Category: Health Care Law

Benefit News of Note For Human Resources and Finance Departments

The National Law Review featured an article by Nancy C. Brower and Kelsey H. Mayo of Poyner Spruill LLP regarding Benefit News for Human Resources and Finance Departments:

It’s April.  For those of you in a planning mode, here’s what you may  want to think about…

Your Pension Plan and Retiree Medical Costs May Be Rising.  The culprit behind the cost increase, better than expected mortality improvement after the age of 55.   The Society of Actuaries exposure draft of a new mortality improvement scale, if adopted, is expected to  result in increases in traditional pension plan liabilities of 2% to 4% and in retiree health care liabilities of 6% to 9%.  The new mortality scale may be applied by the IRS as soon as 2014, and it is possible that auditors will push for its implementation even earlier.
401(k) Safe Harbor Plans IRS Compliance Check.  Employers with 401(k) plans that utilize safe harbor designs to pass nondiscrimination testing may soon be receiving a compliance check in the mail from the IRS.    The IRS will look to see whether the safe harbor requirements are being met, in addition to plan form qualification.   Accordingly, if you have never had your safe harbor notice reviewed by counsel, now is a great time to make sure it is compliant.  Also, note that if you  receive an IRS compliance check you should not just ignore it.  The IRS will refer for audit plans that do not respond to compliance checks.  Remember that plan errors can be corrected through the IRS voluntary correction program even after receipt of a compliance check, but the less expensive  voluntary correction programs are not available once the IRS commences a plan audit.
Identifying Executive Employment Contracts and Severance Arrangements with Release Language.   It is not unusual for employment agreements and severance arrangements to contain claims release language that the IRS believes violates Section 409A.   The IRS guidance on releases was issued after 2008, meaning this issue may not have been addressed through the Section 409A review process that companies completed in 2008.  The IRS has given employers an opportunity to correct deficiencies in release language without any penalties or reporting requirements, but to be entitled to relief, agreements must be amended no later than December 31, 2012.

Utilizing  a Private Health Insurance Exchange.  Some of the nation’s largest consulting firms (Aon Hewitt and Mercer), as well as other companies in the insurance business, are rolling out private health insurance exchanges for employers.  With a private health insurance exchange, a company provides its employees with a lump sum and then lets the employees choose from an array of insurance products that can be offered by more than one insurance company.  This type of arrangement may appeal to companies that wish to provide their employees with more flexibility to choose the type of coverage they wish while fixing the company’s share of the health insurance costs in a more predictable manner.  The exchanges are expected to result in cost savings and to better contain health insurance cost increases.

© 2012 Poyner Spruill LLP

Otsuka v. Sandoz – Motivation Trumps Structure

An article by Warren Woessner of Schwegman, Lundberg & Woessner, P.A. about Otsuka v. Sandoz recently appeared in The National Law Review:

The recent decision of the Fed. Cir. in Otsuka v. Sandoz, App. No. 2011-1126, -1127 (Fed. Cir. May 7, 2012) continues the courts admirable work in defining obviousness post-KSR. This case revisits the standards involved in making out a prima-facie case of structural obviousness. What is particularly interesting in this decision is the weight – or lack thereof – that the court gave to evidence of therapeutic utility of the closest prior art compound. In fact, the court applied the fairly obscure maxim of patent law articulated forty years ago In re Steminski, 444 F.2d 581 (CCPA 1971). John L. White, in Chemical Patent Practice, summarized the holding of Steminski as part of his discussion of the “Hass-Henze Doctrine”:

“The [CCPA] concluded that because the characteristics normally possessed by members of a homologous series [e.g., differing by only one methylene group] are principally the same, varying gradually from member to member [e.g., methyl, ethyl, propyl, butyl, etc], chemists knowing the properties of one member of a series would in general know what to expect in adjacent members so that a mere difference in degree is not the marked superiority which will ordinarily remove the unpatentability of adjacent homologs of old substances. Contra, where no use for the prior art compound is known [citing Steminski].”

