Federal Guidelines On Vertical Mergers

In January 2020, the DOJ’s Antitrust Division and the FTC published draft guidelines regarding vertical mergers. The DOJ has not drafted merger guidelines in approximately 36 years, perhaps indicating that vertical mergers will receive heightened scrutiny in the near future. Vertical mergers combine two or more companies that operate at different levels in the same supply chain. The draft guidelines provide a framework that regulators would consider when evaluating vertical mergers. Vertical mergers have been significant in healthcare where payors are purchasing providers at a rapid rate or where pharmaceutical companies are merging with payors, such as the merger of Cigna with Express Scripts. The draft guidelines are open for public comment until February 11, 2020. It should also be noted that the FTC’s Competition Bureau recently announced leadership changes in late January 2020, including several in the division responsible for pharmaceutical mergers.

New Jersey and Federal Litigation

In Hager vs. M&K Construction, Docket No. A-0102-18T, the New Jersey Appellate Division held that an employer had to reimburse its employee for a medical marijuana prescription that was prescribed for a work-related injury. The employee was working for a construction company when a truck delivering concrete dumped a load on him, resulting in injuries causing chronic pain and leaving the employee permanently disabled. The employer argued that it should not have to pay for the marijuana prescription because payment was preempted by federal Controlled Substances Act (CSA), which outlawed marijuana. The appeals court reasoned that the CSA would only preempt state law if it required the performance of actions specifically prohibited by the law. Because reimbursing the cost of the marijuana prescription did not require the employer to "manufacture, possess, or distribute marijuana,” the court held there was no conflict.

In Ciox Health, LLC v. Azar, et al., No. 18-cv-0040 (D.D.C. January 23, 2020), the Federal District Court for the District of Columbia nullified an HHS rule that capped the fees a health care provider or companies could charge when a patient requests to send their health data to a third party. In 2013, HHS issued a rule limiting the amount a party can charge a patient for accessing the patient’s own records. HIPAA-covered entities and business associates were directed to charge fees based on calculating the labor cost it takes to fulfill a record request or by charging a flat fee capped at $6.50 per request. In 2015, HHS extended the limitation to when a patient requests to send their health data to a third party. But extending that rate to third parties should have gone through a notice and comment rulemaking, according to U.S. District Judge Amit Mehta. Judge Mehta also vacated an HHS rule from 2013 that broadened a directive established in the HITECH Act. That Act said that patients can request for organizations to send a copy of their electronic health record to a third party, but the regulation issued by OCR said that should also include any protected health information even if it is not stored in an EHR. The judge said that could not be added to the regulation since it goes beyond statutory requirements set by Congress.

New Jersey Regulation

52 N.J.R. 16(a): This rule proposal prevents nursing education programs from preventing its students from graduating or taking licensing exams because a student fails a predictor exam. Nursing programs can lose accreditation if less than 75% of its graduates pass the national licensing examination. To avoid this situation, nursing programs require their students to take a predictor exam, and if they fail, the students cannot graduate. This rule is intended to prohibit this practice. Comments are due by March 6, 2020.

52 N.J.R. 10(a): This proposal amends the rules for accrediting nursing programs. Such changes include, but are not limited to, requiring nursing program administrators to have three years of experience with a background in developing curriculum, limiting the body of graduates that will affect a nursing program’s licensing examination pass rate, deleting requirements that faculty members who teach online have a New Jersey license, and changing the time frame from submitting an application to establish a nursing program from eight months to eighteen months before the start of the program. Comments are due by March 6, 2020.

Federal Regulation

CMS announced on January 27, 2020 that it will cover laboratory diagnostic tests using Next Generation Sequencing (NGS) for patients with inherited ovarian or breast cancer.