National Community Pharmacists Association (NCPA) Files Lawsuit Against HHS Seeking to Eliminate Pharmacy DIR Fees

NCPA has sued the Department of Health and Human Services (HHS) over DIR fees. The lawsuit can be viewed here.  Specifically the crux of the case is found below:

This is an action for judicial review of a policy of the Department of Health and Human Services (“HHS”) that undermines Medicare beneficiaries’ access to negotiated prices for prescription drugs and otherwise alters Medicare payment for those drugs in a way that reduces their availability. 

Despite having been reopened time and time again over the last several years, the agency’s current definition of “negotiated prices” continues to enable Medicare Part D plans under the Medicare program (and the pharmacy benefit managers (“PBMs”) with which they contract) to downward-adjust reimbursement to pharmacies for prescription drugs months after a patient has paid cost-sharing for the prescription drugs based on an artificially inflated price. This dynamic results from an exception to the definition of “negotiated prices” for pharmacy price concessions that cannot “reasonably be determined” at the time of sale, an exception that HHS said would be narrow but never was. In reality, this exception swallows the rule and hereby threatens the solvency of independent community pharmacies and drives up the cost of prescription drugs for Medicare patients nationwide. Plaintiff asks this Court to set aside that invalid exception and the agency’s guidance on it.

Lanton Law applauds NCPA’s leadership in filing this much needed lawsuit. Lanton Law has been assisting pharmacies on the state level with issues such as DIR via lobbying. If you are a pharmacy that would like to discuss your advocacy options, contact Lanton Law to discuss your lobbying and legal strategies.

Lanton Law Attends 2021 American Farm Bureau Virtual Convention

Lanton Law was a participant in the 2021 American Farm Bureau Virtual Convention #AFBF21. The January 10-13, 2021 event covered a variety of topics such as the 2020 EPA Navigable Waters Protection Rule, country of origin labeling (COOL), climate change, mental health and broadband access to name a few issues. 

A new incoming Administration and a new Congress will bring new opportunities for farming and ranching in 2021. At Lanton Law our food law practice helps farmers, ranchers and similarly situated stakeholders attain their strategic priorities. Contact us to learn about how either our legal or lobbying services can help you attain your goals.

Biometric Policies Will Likely Be Debated Nationwide in 2021

New York has introduced Assembly Bill 27. According to the proposed bill, AB 27 seeks “to establish the biometric privacy act; requires private entities in possession of biometric identifiers or biometric information to develop a written policy establishing a retention schedule and guidelines for permanently destroying biometric identifiers and biometric information when the initial purpose for collecting or obtaining such identifiers or information has been satisfied or within three years of the individual's last interaction with the private entity, whichever occurs first.”  

Currently, the Illinois Biometric Information Privacy Act, commonly known as BIPA, is the only state with a biometric privacy statute that provides for a similar private right of action. We have been writing in previous posts about how state policies have been taking shape regarding this subject. 

We expect this and other technology questions to be debated in various state houses throughout 2021. It is imperative for interested stakeholders to be prepared for what new potential legislation requires. Contact Lanton Law to discuss your lobbying and legal strategies.   

How to Choose a Lobbyist

Now more than ever it is important to choose the right lobbyist. Since the early 2000s, there has been a steady increase in the amount of government activity that has directly affected stakeholders. 

Prior to this time-period, companies could afford to focus only on differentiating their products from their competitors. Now companies are finding that during their strategic planning meetings, they must account for how state and federal government activity may impact their bottom line. In addition to having a Government Affairs staff, these same companies are starting to realize the importance of having established a relationship with a lobbyist. The question is how to choose a lobbyist that is right for your organization?

First you want to make sure the lobbyist has experience. To be a good lobbyist there is no magic number of how many years you have worked within the political system. However; many lobbyists have worked an average of six months in the legislature as an aide to a legislator or on the other side of the spectrum, many legislators have left the legislature to work as a lobbyist. These individuals have an insider’s perspective into how the legislature works such as when a bill filing deadline date is and whether or not a bill can be introduced due to if a state is in an emergency session where the rules for introducing legislation is different from regular session.

Second the lobbyist should have a minimum number of contacts in the legislature. Whether it is in Congress or on the state level, the lobbyist should be able to have a go to legislator that can get a bill introduced quickly. However; the most successful lobbyist will not be limited to one party. Having contacts on both sides of the aisle will allow the lobbyist the opportunity to bring any bill at any time regardless of what political party has the majority.

Third the best lobbyist should be strategic. He or she should be able to know when a good time to introduce legislation is. The lobbyist should know what legislator to target as the bill sponsor. This is important because the bill sponsor will be the champion for your particular bill from start to finish. 

The lobbyist will need to educate the bill sponsor on the nuances of the bill so that the sponsor will be educated enough to be able to respond to technical questions during a hearing or when the sponsor is in caucus meetings; explaining to their respective party about why your bill should be voted on. The lobbyists should be able to pick and choose what committee will be best for your bill to go into, who to use as strategic allies for your legislation and be intuitive enough on when to negotiate and when not to.

Next it is important for your lobbyist to know the industry and to have foresight. You need to be comfortable knowing that your lobbyist understands your industry because if not, how can you be sure that your lobbyist is communicating the correct outcome for you? 