Sandoz was trying to invalidate an anti-schizophrenic drug, aripiprazole, marketed by Otsuka as Abilify. The court abbreviated its structure by referring to it as a 2,3-dichlorophenylbutoxy compound. Sandoz et al. were trying to invalidate the claim to this compound in US Pat No. 5,006,528 over an earlier patent that disclosed the 2,3-dicholorphenylpropoxy analog of Abilify (a butoxy compound). Not only is the prior art compound  a homolog of Abilify, but the prior art patent disclosed a laundry list of utilities, including “antischizophrenia agents”. Many other structurally more remote analogs were disclosed, and three others were discussed in detail in the opinion, but the appellant/defendants must have felt pretty confident, even though the district court ruled that the patent was unobvious.

No such luck! The Fed. Cir. discussed the “lead compound concept” at length and stated that: “Absent a reason or motivation based on such prior art evidence [of pertinent properties], mere structural similarity between a prior art  compound and the claimed compound does not inform the lead compound selection….See KSR [citation omitted] (‘A fact finder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning.’)” Slip op. at 18-19. In other words, structural similarity, taken alone is not sufficient to establish obviousness.

But wasn’t there data beyond the “naked” structure of the 2.3-dichlorophenyl propoxy prior art homolog? Citing Takeda, 492 F.3d at 1357 and Pfizer, 480 F.3d at 1361, the court fell back on the rule that the art worker must be motivated to use the teachings of the reference to achieve the claimed invention and had a reasonable expectation of success. The court focused on the generality of the prior art disclosure of utility and the primitive nature of this area of pharmacology prior to Otsuka’s invention of Abilify: “At the relevant time, there were no carbostyril compounds that were marketed as antipsychotics or were publicly known to have potent antipsychotic activity with minimal side effects.”So reasonable expectation of success probably carried the day (or the lack thereof), and the ‘528 patent remains valid. Apart from the revival of Steminski, I was heartened by the number of times that the court criticized defendants’ use of what the court(s) considered to be hindsight. For instance, defendants tried to argue that Otsuka’s advance involved “a short timeline”. The Fed. Cir. replied:

“The inventor’s own path itself never leads to a conclusion of obviousness; that is hindsight. What matters is the path the [POSA] would have followed, as evidenced by the pertinent prior art…the district court’s careful analysis exposed the Defendants’ obviousness case for what it was—a poster child for impermissible hindsight reasoning.”

Not just pretty words, beautiful ones!

© 2012 Schwegman, Lundberg & Woessner, P.A.

Upcoming Spring 2012 CLE National Institutes

The National Law Review is pleased to bring you information about the ABA’s Upcoming Spring 2012 CLE National Institutes:

Learn and network at these in-person,full-day or multi-day seminars held live in various locations across the country that draw lawyers from across the nation.

CMS, CCIO, and IRS Release Guidance Proposals on Employer Health Insurance Coverage

The National Law Review recently published an article by Gary E. Bacher and Joshua Booth of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. regarding Employer Health Insurance Coverage:

The Centers for Medicare & Medicaid Services Center for Consumer Information and Insurance Oversight (CCIIO) and the Internal Revenue Service (IRS) recently released four important documents related to the implementation of the Affordable Care Act (ACA) that address employer-provided health insurance plan reporting requirements and the availability of premium tax credits to individuals and families.  The ACA makes tax credits available to help individuals pay insurance premiums, but these credits do not apply if the individual is eligible for employer-provided coverage that is both affordable (in terms of required employee contribution to premium payments) and provides “minimum value” (in terms of overall cost-sharing).

CCIIO issued a Bulletin that describes the procedures it intends to use to verify whether an employee is eligible for employer-provided coverage, and thus precluded from claiming premium tax credits.  To help determine eligibility and availability of employer-provided coverage to an individual, the IRS issued a Notice and Request for Comment that solicits responses to how the IRS intends to determine whether coverage offered by an employer provides “minimum value,” as well as two Requests for Comment (RFC), Notice 2012-32 and Notice 2012-33, on how insurers, government agencies, and employers should be required to report insurance coverage data to implement sections 6055 and 6056 of the Internal Revenue Code, respectively.  The IRS will accept comments related to the above three issuances until June 11, 2012.

