Five Lessons: Ninth Circuit Upholds Decision to Block Idaho Healthcare Merger

amurinoFeatured Expert Column – Antitrust/Federal Trade Commission

Andrea Agathoklis Murino, Wilson Sonsini Goodrich & Rosati*

On February 10, the United States Court of Appeals for the Ninth Circuit affirmed a lower court ruling blocking the merger of St. Luke’s Health Systems, Ltd. (St. Luke’s) and Saltzer Medical Group (Saltzer), and handed the Federal Trade Commission (FTC) yet another victory in its efforts to halt consolidation in the healthcare sector.  This opinion is instructive both because of what it reveals on the macro-level about merger review today, and for what it may portend in future healthcare consolidation cases. Continue reading

The “21st Century Cures Act” Draft Legislation Includes Welcome Support for First Amendment Rights

FDAThe House Energy and Commerce Committee released a 400-page “discussion draft” of its proposed “21st Century Cures Act” late last month. The bill includes a broad range of reforms governing the regulation of drugs and medical devices, most of which have been warmly received by broad segments of those industries. The bill is particularly welcome to supporters of commercial speech rights; it includes several provisions designed to ensure that government regulators do not prevent manufacturers from speaking truthfully about their medical products.

Social Media

One particular area of concern has been Food and Drug Administration (FDA) restrictions on manufacturer use of social media. Subtitle I of Title I of the bill would overturn those restrictions. One characteristic of social media is that it places a premium on brevity. For example, Twitter limits messages to 140 characters or less. In a Draft Guidance issued on June 18, 2014, FDA concluded that drug/device manufacturers should rarely, if ever, attempt to use social media platforms with character space limitations because those limitations deprives manufacturers of sufficient space to include all the risk and benefit information that the agency asserts is a necessary part of any such communications. It is not sufficient, FDA concluded, for a Twitter message to include the name of the drug and its intended uses, and then provide a hyperlink where detailed risk and benefit information is available. But as Washington Legal Foundation (WLF) pointed out in comments urging withdrawal of the Draft Guidance, a de facto prohibition on use of social media platforms raises serious First Amendment concerns. The First Amendment does not allow the government to prohibit an entire method of communication simply because other methods of communications are available to the speaker, at least not where the government’s goals can be achieved through more narrowly tailored means. Continue reading

Linda Greenhouse’s Blatant Effort to Invoke “Greenhouse Effect” in Affordable Care Act Case Fails

NYTMark S. Chenoweth, WLF’s General Counsel, contributed to this post

Linda Greenhouse is at it again. The New York Times Supreme Court reporter-turned-opinion writer is deeply troubled by the possibility that the Supreme Court may actually construe the Affordable Care Act precisely as Congress wrote it. And she is up to her old tricks of trying to influence the justices by suggesting that they “will have a great deal of explaining to do—not to me, but to history” if they strike down the proposed IRS rule at issue in the case.

Now that the Supreme Court has agreed to decide the proper scope of tax credits available under the law, Ms. Greenhouse laments, “[n]ot only the Affordable Care Act but the court itself is in peril as a result.” Chief Justice Roberts, by her lights, “saved the day” last time around. “The fate of the statute hung in the balance then and hangs in the balance today,” she continues, but “… [t]his time, so does the honor of the Supreme Court.”

And yet King v. Burwell is precisely the sort of case that the Supreme Court is supposed to decide. Not only does it raise an issue of exceptional importance—whether the IRS is permitted to appropriate billions of dollars in tax credits each year absent an express authorization from Congress to do so—but the Fourth and D.C. Circuits have issued conflicting decisions on that question, and only the Supreme Court can resolve such a conflict.

Although the text of the ACA couldn’t be any clearer that only those taxpayers who purchase health insurance on exchanges “established by a State” are entitled to subsidies in the form of a tax credit, Ms. Greenhouse argues that the law’s “context” points in the opposite direction. But even if the law is ambiguous, Ms. Greenhouse strenuously avoids addressing the overriding reason for any ambiguity—the ACA was the sloppiest piece of legislative draftsmanship in a generation or more. Continue reading

The 2015 Dietary Guidelines: Another Federal Food Activism Vehicle?