The lobbyist should be skilled enough to draft a bill that solves your problem without having to continuously ask you how something works. Additionally, while many lobbyists only focus on the legislature, the best lobbyists will think long-term to determine if a regulatory body will be involved once your bill passes. If so a lobbyist should be able to guide you through the regulatory process without leaving you to fend for yourself after a bill has passed.

Finally, as with any other professional, you need to be aware of the reputation your lobbyist has. Do they take the time to make sure their clients understand everything that is happening? Does the lobbyist prepare the client and relevant legislators ahead of time for crucial hearings? Does the lobbyist make everything easy to understand? Does the lobbyist dress appropriately for meetings and do they have the needed respect from the legislature? Does the lobbyist closely follow the bill from start to finish or are they overloaded with too many clients? These are important issues to talk with your prospective lobbyist about before entering into a contractual relationship.

While there are other nuances to the lobbying relationship, these should be enough for you to think about as your organization considers whether to engage a lobbyist. A lobbyist should no longer be considered a luxury item. The best lobbyist are quickly becoming essential parts of today’s corporate environment for the value they bring to their clients in either advancing their interests through legislation, or being available to respond to legislative targeting that has been on the rise. You know you have picked the right lobbyist when you can breathe a sigh of relief knowing that they have your back. 

Contact us today for more information regarding lobbying.

Lanton Law Quoted in Law360 Article titled "High Court Gives Green Light to Regulate PBMs"

Lanton Law was quoted in law 360’s article titled "High Court Gives Green Light to Regulate PBMs". The article was written by Emily Brill.

For those that have trouble with the link we have provided the story below.

Law360 (December 10, 2020, 10:08 AM EST) -- The U.S. Supreme Court backed an Arkansas law Thursday that bans insurers' affiliates from shortchanging pharmacies, clearing the way for other states to regulate pharmacy benefit managers and throwing a lifeline to small pharmacies that said PBMs' business practices were bankrupting them.

Pharmacies' advocates celebrated Arkansas' 8-0 win as "a historic moment for pharmacies, patients and state's rights," saying the ruling allows states such as New York to move forward with long-discussed plans to regulate the industry that manages insurers' drug components.

The ruling clarifies that PBMs can't use their ties with employee benefit plans to argue that only the federal Employee Retirement Income Security Act can regulate their business dealings. ERISA only preempts states' ability to regulate employee benefit plans, leaving states free to oversee PBMs and other members of the health care supply chain, the justices said.

In an opinion authored by Justice Sonya Sotomayor and joined by all the justices except newcomer Justice Amy Coney Barrett, who sat out from considering the case, the court clarified that ERISA won't preempt a regulation simply because it could increase a benefit plan's operating costs. The regulation actually has to affect the way the plan works to trigger ERISA's preemption provision, the court wrote.

"ERISA does not preempt state rate regulations that merely increase costs or alter incentives for ERISA plans without forcing plans to adopt any particular scheme of substantive coverage," Justice Sotomayor wrote.

Justice Clarence Thomas authored a concurring opinion, saying he favors more of a textualist approach to applying ERISA's preemption provision — Section 1144 of the sprawling law — than his colleagues have applied in the past.

"I write separately because I continue to doubt our ERISA preemption jurisprudence. The plain text of ERISA suggests a two-part preemption test … but our precedents have veered from the text, transforming §1144 into a vague and potentially boundless … preemption clause," Justice Thomas wrote. "That approach … offers little guidance or predictability. We should instead apply the law as written."

The ruling overturns a 2018 decision by the Eighth Circuit, which had held that ERISA preempted Arkansas' Act 900. That law, passed in 2015, forbade PBMs from reimbursing pharmacies for drugs at rates below the drugs' acquisition costs. Arkansas passed it in response to community pharmacies' complaints that PBMs were reimbursing them less than they were shelling out to purchase drugs, while reimbursing PBM-affiliated pharmacies at significantly higher rates.

The win is significant for states, which had banded together in a bipartisan coalition to back Arkansas' position in the case. Forty-seven attorneys general told the high court in the spring that preserving states' ability to regulate PBMs was essential for curbing harmful business practices in health care and protecting consumers' access to medication. Arkansas Attorney General Leslie Rutledge called the ruling "a win for all Arkansans and Americans."

The ruling also hands a victory to local pharmacists, who say PBMs' practice of shortchanging them on drug reimbursements while overpaying PBM-affiliated pharmacies has threatened to put them out of business. The National Community Pharmacists Association cheered the high court's decision Thursday, saying it was thrilled that the Supreme Court had greenlit states to clamp down on that practice.

"This is a historic victory for independent pharmacies and their patients. And it confirms the rights of states to enact reasonable regulations in the name of fair competition and public health," said National Community Pharmacists Association CEO B. Douglas Hoey, who is a pharmacist himself.

The Pharmaceutical Care Management Association, the PBM industry lobbying group that sued over Act 900, said Thursday that it was disappointed in a decision that it claimed would "result in the unraveling of federal protections under ERISA."

"As states across the country consider this outcome, we would encourage they proceed with caution and avoid any regulations around prescription drug benefits that will result in higher health care costs for consumers and employers," the group said in a statement.

Attorneys said the decision provides much-needed clarity on the scope of ERISA's preemption provision. The ruling preserves Section 1144's broad reach in the context of benefit plan legislation but establishes that preemption can't be wielded as a weapon to knock out regulation of "middlemen somewhere in the [health care] supply chain," as James Gelfand, senior vice president of health policy at the ERISA Industry Committee, put it.