Together, all four issuances provide the government’s initial proposals of how to determine an individual’s eligibility for premium tax credits and when employers will be subject to penalties for failing to offer health care coverage.

The CCIIO Bulletin on Verification of Employer Coverage

The CCIIO Bulletin describes the process by which Health Insurance Exchanges (HIEs) will verify whether an individual is eligible for coverage through an employer. The CCIIO Bulletin recognizes that demonstrating that employer-sponsored coverage is unavailable or unaffordable requires data and documents that may not be easily obtainable by employees.  So, the CCIIO Bulletin suggests that theU.S. Department of Health and Human Services (HHS) will give applicants and employers guidance on what information will be needed, where it can be found, and the types of documentation required.  The CCIIO Bulletin also suggests that, where verification might be difficult, an HIE could initially accept an employee’s attestation that he or she is not eligible for employer-provided coverage and require the employee to provide supporting documentation of his or her ineligibility within 90 days of the attestation.  The CCIIO Bulletin anticipates that these strategies would be interim solutions to be used only until more reliable database systems can be implemented.

The IRS Notice on Calculating Minimum Value

The IRS Notice discusses approaches to determining whether employer-sponsored coverage provides minimum value.  The ACA generally states that a plan provides minimum value if it pays at least 60 percent of the enrollee’s costs for allowed expenses, thus having an actuarial value (AV) of at least 60 percent.  Minimum value is thus closely related to AV.  The Notice builds upon a bulletin regarding AV issued by CCIIO on February 24, 2012, and explicitly adopts many of its core calculation methodologies, such as basing AV on a standard population (adjusted for state or regional differences) and the methodology for evaluating employer’s contributions to an Health Savings Account (HSA).

Because the Notice applies to all employer-sponsored coverage including large group or self-insured health plans, while the February Bulletin applies only to individual and small group market plans, these plans’ distinct features required the IRS to propose an AV calculation methodology in the Notice that differs in certain ways from that proposed in the February Bulletin.  For instance, because self-insured and large group plans are not required to provide the essential health benefits (EHBs) upon which the calculations in the CCIIO Bulletin are based, the IRS has proposed that the AV for such plans would be calculated based on four core categories of benefits: “physician and mid-level practitioner care, hospital and emergency room services, pharmacy benefits, and laboratory and imaging services.” In addition, the population set on which this calculation is based will the population for a “typical self-insured employer-sponsored plan,” rather than the general population that is described in the February Bulletin.

New requirements related to employer-provided health coverage are an integral component of health care reform, so industry responses to the above-described guidance will be important in shaping how the ACA’s changes will be implemented.

©1994-2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

5th Product and Pipeline Enhancement for Generics Conference, July 17-19, 2012

The National Law Review is pleased to bring you information about an upcoming conference:

5th Product and Pipeline Enhancement for Generics Conference, July 17-19, 2012 in Washington, DC

The marcus evans 5th Product and Pipeline Enhancement for Generics Conference will host industry leaders within the Generic Pharmaceutical, Branded Pharmaceutical and API industries operating globally as they share best practices, strategies and tools on portfolio management and business strategy, as well as legal, intellectual property and patent issues.

Featuring case studies from leading generics experts, including:

  • Richard Dicicco, Chairman at Harvest Moon Pharmaceutical
  • Dr. Vijay Soni, Executive Vice President, IP, BD and Product Portfolio at Glenmark Pharmceuticals
  • Candis Edwards, Senior Vice President, Regulatory Affairs & Compliance at Amneal Pharmaceuticals
  • Gregory Fernengel, Senior Intellectual Property Counsel at Ben Venue Laboratories, Inc.
  • Markus H. Meier, Assistant Director, Health Care Division, Bureau of Compensation at Federal Trade Commission
  • Vishal K. Gupta, Chief Scientific Officer, Vice President, Research & Development at CorePharmaLLC
  • Sherri Leonard, VP, Business Development and Portfolio Management at OrchidPharma, Inc.

