HHS and HRSA appointees approach this issue? As this case unfolds, how can we ensure that reforms — whether at the legal or policy level — strengthen the 340B program without negatively impacting those who rely on it most? Let's talk about it, I want to hear your thoughts! #340BProgram #HRSA #CommunityHealthCare #CoveredEntity #JohnsonandJohnson

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The #FTC has voted to ban #noncompete agreements for most U.S. companies, effective in early September unless overturned. This rule affects nearly 30 million workers, though senior executives earning $151,164 or more are exempt. It preempts state laws unless those provide greater protections. The ban raises concerns about confidentiality and enforcement, with firms likely turning to nonsolicitation agreements and trade secret protections instead.Businesses fear the sharing of proprietary information previously protected by noncompetes. The U.S. Chamber of Commerce is suing to block the ban, claiming the FTC is overreaching. Enforcing the rule will be challenging due to the FTC's limited resources.

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LUGPA recently issued a warning about the Centers for Medicare and Medicaid Services’ recent proposal to reduce physician reimbursements as part of the 2025 Medicare Physician Fee Schedule. It argues that the proposal threatens the financial viability of independent urology practices and patient access to care. The issue is that the PFS is constrained by a legal requirement for Medicare programs to maintain budget neutrality, so any increase in reimbursement for one service results in a decrease for another. The policy's failure to account for inflation and the rising costs of providing medical care has already put tremendous pressure on healthcare businesses, and this situation is yet another example of that. #Healthcare #Medicare #Reimbursements

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On Tuesday, November 12, Foley partners Kate Wegrzyn, Greg Husisian and Dottie Watson and Sue Cass, General Counsel at Pelican Products, Inc. will speak on the panel discussion titled, “Managing Supply Chain Regulatory Risk: Understanding and Implementing ESG and Supply Chain Integrity Goals” at the 2024 NAM Manufacturing Legal Summit. Click below to learn more and to register. #Manufacturing #LegalSummit #SupplyChain #ESG

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Listen Here: https://lnkd.in/e4-baq6f Discover the nuances of pharmaceutical expenses in healthcare systems with Amy Gutierrez, PharmD, CPEL, VP and Chief Pharmacy Officer at UCHealth. Amy shares insights on the overlooked rise in drug costs versus labor expenses and discusses current focuses, including GLP-1 medications' promising aspects and challenges. Tune in for a concise exploration of these crucial topics. For more information about Becker's Healthcare, please contact Jessica Cole or Scott Becker. #podcast #healthcare #womensleadership

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15 stories we are following at Becker's Healthcare today. Prescript "Hospital president out after Lifespan trims 20% of executive roles" Kristin Kuchno Lifespan has reduced executive positions by 20%, John Fernandez, Lifespan president and CEO, said in a statement shared with Becker's. 1. 13 drugs expected to be included in CMS negotiations: Study Alexandra Murphy This includes some GLP-1 drugs and some other high cost drugs. 2. Inside the GLP-1 'price war' Jakob Emerson 3. 2 hospitals abruptly close Alan Condon Over the last 10 days, one acute-care hospital in Alabama suspended operations indefinitely, with another physician-owned hospital in California following suit. 4. 4 health systems' thoughts on the 2-midnight rule Andrew Cass Leaders of the four major publicly traded for-profit health systems were asked about the effects of the expansion of the two-midnight rule during the Wells Fargo Healthcare Conference held in early September. 5. AdventHealth CEO's 5 tips to navigate resistance Kristin Kuchno Pushing through resistance is vital in creating change for the future, according to Terry Shaw, president and CEO of Altamonte Springs, Fla.-based AdventHealth. Terry Shaw is a tremendous leader. 6. How a community flash point sparked a $30M Allina Health investment Kelly Gooch 7. Healthcare reform fades from election spotlight Mackenzie Bean Healthcare reform, once a central issue in elections, has taken a back seat in this year's presidential race, The New York Times reported Sept. 13. 8. Ochsner Health names hospital's 1st woman CEO Kristin Kuchno Beth Walker, who has served as CEO of Ochsner Baptist in New Orleans since 2019, has been appointed CEO of Ochsner Health's flagship facility. Beth Walker is an exceptional leader 9. Epic faces antitrust lawsuit: 7 things to know Naomi Diaz A startup has filed an antitrust lawsuit against Epic Systems alleging that the company is leveraging its position in the EHR market to stifle competition in the payer platform 10. 116 hospitals with the best readmission rates Mariah Taylor 11. US health system falls short: 6 takeaways from new global report card Molly Gamble 12. We are thrilled to kick off the Becker's Healthcare Health IT Annual Conference next week. For information reach Jessica Cole or Allison Warner. 13. I am thrilled to speak with two health system boards on key business health care trends at their retreats this coming month. 14. The Becker's Healthcare podcast is having a terrific month of downloads. And rankings. Thank you. 15. FTC sues nation's 3 largest PBMs: 10 notes Paige Twenter The Federal Trade Commission said Sept. 20 that it is suing CVS Caremark, Optum Rx and Express Scripts over allegedly inflating insulin prices. PS. I'm thrilled to participate as a panelist on a Kemtai webinar this morning that discusses selling to health systems. For information reach Seth Bornstein.