"For far too long, the PBM industry has confused both legislators and regulators with overly broad interpretations of ERISA in order to dodge oversight," said health care attorney Ron Lanton. "We have been arguing for years that ERISA should not be interpreted to where it would be virtually impossible to regulate PBMs."

Linda Clark, a health care attorney and partner at Barclay Damon LLP, seconded that notion. "The fact you have a tangential relationship with entities that are regulated by ERISA doesn't make you completely immune from state regulation of anything you do," she said, adding that PBMs need to be regulated to prevent them from "employ[ing] even more draconian practices in management of their pharmacy networks."

Michael Klenov, a benefits attorney and partner at Korein Tillery, said Thursday that the ruling will likely discourage challenges to other states' attempts to regulate PBMs. But "it may also embolden states to push the boundaries of health care-related legislation further, thus leading to new challenges that will test where the courts draw the preemption boundaries," he said.

The federal government, which weighed in as an amicus in support of Arkansas, did not respond to a request for comment Thursday.

Arkansas is represented by Attorney General Leslie Rutledge, Nicholas Jacob Bronni and Shawn J. Johnson of the Arkansas Attorney General's Office.

The federal government is represented by Kate O'Scannlain, G. William Scott, Thomas Tso, Wayne Berry and Stephanie Bitto of the U.S. Department of Labor and by Edwin Kneedler and Frederick Liu of the U.S. Department of Justice.

The Pharmaceutical Care Management Association is represented by Michael B. Kimberly, Sarah P. Hogarth and Matthew Waring of McDermott Will & Emery LLP and by Seth P. Waxman, Catherine M.A. Carroll, Paul R.Q. Wolfson, Justin Baxenberg, Claire H. Chung and Hillary S. Smith of WilmerHale.

The case is Rutledge v. Pharmaceutical Care Management Association, case number 18-540, in the Supreme Court of the United States.

--Editing by John Oudens and Haylee Pearl.

Update: This article has been updated with additional comments and more information about the case.

Lanton Law quoted in Bloomberg Law Article

We were quoted in Bloomberg Law’s article titled “States Risk Losing Power to Regulate Pharmacy Drug Middlemen” by Lydia Wheeler. The article discusses the pros and cons of Rutledge v. PCMA, which is currently being debated at the Supreme Court.

For those that have trouble accessing the article we have provided it below.

States are going to have a hard time controlling the cost of prescription drugs if the Supreme Court broadens a federal law prohibiting states from regulating employee benefit plans.

A challenge to an Arkansas law meant to protect independent pharmacies from abusive reimbursement practices of rate-setting pharmacy middlemen is testing the bounds of the Employee Retirement Income Security Act. A decision striking down Arkansas’s law could cripple state efforts to control the cost of prescription drugs and other health-care services. That could lead to a flood of litigation challenging dozens of similar laws in other states, health policy experts say.

“This is really the tip of the iceberg because states are trying to control drug costs in all kinds of different ways,” said Katherine Gudiksen, a senior health policy researcher at the Source on Healthcare Price and Competition, a project of the University of California Hastings College of Law.

The case could be one of the first decided by the Supreme Court this term. Arguments were heard Oct. 6.

Drawing the Line 

Arkansas’s fighting to save its law, which regulates the rates at which pharmacy benefit managers reimburse pharmacies for drugs and gives pharmacies a right to appeal the rates they set.

The U.S. Court of Appeals for the Eighth Circuit held the law was preempted by ERISA, which prohibits states from passing laws that reference an ERISA plan or have an impermissible connection to an ERISA plan. But Arkansas argues pharmacy reimbursement regulation is basic rate regulation, which the Supreme Court has ruled isn’t preempted by ERISA.

“It’s hard to see how a law that directly affects benefits claims processing isn’t central to ERISA plan administration,” said Stacey Cerrone, a principal in the New Orleans office of Jackson Lewis PC.

“The court is struggling on where to draw the line with preemption,” she said.

Patchwork of State Laws

A win for Pharmaceutical Care Management Association (PCMA)—the trade group for PBMs that’s aggressively fighting this law and others—would likely open the door for more legal challenges. Laws regulating PBMs have passed in 36 states.

“There’s no agency that oversees federally a pharmacy benefit manager,” said Ron Lanton, principal at Lanton Law, which helped lobby for some state PBM laws. “That’s the problem, so the states have had to come up with their own solution on how to regulate this problem.”

But PCMA argues Congress set out to create a uniform set of standards in administering ERISA plans, which include most private sector health plans. The trade group said employers will have to spend more money on administrative services and compliance, increasing the cost of care, if laws like the one in Arkansas remain.

“More than 266 million Americans rely on the prescription drug benefits PBMs administer, and now more than ever we’re committed to protecting accessible, affordable health care,” JC Scott, PCMA’s president and CEO, said in a statement after oral arguments in October.

In addition to Arkansas, PCMA has challenged laws in North Dakota, Oklahoma, and Iowa in recent years.

The trade group has been successful in winning challenges in the Eighth Circuit. The appeals court ruled Iowa’s law and two North Dakota lawsare preempted by ERISA. Iowa’s law regulates how PBMs establish generic drug pricing, and requires certain disclosures on their drug pricing methodology. North Dakota’s laws regulate the fees PBMs can charge pharmacies. North Dakota officials have appealed the court’s decision to the Supreme Court.

