How To Avoid Paying $2,000 A Day To Encrypt ePHI

Let’s hope you don’t pay that much to encrypt electronic Protected Health Information (ePHI). How about a total of $4.3 million over two years? Well, that’s the total penalty for encryption violations assessed by Health and Human Services (HHS). An Administrative Law Judge found the penalty could have been much worse. The facts are sobering. The message is clear.

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Squire Patton Boggs Attorneys Publish Practical Law Practice Note on State Legalized Marijuana Businesses and Access to the Bankruptcy Code

The June 13, 2018 publication of Practical Law features a Practice Note co-written by Squire Patton Boggs attorneys Mark A. Salzberg, Elliot M. Smith, John E. Wyand and Sarah H. Stec titled “State Legalized Marijuana Businesses and Access to the Bankruptcy Code”. The Practice Note discusses the federal statutory scheme governing marijuana, its tension with state laws governing marijuana businesses, and the ability or inability of marijuana related businesses to access the relief provided under federal bankruptcy law.




Majority Of Federal Communications Commission (FCC) Supports 40%+ Annual Increase In Rural Health Care Program Funding – Following on a proposal to review annual funding for the FCC’s Rural Health Care Program (RHCP), which currently provides $400 million in annual subsidies for telecommunications and broadband services to eligible rural healthcare providers (HCP), a majority of the Commission now support a proposed 40+% increase to $571 million per year.

RHCP Components – The telecommunications component of the RHCP, established in 1997, allows eligible providers to obtain rates on telecommunications services in rural areas that are reasonably comparable to rates charged for similar services in corresponding urban areas. The broadband component, established in 2012 and known as the Healthcare Connect Fund (HCF), provides a flat 65% discount on services such as Internet access, dark fiber, business data and private carriage services. Both components include a competitive bidding process.

Need For Increased Program Funding Levels – During the last two funding years, the Program has been oversubscribed at the $400 million level, requiring proration of support available. To address that development, the FCC authorized carry forward of unused funds from prior funding years to ameliorate these cutbacks for funding year 2017. In addition, in December, the FCC sought comment on increasing the current $400 million cap. Thereafter, the Schools, Health and Libraries Broadband Coalition sought emergency relief because of the potential funding cuts affecting health care providers as a result of oversubscription.

FCC Chairman Reacts – Faced with creating continued uncertainty for patients, health care providers and communications companies, the Chairman has proposed adding $171 million to the fund annually and applying the additional funding to the current funding year “to immediately address a critical funding crisis and enable rural health care providers to continue offering telemedicine services.” The proposal also would adjust the $571 million cap annually for inflation and allow unused funds from prior years to be carried forward to future years. That could mean even more resources available.

Majority Support and Next StepsSince releasing the proposal, Commissioners Carr and O’Rielly have joined in voting for the initiative, which means it will ultimately be formally approved. Congressional and other reaction has been highly positive. The Executive Vice President of the American Hospital Association noted that the increase was “critical to improve the lives or rural Americans…since innovations in health care demand connectivity for telehealth, remote monitoring, patient engagement and daily operations.”

The increase in funding resources should offer additional opportunities for eligible entities who would seek RHCP support to “help health care providers get the connectivity they need to better serve patients throughout rural America.”

Entities interested in in taking advantage of the enhanced Rural Health Care Program should follow these and other developments that the FCC is considering closely so that they are fully informed as to their options.

Right to Try Investigational Drugs Signed Into Law

Right to Try Investigational Drugs Signed Into Law

On May 30, 2018, S. 204, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017 (Pub. L. No. 115-176, “Right to Try Act”) was signed into law. The Right to Try Act amends the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”) to establish national standards and rules by which certain investigational drugs may be provided to terminally ill patients. Under the Right to Try Act, a patient diagnosed with a life-threatening disease or condition, who has exhausted approved treatment options and is unable to participate in clinical trials involving certain investigational drugs, may seek the opportunity to drug treatments that are not approved by the U.S. Food & Drug Administration (FDA).

The Right to Try Act exempts the provision of eligible investigational drugs to eligible patients from a number of requirements and restrictions under the FD&C Act and other laws. The manufacturer or sponsor of an eligible investigational drug must report annually to the FDA on any use of drugs dispensed under the Right to Try Act. The FDA will post an annual summary report of such use on its website.

The Right to Try Act incorporates the regulatory definitions of “life-threatening” diseases that are: (1) a disease or condition where the likelihood of death is high unless the course of the disease is interrupted, and (2) a disease or condition with potentially fatal outcomes, where the end of clinical trial analysis is survival.

Under the new law, a sponsor or drug manufacturer may only recover the direct costs of making its investigational drug available. Direct costs are costs that can be specifically and exclusively attributed to providing the drug for the investigational use under the Right to Try Act. Direct costs include costs per unit to manufacture the drug (e.g., raw materials, labor, and non-reusable supplies and equipment used to manufacture the quantity of drug needed for the use for which charging is authorized) or costs to acquire the drug from another manufacturing source, and direct costs to ship and handle (e.g., store) the drug. Direct costs exclude costs incurred primarily to produce the drug for commercial sale (e.g., costs for facilities and equipment used to manufacture the supply of investigational drug, but that are primarily intended to produce large quantities of drug for eventual commercial sale) and research and development, administrative, labor, or other costs that would be incurred even if the clinical trial or treatment use for which charging is authorized did not occur.

