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Trump wants Supreme Court to slow walk ACA suit; drug pricing proposal lingers


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Trump wants Supreme Court to slow walk ACA suit; drug pricing proposal lingers

After repeatedly arguing the Affordable Care Act was unconstitutional, the Trump administration and a group of Republican state attorneys general now say they are not in any hurry for the U.S. Supreme Court to decide if the decade-old law should be invalidated.

Waiting would mean the Supreme Court would be unlikely to render a decision until after the U.S. 2020 elections — an outcome that goes against a Jan. 3 request from a coalition of Democratic state attorneys general and Democrats in the U.S. House of Representatives.

SNL ImageThe U.S. Supreme Court
Source: The U.S. Supreme Court

At issue is a Dec. 18, 2019, ruling by the U.S. Court of Appeals for the 5th Circuit in New Orleans, which said the ACA's individual mandate requiring Americans to buy health insurance or pay a penalty was unconstitutional.

The 5th Circuit returned the case to Judge Reed O'Connor of the U.S. District Court for the Northern District of Texas, telling him to use a "finer-toothed comb" to determine if any other of the ACA's provisions could survive without the individual mandate.

In Jan. 10 briefs filed with the Supreme Court, the Republican attorneys general and President Donald Trump's solicitor general said it would be better for the justices to hold off until after O'Connor's reassessment.

The work of parsing through the over 900 pages of the ACA should be left to the district judge and not the Supreme Court, they argued.

The Supreme Court, however, is already well acquainted with the ACA — upholding it twice: in 2012 and in 2015.

In the latest case, the plaintiffs argued that when Congress zeroed out the ACA's tax penalty for the individual mandate under the 2017 tax reform bill, that action rendered the remainder of the healthcare law unconstitutional.

O'Connor and two of the three judges on the 5th Circuit panel — all appointed by Republican presidents — agreed. The third 5th Circuit judge, Carolyn Dineen King — appointed by former President Jimmy Carter — argued the plaintiffs lacked standing because they could not be harmed by a coverage requirement that "does nothing more than require individuals to pay zero dollars" if they do not buy health insurance.

Trump's solicitor general, Noel Francisco, may have inadvertently admitted that King was correct, writing in his Jan. 10 brief that the ACA's individual mandate "no longer subjects any individual to any concrete consequence."

"It's not the sort of thing you'd normally say in a case where standing is a serious issue," University of Michigan Law Professor Nicholas Bagley told S&P Global Market Intelligence in a tweeted response.

Supreme Court to hear PBM case

Also on Jan. 10, the Supreme Court said it would hear Arkansas' request to overturn a decision by the U.S. Court of Appeals for the 8th Circuit, which said the state's law regulating the drug reimbursement rates from pharmacy benefits managers — often called middlemen — was preempted by a 1974 federal employee benefits law, known as the Employee Retirement Income Security Act, or ERISA.

The lawsuit was brought by the Pharmaceutical Care Management Association, or PCMA, which represents PBMs, entities that negotiate with drug manufacturers to obtain discounts on behalf of insurance plans.

SNL ImageSen. Chuck Grassley
Source: AP Photo

PCMA has used ERISA to challenge other state PBM laws.

Grassley behind delay of HHS' lingering proposal?

Meanwhile, an aide for Senate Finance Committee Chairman Chuck Grassley, R-Iowa, declined to deny a Jan. 9 Bloomberg Law report that the senator's office asked the Trump administration to hold off publishing a proposed rule that seeks to base costs of injectable medicines covered by Medicare on what is paid in foreign nations.

Grassley has long opposed the administration's idea, which the Department of Health and Human Services first outlined in October 2018.

The proposal has been under review by the White House Office of Management and Budget since June 2019.

On Nov. 13, 2019, HHS Secretary Alex Azar revealed the administration had shifted the focus of the proposal from developing an international pricing index model to a "favored nations" approach, which would require drugmakers to offer the U.S. government the lowest prices paid by other developed nations for prescription medicines.

If the administration publishes the proposal before the nonpartisan Congressional Budget Office issues its cost estimate on a revised bill Grassley coauthored with the Finance Committee's ranking member, Sen. Ron Wyden, D-Ore., the Capitol Hill analysts would need to take the HHS rule into account, which may potentially lower the legislation's overall projected savings.

In response to questions from S&P Global Market Intelligence, Grassley's aide declined to deny whether the senator or his office had asked HHS to delay the proposed rule. A spokesperson for Azar also did not deny the report.

SNL ImagePhRMA CEO Stephen Ubl
Source: AP Photo

PhRMA: Other players pocketing more drug cash

Drugmakers are increasingly keeping smaller shares of the money Americans spend on their prescription medicines, the lobbying group representing the brand-name biopharmaceutical industry said.

Other players in the drug supply chain, such as payers, wholesalers, pharmacies and providers, are pocketing more of the money spent by U.S. consumers on brand-name medicines, Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, told reporters during a Jan. 9 briefing.

He cited a new analysis from Berkeley Research Group to back up his claims.

Brand-name drugmakers retained 54.3% of total point-of-sale spending on brand medicines in 2018, down 12.5 percentage points from 66.8% reported in 2013, according to the analysis. The amounts retained by other entities rose from 33.2% in 2013 to 45.7% in 2018.