In July, a federal judge blocked part of Oklahoma’s law. PCMA filed an appeal to the U.S. Court of Appeals for the Tenth Circuit, which it later had dismissed. The case is still playing out in the district court.

Lanton, who represents independent pharmacies, said his clients hope the Supreme Court provides some uniformity to what’s become a patchwork of state laws. He’s also hoping for a clear definition of what a pharmacy benefit manager is and isn’t.

“It comes down to this split in the court of whether or not the court sees a pharmacy benefit manager as an insurer that provides benefits or as an administrator that simply regulates reimbursement and cost.”

Market Power 

The three largest PBM companies are OptumRx, a subsidiary of UnitedHealth Group; CVS Caremark, a subsidiary of CVS Health; and Express Scripts, a subsidiary of Cigna Corp. They control 85% of the market share for PBM services, according to the National Association of Specialty Pharmacy’s brief in support of Arkansas.

That market power gives health plans very little bargaining power, said Erin Fuse Brown, director of the Center for Law, Health and Society at Georgia State University College of Law.

PBMs say they use their size and power to negotiate discounts with the pharmaceutical manufacturers, but it’s not clear they’re passing along those savings to the health plans, she said.

The case is Rutledge v. Pharm. Care Mgmt. Ass’n, U.S., No. 18-540.

To contact the reporter on this story: Lydia Wheeler in Washington at lwheeler@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Brent Bierman at bbierman@bloomberglaw.com

Secure and Fair Enforcement Banking Act of 2019 Still Pending in Congress

The Secure and Fair Enforcement Banking Act of 2019 (SAFE Banking Act) is still pending in Congress. Also known as H.R. 1595, the bill proposes to create protections for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers for such businesses.

In May 2020 the SAFE Banking Act language was included in the U.S. House stimulus bill called the The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which aimed to provide $3 trillion in economic relief in response to the COVID-19 economic effects on the U.S.

 The bill is currently in the U.S. Senate whose future during this session is uncertain. 

Lanton Law is a national boutique law and government affairs firm that focuses on healthcare/life sciences and technology. Specifically we have expertise in cannabis and CBD related issues.

If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today!

House Passes the MORE Act

The House of Representatives passed the Marijuana Opportunity Reinvestment and Expengement Act of 2020 otherwise known as the MORE Act of 2020 or H.R. 3884. The party line vote was 228 to 164. The bill proposes to remove cannabis from the Controlled Substance Act and seeks to mirror the changing policy around this subject as medical cannabis is legal in ⅔ of the states while approximately 15 states have passed laws permitting recreational usage. The bill heads to the Senate where it is not expected to pass this session.

Lanton Law believes that the cannabis market will continue to evolve and expand. Notwithstanding this market potential is the fact that medical and adult-use cannabis operations are confronted with a complex patchwork of state and federal laws and regulations that we assist a variety of businesses with. 

Lanton Law is a national boutique law and government affairs firm that focuses on healthcare/life sciences and technology. Specifically we have expertise in cannabis and CBD related issues.

If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today!

Biosimilars Advocacy Group Outlines Congressional Wish List for 2021

The Association for Accessible Medicines sent letters to all members of Congress, which expressed what measures they would like them to take regarding access to biosimilars. 

Key legislation that they focused on was, 

1. Increasing Access to Biosimilars Act, incentivizes doctors to prescribe biosimilars through a Medicare demonstration project. 

2. BIOSIM Act, allows for an increase in biosimilar payments in Medicare for five years for biosimilars whose average sales price or wholesale price acquisitions cost is less than that of the reference product.

They also advised Congress on policies regarding brands suggesting that Congress provide a more certain date as to when generics and biosimilars enter the market and updating Medicare Part D. 

AAM stated that updating Part D should include these three key policies, 

1. Increasing the share that plans pay towards the catastrophic phase. 

2. Establishing an out-of-pocket cap.

3. Ensure that rebates and discounts do not disadvantage biosimilars and other lower-priced drugs. 

With a new Administration transitioning in, 2021 looks to be a major policy shaping year for healthcare and life sciences on the legislative and regulatory fronts. 

Lanton Law is a national boutique law and government affairs firm that closely monitors legislative, regulatory and legal developments in the healthcare and life science spaces. Contact us to learn about how either our legal or lobbying services can help you attain your goals.

The Farm System Reform Act of 2019 Seeks to Level the Farming & Rancher Playing Field

Earlier this year, U.S. Senator Booker (D-NJ) unveiled The Farm System Reform Act of 2019 also known as S.3221. This proposed bill seeks to revitalize independent family farm agriculture and ensure a level playing field for all farmers and ranchers. 

The Farm System Reform Act of 2019 would, among other things, strengthen the Packers & Stockyards Act to crack down on the monopolistic practices of multinational meatpackers and corporate integrators, place a moratorium on large industrial animal operations, sometimes referred to as concentrated animal feeding operations (CAFOs), and restore mandatory country-of-origin labeling requirements.

According to the Senator’s release, below are a few issues that this bill seeks to address:

• Place an immediate moratorium on new and expanding large CAFOs, and phase out by 2040 the largest CAFOs as defined by the Environmental Protection Agency

• Hold corporate integrators responsible for pollution and other harm caused by CAFOs

• Provide a voluntary buyout for farmers who want to transition out of operating a CAFO

• Strengthen the Packers and Stockyards Act to protect family farmers and ranchers, including:

  • Prohibit the use of unfair tournament or ranking systems for paying contract growers

  • Protect livestock and poultry farmers from retaliation

  • Create market transparency and protect farmers and ranchers from predatory purchasing practices

• Restore mandatory country-of-origin labeling requirements for beef and pork and expand to dairy products

• Prohibit the United States Department of Agriculture (USDA) from labeling foreign imported meat products as “Product of USA”

At Lanton Law our food law practice helps farmers, ranchers and similarly situated stakeholders attain their strategic priorities. Contact us to learn about how either our legal or lobbying services can help you attain your goals.