MyPlateEvery five years, the U.S. Department of Health and Human Services (HHS) and the U.S. Department of Agriculture (USDA) jointly issue the latest iteration of the federal government’s formal guidance on healthy eating, the Nutrition Guidelines. These Guidelines not only inform as to how government feeds its millions of employees (including the military) and those who eat in a government facility (i.e. public schools, prisons), but they also influence food-related laws and regulations.

A federal advisory committee is expected to report its recommended updates for the 2015 Guideline to HHS and USDA this month. If the committee’s proceedings and its December 15, 2014 interim report are any indication, the 2015 “My Plate” will feature supersized, empty-calorie portions of activism and food-nanny nagging.  We should expect to be lectured on the need to eat “sustainably,” the imperative for mandated “added sugars” food labeling, and the importance of imposing marketing restrictions on certain foods.

The advisory committee. None of this comes as a surprise, given the makeup of the Dietary Guidelines Advisory Committee (DGAC) and the motivations of the regulators at HHS and USDA who appointed its 15 members. Every single member hails from academia, and as one assessment of the DGAC and its work published by Capital Research Center noted,

There is not a single business owner, family physician, working nutritionist, food services executive, or federal nutrition program director in the mix.

Continue reading

Update: Federal Liability Immunity Thankfully Conferred for Some Ebola Vaccines

670px-ebola_virus_virionPer Washington Legal Foundation’s suggestion earlier this fall, the Secretary of the Department of Health and Human Services (HHS) issued a formal declaration this week that those who manufacture, distribute, and administer certain yet-to-be-approved vaccines for the Ebola virus qualify for federal liability protection under the federal Public Readiness and Emergency Preparedness Act (PREP Act).

In our October 30 post, Ebola Vaccine and Treatment Makers Need Liability Protection, we discussed the PREP Act and explained why its protections would be an especially effective incentive for Ebola vaccine research and development. Under the law, those who have been allegedly injured by a vaccine can only sue in federal court if the FDA or the Justice Department investigates and finds willful misconduct by the drug manufacturer.  The act preempts all state laws that might limit distribution of the declared countermeasure, and it creates compensation funds for injured parties.

Secretary Burwell’s declaration applies to three specific countermeasures that are currently in development. The liability immunity protects manufacturers and distributors regardless of whether a covered vaccine is administered, and applies without geographic limitation. Liability protection related to the administration of a covered vaccine lasts until December 10, 2015, and the declaration extends that protection for manufacturers for an additional year “to allow for the manufacturer(s) to arrange for disposition of the Covered Countermeasure.”

Individuals who sustain a “covered serious physical injury as the direct result” of the use of a covered vaccine can seek compensation through a Countermeasures Injury Compensation Program. The burden of proof for such claims is significant:

The causal connection between the countermeasure and the serious physical injury must be supported by compelling, reliable, valid, medical and scientific evidence in order for the individual to be considered for compensation.

We applaud HHS for mitigating the manufacturers’ liability exposure and cutting avaricious plaintiffs’ lawyers out of the injury compensation process. Now if only similar measures can be adopted throughout our healthcare system, we might actually begin to bend the cost curve substantially.

Also published by Forbes.com at WLF’s contributor page

Why “King v. Burwell” Obamacare Case Is Not “NFIB v. Sebelius” Redux

supreme courtThe Supreme Court’s decision to hear King v. Burwell means that the Court, for the second time in three years, will be deciding an issue that will have a major impact on the Obama Administration’s ability to implement the Affordable Care Act. The ACA’s requirement that individuals purchase health insurance or else pay a penalty barely survived a constitutional challenge in June 2012 when the Court voted 5-4 in NFIB v. Sebelius to uphold the mandate as a proper exercise of Congress’s power under the Taxing Clause. The claim raised in King—that individuals who purchase insurance on the federal government’s healthcare exchange are not entitled to the tax subsidies available to those purchasing on state exchanges—would, if accepted by the Court, have an impact on the ACA every bit as great as a decision striking down the individual mandate. That fact has caused some commentators to draw spurious parallels between the two cases. Many Obamacare partisans who dismissed the NFIB constitutional challenge as a “shameful” and hypocritical “solicitation of right-wing judicial activism,” are making the same accusation against the King challenge.

