Last week, the blog Concurring Opinions featured aÂ symposium on Madhavi Sunderâs new book,Â From Goods to a Good Life: Intellectual Property and Global Justice. A chapter relevant to health law scholars is available online,Â here . Â The chapter focuses on access to drugs in less developed countries (LDCs), and makes the following case:
The chapter begins by telling the moving story ofÂ Thembisa Mkhosana , one of thousands of South Africans who cannot afford theÂ third-lineÂ antiretroviral treatments needed to survive AIDS. Â Â âMy blood test results have worsened dramatically,â Mkhosana told a reporter, âAnd now I suddenly have fever and am in pain. Iâm really worried.â Â âI know that Iâm going to die,â she said, but âwho is going to lookÂ after my children?â Â Her story appears inÂ .
Mkhosanaâs plight raises difficult interpretive issues. Â Is she âcollateral damageâ from a patent system that depends on the strict rules that deny her access to the medicine she needs? Or is this an entirely avoidable tragedy, a consequence of misapplied and misinterpreted laws?Â Sunder makes the case for the latter view very convincingly, while providing a compact and accessible account of the development of international patent policy over the past 20 years.
On the other hand, Big Pharma has a number of justifications and excuses for aggressive assertion of their patents. Spokesmen aver thatÂ they are only concerned about what would happen to their profit margins if drugs circulated in an uncontrolled manner. They claim that, ifÂ poor countries are permitted to manufacture vast quantities ofÂ their drugs, those countries may sell them on the black or grey markets.Â That, in turn, would reduce the return on such drugs in theÂ developed world, leaving less money for research in the future. Sunder responds that, âThe grey-marketsÂ concern is a valid oneâbut . . .the World Trade Organization has begun to craft creative solutions to thisÂ problem (requiring generic drugs made for developing world markets toÂ be distinctively labeled, for example).â Â As surveillance of both people and goods is better perfected by state security apparatuses and RFID technology, the grey market concern should also become more technologically manageable, enabling finer-grained and more effective price discrimination.
Access to drugs is a key area where ordinary markets simply canât be expected to achieve humane and rational results. Â In 2008, the purchasing power of theÂ average American dog wasÂ higher than that of forty percent of the worldâs population.Â Given theÂ extensive extant involvement of the U.S. government both in the domestic pharmaceutical industry and in the international negotiations determining its powers and duties abroad, there is a specialÂ moral obligation for U.S. citizens and politicians to assure the widespread and equitable distribution of lifesaving drugs. As Sunder states:
Sunderâs eloquent case for access to drugs commends respect and admiration for theÂ Health Impact Fund , Knowledge Ecology International, Medecins sans Frontieres, andÂ other groups for trying to close this gap.
X-Posted atÂ Bill of Health .
Since September is National Childhood Cancer Awareness Month –a calendar of events can be found here – a review of relevant recent and pending federal legislation seemed appropriate. Â The Food and Drug Administration Safety and Innovation Act (FDASIA), which the President signed into law on July 9, 2012, included a number of provisions that it is hoped will speed development of drugs to treat childhood cancers and other rare diseases.Â As Peter L. Saltonstall, who heads up the National Organization for Rare Disorders (NORD), explains here , the central purpose of the FDASIA was to reauthorize the Prescription Drug User Fee Act, but several separately-introduced bills “of particular importance to rare disease patients and supported by NORD” were incorporated into it.Â These included the Creating Hope Act , which was powerfully advocated for by Kids v Cancer and the bi-partisan Congressional Childhood Cancer Caucus .
The Creating Hope Act expands the FDA’s priority review voucher (PRV) program– which was passed to incentivize the development of treatments for neglected tropical diseases, malaria, and tuberculosis– to cover rare pediatric diseases, including childhood cancers.Â Under the program, “[t]he [FDA] shall award a priority review voucher to the sponsor of a rare pediatric disease product application upon approval by the [FDA] of such rare pediatric disease application.”Â The fully-transferable voucher can be redeemed for review of–and action on–another new drug application within just six months.Â In an influential 2006 article in Health Affairs, David Ridley and colleagues estimated that if a “voucher speeds FDA approval by a year, it could increase the present value of sales of a blockbuster drug by more than $300 million.”