Lanton Law Quoted in Law360 Article Titled "High Court PBM Case Could Be Turning Point In 20-Year Fight"

Lanton Law was again quoted in Law360’s article titled “High Court PBM Case Could Be Turning Point in 20-Year Fight.” The article can be found here. For those having trouble finding the article written by Emily Brill we have provided it below:

Law360 (October 13, 2020, 8:47 PM EDT) -- Last week's U.S. Supreme Court arguments over Arkansas' attempt to regulate how much middlemen called pharmacy benefit managers reimburse pharmacies for drugs on insurers' behalf could mark a turning point in a broader legal fight that's been playing out for 20 years.

Here, Law360 brings you up to speed on what led to the pending high court showdown between the Pharmaceutical Care Management Association and the Natural State.

The Laws Come Down

Pharmacy benefit managers have assumed an increasingly large role in the health care landscape since the first PBM arose in 1968.

These companies started as third-party administrators, processing patients' prescription drug claims on behalf of health insurance plans. Over the years, though, PBMs have launched drug formularies, pharmacy networks and their own mail-order pharmacies as the industry has grown, and the largest PBMs have integrated with insurers in multibillion-dollar deals.

"They've always been a partner to the insurer, but now they're a crucial extension of the insurer," said Ron Lanton, an attorney and lobbyist who specializes in health care law. "The PBM has grown to this huge marketplace player — determining who's the provider in their networks, setting the prices for insurance reimbursement."

Today, PBMs have a hand in most aspects of prescription drug dispensing, from how much consumers pay and how much pharmacies are reimbursed to where patients get their drugs and whether they receive name-brand or generic versions.

PBMs have drawn praise for saving consumers and plan sponsors money, but they've also met criticism, particularly from pharmacists, who say PBMs routinely reimburse their own mail-order pharmacies at much higher rates and thus drive local pharmacies out of business.

"PBMs are not only managing benefits for their clients — they're actively competing in the networks they manage," said Linda Clark, a partner at Barclay Damon LLP. "That's the fundamental optical conflict of interest that's in play. And as a result, many states have attempted to even the playing field."

States have been attempting to regulate PBMs since at least 2003, passing laws that primarily target the industry's pricing and reimbursement practices. Today, all but three states have some legislation on the books impacting PBMs, according to the National Community Pharmacists Association.

Much of that legislation has arrived recently. An influential model bill released in December 2018 by the National Council of Insurance Legislators inspired the introduction of between 250 and 300 pieces of PBM reform legislation around the country in 2019, according to the NCPA.

Another model bill from a different insurance regulators group is in the works, with the National Association of Insurance Commissioners releasing a first draft in July after working on the policy for a year. The model bill proposes requiring PBMs to get licensed and banning practices such as self-dealing and retroactive payment reductions to pharmacies.

The Suits Flood In

PBMs have not sat idly by as states have tried to regulate them. They've met lawmakers' bills with aggressive lobbying and sued a half-dozen states that adopted PBM reform legislation.

"A lot of times when there are regulations in states proposed to provide some kind of oversight, the PBM lobby tends to get very aggressive," Lanton said. "I've directly lobbied on a lot of these issues, so I've come face to face with what they've been saying to legislators."

The PBM industry's lobbying group, the Pharmaceutical Care Management Association, began suing states over their PBM laws in the early 2000s. The first suit arose in Maine, a challenge to a law that required PBMs to disclose their payments from pharmaceutical companies and forbade them from switching patients to more expensive drugs.

That law survived the PCMA's challenge, with both a Maine federal judge and the First Circuit handing wins to the state and then the U.S. Supreme Court declining to take up the case in 2006. But other jurisdictions have not fared as well in the years since.

Since Maine's win, Washington, D.C., Iowa and North Dakota have been forced to walk back PBM regulations after the PCMA convinced the D.C. Circuit and Eighth Circuit that the laws tread on territory that could only be regulated by the federal Employee Retirement Income Security Act.

Oklahoma could be next, with a court battle playing out in the Tenth Circuit to determine the viability of a PBM law there. An Oklahoma federal judge blocked part of the law in July, ruling some of its language was likely preempted by Medicare Part D.

High Court Joins the Fray

As the Tenth Circuit weighs the legitimacy of Oklahoma's law, the U.S. Supreme Court is considering whether to strike down an Arkansas law in a case with huge implications for the legal fight between states and PBMs.

On Oct. 6, the high court heard oral arguments in the PCMA's challenge to a 2015 Arkansas law requiring PBMs to reimburse local pharmacies at the same rates as their affiliated pharmacies.

If the high court rules that the law flouts ERISA, other state laws could fall on similar grounds, attorneys say.

"There are implications for other state laws based on what happens in this case," said Ben Conley, a partner at Seyfarth Shaw LLP.

Many states have placed their PBM reform plans on hold while waiting on the outcome of the case, Barclay Damon's Clark said. Other states aren't enforcing their PBM laws but would likely start if the Supreme Court rules in Arkansas' favor, she said.

