On October 15, 2018, the Centers for Medicare & Medicare Services (“CMS”) in the Department for Health and Human Services proposed a rule to require prescription drug manufacturers to post the Wholesale Acquisition Cost (“WAC”) for drugs and biological products covered by Medicare or Medicaid in direct-to-consumer television advertisements. The WAC reflects the manufacturer’s list price for a drug to direct purchasers, not inclusive of any discounts or rebates. CMS is proposing this rule in the context of broadcast advertisements, an area in which the Supreme Court has recognized that the government may take special steps to help ensure that viewers receive appropriate information.[1]

CMS stated that 47 percent of Americans have high-deductible health plans and that many patients may pay the list price of the drug until they meet their deductible. The proposed rule aims to provide greater transparency into the prices charged by prescription drug manufacturers. The theory is that markets operate more efficiently with greater transparency, and that increased exposure of the list price will also provide a moderating force to discourage price increases. While wholesale prices do not equate to the patient’s out-of-pocket obligation, CMS asserts that benefit designs are impacted by WACs, and patients in high-deductible plans may pay the full list price until meeting their deductible – thus, the WAC may still be relevant to many patient and impact their decisions and market dynamics. The price required to be posted would be for a typical course of treatment for an acute medication like an antibiotic, or a thirty day supply of medication for a chronic condition that is taken every month. The posting would take the form of a legible textual statement at the end of the ad and would not apply where the list price for a thirty day supply or typical course of treatment of a prescription drug was less than $35.
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CMS has issued its 2019 Physician Fee Schedule Proposed Rule, containing highly anticipated new reimbursement policies for telehealth, remote monitoring, and other uses of digital tools, as well as updates to health IT requirements in the Quality Payment Program, with a stronger focus on patient access to health information. Comments are due September 10 at 5pm.

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Next week, on June 21, 2018, attorneys from Crowell & Moring will hold a bootcamp entitled “Early Stage Investing in Health Technology.” Crowell & Moring attorneys will present on topics of interest to entrepreneurs, investors, and early stage health technology companies. Attendees will have the opportunity to learn about a range of matters including formation

On April 17, 2018, the Food and Drug Administration (FDA) released its Medical Device Safety Action Plan which outlines FDA’s intended steps to address medical device safety while preserving enough space for innovation in the market.

The FDA’s plan is the latest effort by the FDA on medical device safety, including a recent budget request seeking $70 million to create a Center of Excellence on Digital Health that would, among other things, craft new regulations for third-party certification for developing medical devices. This comes as FDA is pushing guidance and innovative approaches for oversight of digital health (see our blog).

According to FDA Commissioner Scott Gottlieb’s announcement, the FDA’s plan organized into five points that seek to balance patients’ timely access to devices and safety and effectiveness.
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This morning, the Food and Drug Administration released highly anticipated guidance on clinical and patient decision support that has been in the works at the agency for several years, advising the digital health community about how it plans to regulate software that offers recommendations or feedback to its users—both healthcare professionals, and patients and caregivers. It also provides guidance on FDA’s interpretation of new software provisions in Section 3060 of the 21st Century Cures Act.

Given the explosion of these innovative digital health tools and their strong potential to transform healthcare, this guidance is a significant development for tech companies and investors focusing on this space. Comments will be accepted for 60 days.
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The Department of Health and Human Services, Office of the Inspector General (OIG), modified its Work Plan to announce that the agency will be conducting a nationwide audit of hospitals that participated in the Medicare Electronic Health Records (EHR) Incentive Program (also known as the Meaningful Use Program).  The OIG review is focusing on hospitals

Congress is considering several adjustments to health IT policy which may have significant impact on the Centers for Medicare and Medicaid Services’ (“CMS”) electronic health records (“EHR”) incentives. On July 20th and 21st, Representatives met to discuss bipartisan legislation to improve the Meaningful Use program and introduced legislation that would authorize a CMS Innovation Center (“CMMI”) project to incentivize EHR adoption by behavioral health providers. The bills may be indicative of Congress’ attitude towards the Meaningful Use program, which has garnered criticism from providers for being burdensome.

On July 21, 2017, the House Committee on Energy and Commerce Subcommittee on Health held a hearing on H.R. 3120 and featured testimony from Cletis Earle, Chairman-Elect of the College of Healthcare Information Management Executives. The bill, sponsored by a group of bipartisan lawmakers, will allow CMS to modify the requirements of the Meaningful Use program in order to give the Secretary additional flexibility in implementing the program. Currently, providers and vendors must comply with the Stage 3 measures and objectives of the Meaningful Use program starting January 1, 2018 or be subject to Medicare reimbursement penalties. Earle argued that the implementation timeline for Stage 3 of the program is too rigorous for providers to meet and may lead to an increase in hardship exemption applications. Provider and vendor groups across the industry have suggested that the HHS Secretary Tom Price delay the Stage 3 obligations, noting that software implementation and cybersecurity issues have made the 2018 deadline unreasonable. Sponsors of H.R. 3120 note that the bill will reduce the burden on providers’ use of EHR systems, allowing providers to focus on care coordination and patient outcomes. In response, CMS noted that the proposed “Medicare Program; CY 2018 Updates to the Quality Payment Program,” which is open for comment through August 21, 2017, would give eligible providers an additional year to implement EHR technology that complies with the 2014 or 2015 edition of Certified Electronic Health Record Technology (“CEHRT”) and offers the opportunity to apply for hardship exemptions for the Advancing Care Information performance category of the Merit-based Incentive Payment System (“MIPS”). For more information, see our update on key proposals of the 2018 Proposed Rule here.
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