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A Prediction on the Louisiana #ContractPharmacy Law? Last Thursday, a US District Court heard oral argument on the constitutional challenges brought by PhRMA AstraZeneca, and AbbVie to the LA CP law. Although it’s always hard to predict an outcome from an argument, I’m going to tempt fate. The judge is still finding his legs in what he described as a “complicated case”. Even so, he showed little interest in all but one claim—a subset of the “#preemption” issues. But I think he’s leaning in the state’s direction, even on those claims. Limited Questions: The judge showed little interest in most of the claims. Pretty much zippo questions on the argument that the state law was an unconstitutional taking of #drug makers’ property without just compensation (an argument I like) or that the law is too vaguely drafted (not a great argument), for instance. Preemption: Where the court did show some interest was the issue of whether the state law is preempted because it conflicts with the #340B statute. Even here, though, the court seemed disinterested in some versions of the preemption challenge; the court did not really engage on the (pretty sound) argument that the state law conflicts with the federal patent laws, impeding the value of #patents by imposing #pricecontrols. And though the court showed a little more interest re: the argument that the 340B statute laid out a comprehensive balance of benefits and obligations that the state is disturbing, he didn’t seem likely to bite there, either. He wondered out loud a few times why a CP law would conflict with the federal law so long as the “link to a [legitimate] #coveredentity” was present. The court showed the most interest in the question of whether the 340B statute’s enforcement mechanisms would be undermined by the state law. The court seemed to telegraph that its ultimate view of the “enforcement preemption” issue would boil down to the question of whether the state statute was a “pricing” or a “delivery” provision. P vs. D: If the state law is a “pricing” statute, the court suggested, it would likely be preempted. The 340B statute and the Supremes’ decision in the Santa Clara case really do seem to frame federal mechanisms, including #HRSA’s Administrative Dispute Resolution, as the exclusive means for addressing “pricing” or “overcharge” issues. But, if the state law is only about “delivery”, the court’s working hypothesis seemed to be that the 3rd and DC Circuit opinions hold that the 340B statute is “silent” on those issues. If so, the court appeared to reason, “silence” can’t be the basis for a state-federal conflict. Where Is the Court Headed?: Good question! Please see the comments below for my prediction. #lifescienses #healthcare #pharmaceuticals #drugpricing

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The #340B #ADR Rule: Missing the Forest for the Trees? At the Informa Conference, a speaker decried what he said was an overbroad scope to #HRSA’s Final ADR Rule. But what he saw as a threat to manus is actually a lifeline in the litigation challenging state laws that purport to restrict #drug maker #contractpharmacy restrictions. The Big Picture: After a bit of a rocky start in the various federal district court cases, the trendline in the CP policy cases is now quite positive for manus. Both the 3rd and the D.C. Circuits have ruled in favor of reasonable CP restrictions. The next shoe to fall, in the 7th, could strike a contrary note, but, if it does, the resulting circuit split will set the stage for SCt review, with the majority of the appellate courts already siding with the manus. Manus, pleased with the federal status, are, however, concerned about state developments. The problem is 2-fold. 1) 6 states have passed laws that reverse the manu policies, and multiple other states are lining up to do the same. 2) Though deeply flawed, an 8th Circuit opinion has upheld the first of those state laws, concluding it is not “preempted” by 340B, because, supposedly, there is no conflict between the federal and state laws. In particular, the court concluded that it did not see a conflict between the 340B dispute resolution process and the state regime. The Rule: But the ADR Rule sure seems to undercut the 8th. Where, before that rule, HRSA had disclaimed any interest in addressing any dispute that was pending in the courts, the Final Rule reverses course. It asserts that an overcharge dispute, subject to binding federal dispute resolution, shall "generally include[]" any "claims that a manufacturer has limited the covered entity's ability to purchase covered outpatient drugs at or below the 340B ceiling price". That presents a direct conflict between the ADR process and state laws and related enforcement efforts. Tree or Forest: Our Informa speaker complained that the Final Rule broadened the scope of alternative dispute resolution—worrying that this would subject manfacturers to adverse findings where they imposed CP policies. The argument here is that the ADR process should be limited to pure “overcharge” issues, not other issues. But this misses the forest—for two reasons. 1. The biggest current threat to manu efforts to limit CP transactions are these state laws. By defining federal ADR to include any claims that “a manufacturer has limited” CE purchases, HRSA has handed drug makers a strong preemption argument. 2. The concern that federal ADR, defined broadly, is a greater threat to manus than the state laws seems a bit overblown, given that the 3rd and DC Circuit opinions. On balance, if I were in a manu’s shoes, I’d be pleased where the ADR Rule leaves things at least on this particular point (though certainly not others). #lifesciences Health Resources and Services Administration (HRSAgov), HHS