She said her pharmacist clients also have their eyes trained on the high court, waiting on a decision that could have a huge effect on them.

"The decision in this case is really going to define the scope of permissible state regulation of pharmacy benefit manager practices. It's going to define the contours of what states can and can't do," Clark said. "And there could be a lot of nuances in the decision that could affect the impact on state legislation. That's why everybody's watching it so carefully."

The case is Rutledge v. Pharmaceutical Care Management Association, case number 18-540, in the Supreme Court of the United States.

Administrative Judge Rules Against Washington State’s Pharmacy Reimbursement Plan Violates Medicaid Rules

Last week the National Association of Chain Drug Stores (NACDS), the Washington State Pharmacy Association (WSPA) and the National Community Pharmacists Association (NCPA) celebrated an administrative law judge’s ruling against Washington State that stated Washington’s pharmacy reimbursement plan violated Medicaid’s rules. 

The Washington State Pharmacy Association provided some insightful background into this issue.

“In 2016, CMS put in place a new rule changing how states must reimburse pharmacies. A key part of the rule indicates that states must reimburse pharmacies for their actual costs in dispensing drugs to Medicaid beneficiaries. Since that time, NACDS, WSPA and NCPA forced the issue that Washington State failed to comply with that rule, maintaining its below-cost dispensing fees. The pharmacy groups emphasized throughout the challenge that Washington State refused to adopt cost-based dispensing fees, and maintained below-cost dispensing fees—lower than any state in the country—which may impede patient access to care. The finding upholds CMS’ March 2019 decision to this effect, which was challenged by Washington State.” 

As a long-time advocate for retail pharmacy, we at Lanton Law applaud this decision. 

Lanton Law is a national boutique law and government affairs firm that closely monitors legislative, regulatory and legal developments in the LTC, CBD/hemp, specialty and retail pharmacy space, as well as manufacturers and suppliers. If you are an industry stakeholder with questions about strategy or simply need advice, contact us today.    

Will 2021 Witness the Creation of More State Green Banks?

With the incoming Biden Administration, the President elect has announced his new environmental plan “To Build a Modern, Sustainable Infrastructure and Equitable Clean Energy Future.” Among the various policy points discussed in the plan, one interesting initiative describes the development of “innovative financing mechanisms that leverage private sector dollars to maximize investment in the clean energy revolution.” This last sentence reminds me of what happened in Connecticut with regards to their Green Bank. 

The Connecticut Green Bank is the first green bank in the country. According to the Bank’s website “Established by the Connecticut General Assembly on July 1, 2011 as a part of Public Act 11-80, Connecticut Green Bank supports the Governor’s and Legislature’s energy strategy to achieve cleaner, less expensive, and more reliable sources of energy while creating jobs and supporting local economic development. The Connecticut Green Bank evolved from the Connecticut Clean Energy Fund (CCEF) and the Clean Energy Finance and Investment Authority (CEFIA), which was given a broader mandate in 2011 to become the Connecticut Green Bank.

Our mission is to confront climate change and provide all of society a healthier and more prosperous future by increasing and accelerating the flow of private capital into markets that energize the green economy.

Our green bank model upended the government subsidy-driven approach to clean energy by working with private-sector investors to create low-cost, long-term sustainable financing to maximize the use of public funds. We continue to innovate, educate and activate to accelerate the growth of green energy measures in the residential (single and multifamily), commercial, industrial, institutional and infrastructure sectors.”

With the incoming Administration’s intent to push into green energy and region’s like New England that have so many industries relying on a stable environment, it will not be surprising to see states create green banks like Connecticut’s in order to jumpstart local economies. 

At Lanton Law we understand the complexities of how green energy plays into business strategies. Contact us to learn about how either ourlegal orlobbying services can help you attain your goals.

Novartis Announces Renewable Energy Goals For Its European Operations

Last week, Novartis announced its signature on five virtual power purchase agreements (VPPAs), which are expected to collectively add more than 275 megawatts of clean power to the electrical grid. The announcement sets the company to be the first pharmaceutical entity to attain 100% renewable electricity in its European operations via its VPPAs. 

According to the company’s press release “wind and solar electricity will be generated from six renewable energy projects being developed by three different providers – Acciona, EDP Renewables and Enel Green Power. All projects will be located in Spain. The projects are expected to be online by 2023 and aim to address the company’s carbon footprint across its European operations over a period of 10 years from the start of operations.” 

This move is not surprising since electricity use for process manufacturing is an area that manufacturers will be looking more to in order to reduce energy costs as well as CO2 emissions. 

As the debate around climate change starts to take shape, many manufacturing companies have already started thinking about green energy as a next step in their evolution plans. We will definitely see more announcements like these from pharmaceutical manufacturers and other similarly situated supply chain members. 

At Lanton Law we understand the complexities or the healthcare and life science industries and how green energy plays into their business transitions. Contact us to learn about how either our legal or lobbying services can help you attain your goals.       

The Rise of the Special Purpose Acquisition Company (SPAC)

With the tumultuous chain of events we have witnessed throughout 2020, we have also been hearing more about the rise of SPACs. We have been getting asked more about SPACs such as what they are and what is their role within Wall Street?

A Special Purpose Acquisition Company or SPAC is known as a “blank check company.” This entity’s main function is to raise money through an initial public offering or an IPO in order for the SPAC to make strategic acquisitions by buying other companies. 