Attendees will leave this conference with a better understanding of:
1. Current and upcoming FDA proposals and regulations to ensure compliance
2. Innovation in the drug pipeline
3. Portfolio management and business development
4. How to protect the company’s patents’ and intellectual property
5. Expanding the commercial reach through biosimilars
6. Market changes and future industry developments

Testimonials:

“Great in-depth coverage of hot topics in an intimate setting that lent itself to excellent discussions.” – Novartis

”Terrific chance to connect with other industry traders to exchange ideas and explore solutions to the challenges we all face.” – OrchidPharma

Upcoming Spring 2012 CLE National Institutes

The National Law Review is pleased to bring you information about the ABA’s Upcoming Spring 2012 CLE National Institutes:

Learn and network at these in-person,full-day or multi-day seminars held live in various locations across the country that draw lawyers from across the nation.

5th Product and Pipeline Enhancement for Generics Conference, July 17-19, 2012

The National Law Review is pleased to bring you information about an upcoming conference:

5th Product and Pipeline Enhancement for Generics Conference, July 17-19, 2012 in Washington, DC

The marcus evans 5th Product and Pipeline Enhancement for Generics Conference will host industry leaders within the Generic Pharmaceutical, Branded Pharmaceutical and API industries operating globally as they share best practices, strategies and tools on portfolio management and business strategy, as well as legal, intellectual property and patent issues.

Featuring case studies from leading generics experts, including:

  • Richard Dicicco, Chairman at Harvest Moon Pharmaceutical
  • Dr. Vijay Soni, Executive Vice President, IP, BD and Product Portfolio at Glenmark Pharmceuticals
  • Candis Edwards, Senior Vice President, Regulatory Affairs & Compliance at Amneal Pharmaceuticals
  • Gregory Fernengel, Senior Intellectual Property Counsel at Ben Venue Laboratories, Inc.
  • Markus H. Meier, Assistant Director, Health Care Division, Bureau of Compensation at Federal Trade Commission
  • Vishal K. Gupta, Chief Scientific Officer, Vice President, Research & Development at CorePharmaLLC
  • Sherri Leonard, VP, Business Development and Portfolio Management at OrchidPharma, Inc.

Attendees will leave this conference with a better understanding of:
1. Current and upcoming FDA proposals and regulations to ensure compliance
2. Innovation in the drug pipeline
3. Portfolio management and business development
4. How to protect the company’s patents’ and intellectual property
5. Expanding the commercial reach through biosimilars
6. Market changes and future industry developments

Testimonials:

“Great in-depth coverage of hot topics in an intimate setting that lent itself to excellent discussions.” – Novartis

”Terrific chance to connect with other industry traders to exchange ideas and explore solutions to the challenges we all face.” – OrchidPharma

Upcoming Spring 2012 CLE National Institutes

The National Law Review is pleased to bring you information about the ABA’s Upcoming Spring 2012 CLE National Institutes:

Learn and network at these in-person,full-day or multi-day seminars held live in various locations across the country that draw lawyers from across the nation.

The Health Effects of Divorce can be both Detrimental and Beneficial

Recently an article by Rebecca L. Palmer and Crystal Espinosa Buit of Lowndes, Drosdick, Doster, Kantor & Reed, P.A. regarding The Health Effects of Divorce was published in The National Law Review:

Divorces affect every aspect of an individual’s life – their financial situation, their children, their home, their friendships, everything. Divorces are notoriously stressful events and, while a stressful marriage can absolutely consume a person to their detriment, many people would also agree that their lives are negatively impacted in some way by the process. What most people may not recognize, however, is how significant a role divorce plays in their overall mental and physical health. While short term effects are generally associated with divorce, recent studies have focused on the long-term impacts to health. The findings are troubling. In a 2009 study conducted by sociologists Linda Waite and Mary Elizabeth Hughes of the University of Chicago, research showed that divorced or widowed individuals are 20 percent more likely than married people to have chronic health conditions, such as heart disease, diabetes, or cancer. In addition, they also showed 23 percent more mobility limitations, such as trouble climbing stairs or walking. The study, which examined the marital history and health indicators for 8,652 people between the ages of 51 and 61, focused on four categories: chronic health conditions, mobility, depressive symptoms and self-assessment. The results of the study support the contention that those who experience a divorce or the death of a spouse have long-term negative consequences related to their health.