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Great short course for any life sciences lawyer

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The #340B FInal #ADR Rule: Help on the State Contract #Pharmacy Law Front? The 340B fight of fights now is the question of whether state CP laws can alter the scope of statutory “must offer” obligation, which the Third Circuit held did not compel CP transactions. The Final Rule may actually help to make the drug maker point that state CP laws necessarily conflict with the federal ADR process, such that the state laws should be struck down. Background: Drug makers have been trying to beat back state laws that compel sales to contract #pharmacies by arguing that these state laws would interfere with #HRSA’s oversight and enforcement. Manufacturers cite the Supremes’ decision in the Santa Clara case for the proposition that federal enforcement under 340B should be “exclusive”. Sure Sounds Like a Conflict: In describing the intended scope of the ADR, the Final Rule defines an overcharge dispute to “generally include[]” any “claims that a manufacturer has limited the covered entity’s ability to purchase covered outpatient drugs at or below the 340B ceiling price”. That’s exactly the claim state CP mandates are built on—the claim that, because the CP has a contract with the CE, it is entitled to the delivery of 340B product at the 340B price. Arising Under: At one point in speaking about the intended scope of the ADR Final Rule, HRSA says that it is “implementing a binding ADR process”. It also says that this “binding” process applies for relevant issues (including alleged overcharges) “arising under the 340B Program”. The phrase “arising under” is generally interpreted by courts very broadly in the context of defining the scope of an arbitration, another form of alternative dispute resolution. The 1st, 3rd, 5th, 6th, 7th, 8th (where the Arkansas statute was heard on appeal) and 11th Circuit Courts of Appeal all have ruled that the phrase “arising under” creates a broad intended scope. The intent to have the ADR process be “binding“ and to apply to any dispute “arising under” an overcharge helps to show the conflict between the federal ADR process and state law created enforcement mechanisms. The ADR process isn’t truly “binding” if a state process can ultimately dictate a separate result. And, the question of whether CEs are being overcharged when not receiving 340B prices in state mandated CP transactions would sure seem to be an issue that “arises under” the 340B statute. There are places where the Rule refers to ADR as pertaining to issues “regarding overcharges”. Though the scope of that phrase might be read as narrower than “arising under”, it’s probably still helpful to the manufacturer cause. The state statutes tend, after all, to reference not just “delivery” to a CP, but delivery at the 340B “price”. All food for thought as #PhRMA and drug makers consider their litigation options— and arguments.

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T.J. Ferrante, vice chair of Foley's Health Care Practice Group, is speaking during Spruce Health's upcoming webinar, "U.S. Federal and State Telehealth Law & Policy—2024 & Beyond," on June 12. This panel will examine the current regulatory landscape as it relates to digital health. Click below to learn more and register. #Webinar #Telehealth #HealthLaw

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Last week, the FTC voted to issue an interim report in its study of the PBM industry - 2 years after the agency launched its investigation. While, according to the report, staff is still trying to collect information from the PBM respondents, the FTC felt it had enough to release a 73 page report on the topic and come to some significant conclusions. Read our analysis of the report and what's to come, at the link below. #ftc #pbm #pharma #antitrust #competition

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Monica Chmiewlewski and Alex Maulden authored this recent Applied Clinical Trials article, “An Overview of FDA Diversity-Related Documents for Clinical Trials,” highlighting the key takeaways of several FDA diversity-related guidance documents. #FDA #LifeScience #ClinicalTrials

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