SPACs raise money similar to a traditional IPO where the SPAC management team will arrange meetings with private equity and hedge fund players to discuss interest in the SPAC offering. These institutional investors will buy into the SPAC offering along with retail investors resulting in the SPAC’s funding. The funds are then moved into a trust until management decides how to deploy the capital. 

SPACs may be a more suitable alternative way for some companies to get public funding for an IPO. For example when a private company is seeking an IPO, there are a myriad of steps to go through when dealing with the Securities & Exchange Commission (SEC). 

Additionally, there are a lot of behind the scenes strategic conversations regarding how a company attains a particular stock price when it debuts on one of the stock exchanges. Pricing is important for companies for a number of different reasons including how much of a profit insiders could realize from selling, etc.

There are also institutional interests at play when it comes to an IPO. Towards the end of the process is when the company’s bank partner(s) assign a share price and then a block of shares are sold at the price to institutional investors who provide the liquidity. 

After this process, the company begins the process of being traded on the open market. The problem lately with this is sometimes companies are underpriced from what underwriters believed would be a reasonable price for a company, which means that the block of shares sold to the institutional investors prior to the company’s first day on the market sold for less than the company could have realized. This means there was money oftentimes left of the table.   

Not to mention that a company’s stock price goals could also be complicated by outside factors beyond a company’s control such as geopolitical risks and other headline risks that could affect the overall market the day that a company debuts. While companies do try and time these issues out, uncertainty still remains no matter what. 

SPACs could offer more certainty and liquidity to companies seeking a direct listing since acquisition prices are pre-negotiated and there are less steps involved when it comes to the SEC, thus shielding companies from market volatility. Overall SPACs offer a faster timeline for companies to go public. SPAC shareholders have the ability to vote for or against an acquisition due to a SPAC’s corporate governance protocols.   

As with anything new it wouldn’t be out of the question to expect for SPACs to receive additional regulatory scrutiny. SPAC interests should expect this, especially since there will be an upcoming Administration change. 

At Lanton Law not only do we understand the issues, but we provide you with timely solutions to help you make informed decisions about either an acquisition target or ways to maximize value. 

We counsel clients by performing corporate due diligence, provide strategic advice for growth and business strategies as well as structuring and executing M&A transactions.

If you are a financial stakeholder including a private equity firm, SPAC, hedge fund, bank, etc. we have a suite of strategic services that can help. Contact us today to learn more.

Amazon Launches U.S. Pharmacy Business

Many supply chain stakeholders have been fearing whether Amazon would ever open a retail pharmacy business. There have been traces of this occurring for years from its sporadic applications of pharmacy licenses in various states, to its June 2018 $753 million acquisition of PillPak. However; no coherent plan had come into focus until now. 

Today (November 17) Amazon has launched Amazon Pharmacy. According to the press release: 

“ Amazon.com, Inc. (NASDAQ: AMZN) today announced two new pharmacy offerings to help customers conveniently purchase their prescription medications. Amazon Pharmacy, a new store on Amazon, allows customers to complete an entire pharmacy transaction on their desktop or mobile device through the Amazon App. Using a secure pharmacy profile, customers can add their insurance information, manage prescriptions, and choose payment options before checking out. Prime members receive unlimited, free two-day delivery on orders from Amazon Pharmacy included with their membership. 

Also new today, Prime members can access savings on medications at Amazon Pharmacy when paying without insurance, as well as at over 50,000 other participating pharmacies nationwide. The Amazon Prime prescription savings benefit saves members up to 80% off generic and 40% off brand name medications when paying without insurance. Prime members will have access to their prescription savings at checkout on Amazon Pharmacy, or can learn more at amazon.com/primerx.

Together the Amazon Prime prescription savings benefit and Amazon Pharmacymake it simple for customers to compare prices and purchase medications for home delivery, all in one place. Now, filling prescriptions is as convenient as any other purchase on Amazon’s online store:

• Research Medications and Order Confidently: The same browsing experience customers are familiar with from Amazon makes it easy to discover what medications – including branded and generic versions, and different forms or dosages – are available through Amazon Pharmacy. Before checking out customers can compare their insurance co-pay, the price without insurance, or the available savings with the new Prime prescription savings benefit to choose their lowest price option.

• Seamless Transactions: Customers can add insurance information and ask their prescriber to send new or existing prescriptions directly to Amazon Pharmacy for fulfilment. Purchase is as simple as confirming the request on the Amazon App or website.

• Access Fully Digital, Personalized Quality Care: Customers have online self-service help options combined with phone access to customer care at any time. Friendly and knowledgeable pharmacists are available 24/7 to answer questions about medications.”

Notwithstanding today’s market moving news, we fully expect that our healthcare supply chain will continue to evolve. New players are moving into the sector and are looking for ways to either disrupt the model or have significant influence on reimbursement. To succeed you need to be in the know and planning ahead. 

Lanton Law is a national boutique law and government affairs firm that closely monitors legislative, regulatory and legal developments in the LTC, CBD/hemp, specialty and retail pharmacy space, as well as manufacturers and suppliers. If you are an industry stakeholder with questions about strategy or simply need advice, contact us today.    

Online Marketplaces Will Benefit from November 2020 Sports Betting Ballot Initiatives

Online stakeholders in the sports betting market have made policy inroads from the November 2020 ballot initiatives. Below are three states that expanded sport betting capabilities.   

