SZD Health Law Scan : Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

The National Institutes of Health, a component of the U.S. Department of Health and Human Services, approved the first human embryonic stem cell lines under the new NIH Guidelines for Human Stem Cell Research. According to the NIH's press release, the NIH has approved 13 lines and an additional 92 lines are awaiting the NIH's review.

The NIH Guidelines were released on July 7, 2009 to implement President Barack Obama's executive order issued earlier in the year that removed the limitations on the use of federal funds for human stem cell research. The limitations had been established through an executive order issued by President George W. Bush in 2001.

For more information on President Obama's executive order and its impact on stem cell research, please see SZD's article "Campaign ‘08 and the Obama Administration’s Rejuvenation of Stem Cell Research" as published in Life Sciences, A Publication of the American Health Lawyers Association.

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Senate Finance Committee Chairman Max Baucus has been reported as circulating to members of the committee a document entitled "Framework for Comprehensive Health Reform."

The Framework represents "many of the policies" discussed by the committee but is "not a final product . . . and does not include everything that might be in the [Chairman's Mark]." It most notably does not include a public insurance option. Rather, it proposes a Consumer Operated and Orientated Plan (CO-OP) program to create nonprofit, member-run health insurance companies that service individuals in one or more states.

Also, it does not propose an employer mandate. However, as discussed below, while there is no employer mandate, certain employers may be fined for not providing health insurance coverage.

Some other highlights of the document include:

• Penalizing US citizens and legal residents who fail to obtain health insurance coverage up to $3,800 per year.
• Fining employers with more than 50 full-time employees (30 hours and above) that do not offer health insurance coverage to their employees up to $400 annually for each employee who receives a tax credit for health insurance through an exchange.
• Establishing state-based exchanges to assist individuals and small groups to more easily compare health insurance plan benefits and premium costs for four benefit options that would be available.
• Permitting health insurance premiums to vary based on only four factors: tobacco use, age, family composition and geographic differences.
• Prohibiting health insurance plans in the individual market from excluding coverage for pre-existing health conditions or rescinding health coverage.
• Levying an excise tax of 35% on insurance companies and insurance administrators for any health insurance plan that is above $8,000 for singles and $21,000 for family plans.
• Assessing fees that would be generally allocated by market share on pharmaceutical manufacturing companies ($2.3 billion), medical device manufacturers ($4 billion), health insurance providers ($6 billion), and clinical laboratories ($750 million).
• Permitting states to form "health care choice compacts" between two or more states to allow the purchase of non-group health insurance across state lines.
• Expanding Medicaid coverage to include individuals who are not currently eligible (e.g., non-elderly individuals (childless adults) at or below 133% of poverty).
• Reducing a state's allotment for Medicaid Disproportionate Share Hospital Payments by 50% once the number of uninsured individuals in the state is reduced by 50%.

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President Obama recently ordered federal agencies to perform a comprehensive review of all regulations released in the past ten years to determine if federal "preemption" was improperly implemented in any of these regulations. 

President Obama's order represents yet another major departure from the policies/philosophy of the Bush Administration.  The Bush Administration encouraged federal agencies to add preemption language to their respective regulations.  This position was grounded in the policy that plaintiffs were being given too many opportunities to circumvent federal laws and bring state law tort claims against corporations. 

Although "next step" guidance has yet to be provided to federal agencies, and specific industries have yet to be fingered as prime offenders, the Obama order could have a significant impact on the life sciences industry. 

This order comes on the heels of the Supreme Court's decision in Wyeth v. Levine, where the Supreme Court determined that state law tort claims against pharmaceutical companies were not preempted by FDA approval of those companies' drugs.  The Obama order may have the effect of widening the gateway provided by the Supreme Court to sue pharma companies, and may further have the effect of opening the gateway against medical device companies and other players in the industry. 

This Life Sciences segment of the SZDHealthLawScan has kept a close eye on preemption cases in the industry, and we will provide ample commentary on the effects of President Obama's recent order. 

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On April 8, 2009, President Obama signed an executive order establishing a White House Office of Health Reform (OHR) that will spearhead the Obama Administration's policy agenda for health care. The principal functions of the OHR include providing leadership for and coordinating the development of the Administration's agenda; working with Congress, various executive departments and agencies, and State, local and community policymakers and public officials; and monitoring the implementation of the agenda.  If requested by the OHR Director, executive departments and agencies are required to designate a liaison to work with the OHR.

The executive order also requires the Secretary of Health and Human Services to establish its own Office of Health Reform within the Department of Health and Human Services to coordinate closely with its White House counterpart.

President Obama has appointed Nancy Ann Min DeParle as the first Director of the OHR. During the Clinton Administration, DeParle served as the Associate Director for Health and Personnel at the White House Office of Management and Budget and as the Administrator of the Health Care Financing Administration, which is now the Centers for Medicare and Medicaid. Before joining the Clinton Administration, she served as the Tennessee Commissioner of Human Services and worked as a lawyer for a law firm in Tennessee. Since leaving the Clinton Administration, DeParle is reported to have served on the board of directors of various medical device companies, such as Boston Scientific and MedCo.

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