University of Texas at Austin researcher Mark Hayward tells WebMD “that long-term stress before, during, and after a divorce may accelerate the biologic processes that lead to cardiovascular disease and possibly other chronic diseases.” In his study on the impact of divorce on heart disease, he showed that divorced, middle-aged women were more likely to develop heart disease than other non-divorced, married women. Although Hayward’s study focused on women, the health consequences of divorce are not specific to gender. In a 2010 article on marriage and men’s health, the Harvard Medical School cited a MFRIT study of 10,904 American married men which revealed that men who divorced were 37 percent more likely to die during the nine-year study than men who remained married. This may be due to the biological effects stress is having on men and women alike. The Harvard Medical School notes that stress triggers inflammation, which is a newly recognized cardiac risk factor. Thus, it may come as no surprise that divorced men have higher levels of inflammatory markers than married men.

Divorce also alters lifestyle habits and behaviors that may adversely affect health. Researchers from Ohio State University found that, two years after a divorce, separated partners tended to be heavier as compared to couples who remained married, although men showed larger weight gains than women. Harvard Medical School similarly points out that divorced men don’t eat as well as married men. Furthermore, divorced men are less likely to exercise and are more likely to smoke, drink excessively, and engage in other risky behaviors. It is clear that divorce may cause some people to engage in destructive conduct that inevitably affects their physical and mental well being.

There is no doubt that electing to end your marriage is a decision that should be weighed heavily. The unsettling studies on the health effects of divorce can only lead one to question why divorce has such a powerful impact on a person’s health. When discussing her research on the subject, sociologist Linda Waite noted that “previous research suggests that marriage has protective health benefits by providing financial, social, and emotional stability.” Specifically, women often have more financial security, thus allowing them access to health care and reduced stress, while married men have better health habits in comparison to single males. It also goes without saying that the stress of determining the division of marital assets and child custody directly contributes to this impact.

On the other hand, while a healthy marriage has been shown to provide protective health benefits, several studies also “show that the marriage advantage doesn’t extend to those in troubled relationships, which can leave a person far less healthy than if he or she had never married at all.” One study, for instance, showed that a stressful marriage can be as bad for the heart as a regular smoking habit. Further, just as divorce has been found to negatively impact women’s health specifically, researchers have also found that “bad relationships [are] bad for health” as women in troubled relationships (who likely face anger, stress and hostility) are more likely than other women to be depressed, have metabolic syndrome, low levels of HDL (good) cholesterol, abdominal obesity, and elevated blood sugar – “all basically steps on the road to heart attack or diabetes.”

Accordingly, it is important to remember that, while divorce has been shown to have negative impacts on health, this is not true for everyone as an unhealthy relationship can also lead to certain health problems, including physical ailments and mental depression. As researcher Mark Hayward noted, “For people in highly stressful marriages, divorce may be beneficial for their health.”

Ultimately, those seeking to prevent their current circumstances, whether a troubled marriage or divorce, from impacting their physical and mental health should seek measures to reduce stress and remember that a divorce should serve as a gateway to a healthier and happier life. When going through a divorce it is vital to remember the basics – eat well, exercise and, quite simply, remember to do the things that make you happy. Further, surrounding oneself with a supportive environment and attending counseling, if needed, will lessen health risks by helping one to cope with the stress.

© Lowndes, Drosdick, Doster, Kantor & Reed, PA

Upcoming Spring 2012 CLE National Institutes

The National Law Review is pleased to bring you information about the ABA’s Upcoming Spring 2012 CLE National Institutes:

Learn and network at these in-person,full-day or multi-day seminars held live in various locations across the country that draw lawyers from across the nation.