The accusations were inaccurate in NFIB; they are hopelessly wrong when applied to King. Before such unfounded criticism of King takes hold, it is important to emphasize major distinctions between the two cases. The petitioners in NFIB were asking the Court to take a decisive step: to strike down legislation adopted by Congress and signed by the President. Those petitioners, in my opinion, raised highly plausible (and indeed, partially successful) arguments in support of their constitutional claims. However, a majority of the justices—mindful of separation-of-powers concerns that arise whenever they are asked to override the will of Congress and the President—followed the Court’s long-held preference that, in the words of Chief Justice Roberts, “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.” Continue reading

Nutrition Nannies Win Only 1 of 4 High-Profile Ballot Initiatives

election2014The 2014 election featured four high-profile attempts by the national food nanny movement to impose its agenda through municipal and state ballot initiatives. Voters in Oregon and Colorado rejected mandatory “genetically-modified organism” (GMO) food-labeling measures, while voters in two California cities split on sin taxes for “sugary” drinks.

Food Labeling. Exactly 2/3 of Colorado voters said “no” to the Colorado Right to Know Act. The vote on Oregon’s Measure 92 was considerably closer, with the “no’s” outnumbering the “yes’s” 50.7% to 49.3%. Each initiative trumpeted the superficial appeal of  consumers’ “right-to-know,” and both made the oft-repeated misleading or false claims in their legislative “findings” sections that GMOs in food are unregulated, unsafe, and unhealthy. Much like California’s unsuccessful Proposition 37 initiative, the Oregon and Colorado proposals were riddled with labeling exemptions, including food served at restaurants and alcoholic beverages. Oregon’s proposal would have also unleashed the plaintiffs’ bar on food processors through a “private attorney general” enforcement provision.

Thin Taxes? Two California municipalities, San Francisco and Berkeley, held votes on soda excise taxes. The Berkeley measure, which passed by a large margin, imposes a one-cent-per-fluid-ounce tax on all soda, energy drinks, coffee syrups, sweetened tea, and other packaged “sugary” drinks, while exempting milk and diet soda. The failed San Francisco initiative would have imposed a two-cent-per-fluid-ounce tax on sodas and other sugar-sweetened drinks, including some juices, coffees and flavored waters. It garnered 55% at the polls, but fell short of the 66% “yes” votes needed for measures whose revenues are aimed at a specific purpose. The initiative would have funded children’s nutrition and physical education programs. The revenues from Berkeley’s tax measure will go into the city’s general fund.

The Bigger Picture. Mandatory GMO-labeling proponents have now lost each of their four initiative campaigns. And they have failed in states where one might think voters would overwhelmingly support such progressive measures: California, Washington, Oregon, and Colorado. With 2015 being a slow year for elections, activists will likely turn their attention now to state legislatures. The negative opinions of hundreds of thousands of voters in the aforementioned states should speak volumes to politicians in other states about mandatory GMO labeling. In addition, as several WLF publications have explained (i.e. here and here)—and a suit against Vermont’s labeling mandate argues—such mandates infringe on federal authority to regulate food labels and tread on food producers’ constitutional rights. Policy makers should bear these points in mind, and keep a watchful eye on the legal challenge to Vermont’s law, when they are urged to embrace mandated labeling.

Nutrition nannies such as former New York City Mayor Michael Bloomberg have trumpeted the Berkeley vote as a watershed moment. Given the Berkeley electorate’s historical affinity for fringe movements and big government, the outcome is more likely an aberration than a harbinger. The result also should be considered counterproductive for the fight against obesity. It advances the entirely baseless notion that regressive taxes on soda and other disfavored beverages will benefit taxpayers’ health. Reliance on such taxes also detracts attention and energy from actual solutions to America’s expanding waistline. But considering the financial largesse of benefactors like Mr. Bloomberg and the zeal of his activist allies, the fight over manipulative sin taxes is likely to continue.

Also published by Forbes.com on WLF’s contributor page