Maryland: The State of Maryland has joined both Virginia and the District of Columbia in legalizing sports betting. Voters passed Ballot Question 2 which allowed for legalized sports betting while having the revenue generated from this to go towards funding public education.

Louisiana: The State of Louisiana approved sports betting in the major cities of Baton Rouge, New Orleans and Lafayette. The following parishes approved the measure as well including: St. Tammany, Jefferson, Ascension, Livingston, St. Bernard, West Baton Rouge, Plaquemines, St. Charles and Terrebonne parishes.

South Dakota: Voters in South Dakota have allowed sport betting as early 2021. By approving Amendment B  sports betting is legal in the city of Deadwood as well as the state’s Native American gaming facilities.

Lanton Law’s fintech and online marketplace practice helps stakeholders understand and navigate regulatory complexities. Contact us today to learn more about how our services can help you.  

Psychedelic mushrooms take a policy step forward

In what has surprised many cannabis stakeholders it seems as though the November 2020 elections is bringing a new therapeutic item into the mainstream healthcare policy conversation: psychedelic mushrooms via ballot box initiatives. 

On November 3rd, Oregon voted to legalize psychedelic mushrooms for therapeutic usage with the passage of Measure 109. This is a first for the U.S.The ballot measure calls for a two year period to create a regulatory scheme to oversee this issue as well as what qualifications are required for overseeing therapists. The issue with psychedelic mushrooms turns on the use of psilocybin, who some therapists believe helps those battling depression, addiction and anxiety. Currently psilocybin is still classified as a Schedule I drug. 

Oregon also became the first in the nation via Measure 110 to decriminalize the possession of small amounts of drugs including heroin, cocaine, methamphetamine, ecstasy, LSD, psilocybin, methadone and oxycodone.     

Meanwhile in the District of Columbia, voters approved Ballot Initiative 81 that would decriminalize the use of magic mushrooms and other psychedelic substances.  The measure ensures that the prosecution of those who use and sell these substances would be “among the Metropolitan Police Department’s lowest law enforcement priorities.”   

There is definitely a policy change on the local and state levels. 

Lanton Law’s Cannabis practice is more than prepared to assist cannabis stakeholders. Whether you are a public or private cultivator, processor, distributor, dispensary, or an ancillary service related to the medical and/or adult-use cannabis business, we can help. 

Lanton Law assists our cannabis clients with the following services:  

• Offer strategic advice on the federal and state outlook

• Contract and lease drafting

• Corporate formation & governance

• Shareholder agreements

• Administrative representation

• Trademarks and copyrights

• FDA, USDA and FTC regulatory compliance 

• Banking and finance

• Licensing

• State and local permits

• Lobbying 

• Investor & early stage company issues

• Mergers and acquisitions

• Non-Compete and Non-Disclosure agreements

• Labor and employment

• General counsel services

To put your plans forward contact us today. 

California Passed Proposition 22 in a Win for Uber & Lyft

Proposition 22’s passage in California on November 3, 2020 will have a major impact on the future of the gig economy not just in California but potentially the rest of the country. 

Proposition 22 involved the issue of whether transportation drivers for app-based entities such Uber and Lyft should be classified as independent contractors. This now means that these companies would be exempt from a California law enacted last year that made it harder for these app-based companies to not classify their workers as employees.    

If you have questions about what this means for you contact Lanton Law. We are experts in the technology and fintech industries and can help stakeholders navigate these evolving markets.

November Election Yields Gains for Marijuana Legalization

The result of a few November 3, 2020 election ballot measures have yielded additional gains for marijuana. 

New Jersey: In New Jersey voters approved Question 1, which legalized recreational marijuana.

Arizona: Voters in Arizona approved Proposition 207 which legalizes possession and use of marijuana for adults, age 21 years or older, in Arizona and permits individuals to grow up to six marijuana plants in their residences.

South Dakota: The state has legalized marijuana possession and use for adults 21 and older. It also allows individuals to grow up to three plants if they live in a jurisdiction with no licensed marijuana retailers. It allows distribution and sales, with a 15 percent tax. Additionally, the state legislature would have to pass legislation legalizing medical marijuana and the sale of hemp by April 1, 2022.

Mississippi: Initiative 65A was passed, which restricts medical marijuana to terminally ill patients and would require pharmaceutical-grade marijuana products to have oversight by licensed physicians, nurses, and pharmacists.

Montana: Montana has passed two constitutional amendments regarding marijuana. CI-118 allows for the state legislature or a ballot initiative to set a legal age for marijuana use. Additionally, I-190 allows for marijuana possession use and growing for adults 21 or older. The measure allows for the creation of a regulatory scheme around growing and selling cannabis and imposes a sales tax on these goods.

Lanton Law’s Cannabis practice is more than prepared to assist cannabis stakeholders. Whether you are a public or private cultivator, processor, distributor, dispensary, or an ancillary service related to the medical and/or adult-use cannabis business, we can help. 

Lanton Law assists our cannabis clients with the following services:  

• Offer strategic advice on the federal and state outlook

• Contract and lease drafting

• Corporate formation & governance

• Shareholder agreements

• Administrative representation

• Trademarks and copyrights

• FDA, USDA and FTC regulatory compliance 

• Banking and finance

• Licensing

• State and local permits

• Lobbying 

• Investor & early stage company issues

• Mergers and acquisitions

• Non-Compete and Non-Disclosure agreements

• Labor and employment

• General counsel services