The FDA announced that it stands “ready to implement this legislation in a way that achieves Congress’ intent to promote access and protect patients. The FDA is dedicated to achieving the goals that Congress set forth in this legislation, so that patients facing terminal conditions have an additional avenue to access promising investigational medicines.”

UK Competition Appeal Tribunal Quashes Fines in First Pure Excessive Pricing Case

On 7 June, the UK’s Competition Appeal Tribunal (CAT) annulled in part a decision by the UK’s Competition and Markets Authority (CMA) imposing fines of nearly £90 million on two pharma companies, Pfizer and Flynn, for charging excessive prices for the anti-epileptic drug, phenytoin sodium capsules. The case is notable as it marks the first time that the CAT has ruled on a pure excessive pricing case in the pharma sector.

In its decision, the CMA had found that both Pfizer and Flynn held a dominant position in their respective markets and that each company had abused that position by significantly raising the prices of phenytoin sodium capsules from £2.83 to £67.50 – corresponding to a price increase of 2,600%. The price increase followed from Flynn’s decision in 2012 to genericise the drug with a view to effectively removing it from the sectoral pricing regulation that applies to branded medicines. Continue Reading

Texas Hospital Loses Bid to Keep Secret its Reimbursement Rates

The Texas Supreme Court recently held that North Cypress Medical Center Operating Co., Ltd. cannot keep secret its private insurance and public payer reimbursement rates in litigation brought by an uninsured patient who alleges that she was overcharged for treatment. In re North Cypress Medical Center Operating Co., Ltd., No. 16-0851 (Tex. 2018) (majority opinion available here). In a 6-3 decision, the Court denied North Cypress’ petition for writ of mandamus and rejected the hospital’s argument that its reimbursement rates were irrelevant to whether its charges to an uninsured patient were reasonable.

The majority opinion held that it “defies logic” to conclude that the reimbursement rates paid by insurers and government payers “have nothing to do with the reasonableness of charges” for uninsured patients, particularly because insurance and government reimbursements “comprise the bulk of a hospital’s income for services rendered.” While noting that such rates will not conclusively establish what constitutes a “reasonable and regular rate[,]” the Court held that such information is “at least relevant to what constitutes a reasonable charge.” The Court also rejected the hospital’s argument that the rates were confidential and proprietary, noting that the contracts could be produced pursuant to a protective order. Continue Reading

Law360 Expert Analysis: Health Tech Is The New Focus For Cybersecurity Policy

In a May 22, 2018 article that appeared in Law360 Expert Analysis piece, Squire Patton Boggs partner Elliot Golding writes, “There is no shortage of attention on health care data privacy and cybersecurity, with an avalanche of new and proposed government and regulatory initiatives underway. Although health care has long been a key target for malicious actors given the data sensitivity and potential for life-threatening disruption, the rapid rise of health care smart devices — from fitness and portable devices to health care tracking apps — is intensifying the focus on data privacy and cybersecurity.”

For additional insights and analysis, including details on regulatory, government action, privacy/security and other related issues related to vendor management, planning and training, read more.

New EU Strategy on Artificial Intelligence

On Wednesday 25 April, the EU Commission unveiled a new strategy to boost Europe’s capabilities and related industries around artificial intelligence. As you know, this is a “hot topic” that has the potential to affect many businesses and sectors across Europe and beyond. Many of our clients are very interested in this technology development (and its implications) and we are well placed to advise clients on related legal, regulatory and policy challenges. Our US colleagues (e.g. in New York City and San Francisco) have already held various client events on this topic in the recent past.

We have, therefore, created the attached client alert, describing the new EU strategy and highlighting our firm’s capabilities in Europe.  Read analysis of the new strategy.

House Energy and Commerce Committee Clears Opioid-Related Measures

On Thursday, May 17, the House Energy and Commerce Committee (E&C) cleared 32 additional opioid-related measures during its second markup on the issue. In total, E&C has now advanced 57 bills to combat the opioid overdose crisis.

While most measures were easily approved on a bipartisan basis, committee members disagreed over a number of bills related to expanding buprenorphine prescribing authorities, lifting a decades old ban on Medicaid payments for mental health and substance use disorder (SUD) residential treatment facilities with more than 16 beds, and permitting physicians to more easily access and share medical records related to patients’ SUD therapies.

During the hearing, E&C Chairman Greg Walden (R-OR) suggested that Majority Leader Kevin McCarthy (R-CA) has committed to reserving House floor time in June to consider a comprehensive legislative package.

A summary of the various bills is presented here.


The New Federal Blueprint to Lower Drug Prices

On Friday, May 11, 2018, President Trump vowed to fix “the injustice of high drug prices” by announcing the “Blueprint to Lower Drug Prices” (the Blueprint) to address the following challenges:

  1. Excessively high drug prices
  2. Seniors and government programs overpaying for drugs
  3. High out-of-pocket costs for consumers
  4. Lack of transparency in drug pricing
  5. Free-riding by foreign nations as to US investment in innovation

This piece provides analysis of the Blueprint and its proposed reforms.  Read PDF.