While a voucher worth as much as $300 million would seem to add up to an attractive “pull” mechanism , the PRV program for neglected tropical diseases has, unfortunately, not lived up to expectations.Â Only one company, Novartis, has received a PRV, for an anti-malaria drug which was already approved and marketed outside the United States.Â Writing at The Incidental Economist earlier this year, Kevin Outterson characterized the PRV program as “unsuccessful” and its extension to rare pediatric diseases as “disappointing.”Â More promising, Professor Outterson suggests, are “push” mechanisms like the Innovative Medicines Initiative (IMI) in Europe, described here , which will, among other things, funnel $738 million to antibiotics researchers between now and 2020, with the initial goals of “building and training networks of researchers, facilitating and increasing the exchange of research data, and improving the efficiency of clinical trials on new antibiotics through better laboratory tests and better trial design” and the long-term goal of “speed[ing] up the development of much-needed antimicrobial drugs.” Â Notably, the IMI was established with $1.23 billion of European Union funds and an impressive $1.23 billion of “mainly in kind contributions (consisting mostly of research activities)” from the European Federation of Pharmaceutical Industries.
The National Pediatric Research Network Act of 2012 , which is currently pending in the House and Senate, bears some similarities to the IMI’s antimicrobial drug development effort.Â The Act would appropriate government funds to support the establishment and operation of a network of pediatric research consortia that would conduct “basic, clinical, behavioral, or translational research to meet unmet needs for pediatric research” and “train researchers in pediatric research techniques.”Â The Act provides that “an appropriate number of such awards” must be awarded to consortia that, among other things, agree to “conduct or coordinate one or more multisite clinical trials of therapies for, or approaches to, the prevention, diagnosis, or treatment of one or more pediatric rare diseases or conditions[.]”
Childhood cancers are not specifically mentioned in the text of the National Pediatric Research Network Act, however, and, should it pass, the Network it establishes is likely to focus on other rare pediatric diseases.Â An existing network , the Children’s Oncology Group (COG), which is principally supported by the National Cancer Institute, “unites more than 8,000 experts in childhood cancer at more than 200 leading children’s hospitals, universities, and cancer centers across North America, Australia, New Zealand, and Europe in the fight against childhood cancer.”Â COG “has nearly 100 active clinical trials open at any given time … include[ing] front-line treatment for many types of childhood cancers, studies aimed at determining the underlying biology of these diseases, and trials involving new and emerging treatments, supportive care, and survivorship.”Â The existence and success of COG it’s “research has turned children’s cancer from a virtually incurable disease 50 years ago to one with a combined 5-year survival rate of 80% today,” although it has suffered from budget cuts in recent years–likely explains why advocates have turned their attention to pull mechanisms like the Creating Hope Act that build on existing incentives aimed at increasing industry investment in drug research.
Another model for increasing industry involvement is to require it.Â This could perhaps be described as a strong pull mechanism.Â The Pediatric Research Equity Act (PREA) takes this approach, requiring, with some exceptions, that a sponsor of a new drug application study that drug in children.Â FDASIA, as the FDA summarizes here , makes PREA “permanent no longer subject to reauthorization every five years[,] … requires earlier pediatric study plan submission by drug manufacturers subject to PREA and gives FDA new authority to help ensure PREA requirements are addressed in a more timely fashion.”Â PREA, though, has not worked to generate research into pediatric cancer treatments, and the FDASIA reforms will not change that.Â In remarks delivered at the 2nd Annual Childhood Cancer Summit in September 2011, Dr. Peter Adamson, the Chair of the Children’s Oncology Group, explained that an exception to PREA’s requirements “can be granted for most new cancer drugs, as the common cancers observed in adults essentially do not occur in children.”
Of course, industry involvement could increase though profit-driven activity without additional pushes or pulls from government.Â Childhood cancers have not, thus far, been an industry focus.Â In the past twenty years, the FDA has approved just two drugs, clofarabine and erwinaze , to treat pediatric-specific cancers.Â It was not until this past August that the agency approved the first “pediatric-specific dosage form” of a cancer-fighting drug, everolimus .Â A story reported in Fortune’s September 3, 2012 issue entitled Rare Diseases Mean Big Profits (an online version is available here ), suggests that there may be hope that the pace of development will accelerate.Â According to Fortune:Wall Street skews bullish on Alexion[, a specialty pharmaceutical company that developed and sells the drug Soliris which is used to treat two rare disorders,] and its peers in the ultra-rare-disease market.Â With Pfizer and other big pharma companies facing devastating revenue drops as blockbuster drugs like Lipitor go off patent, niche players like Alexion look good because of their monopoly pricing power.
Soliris, Fortune reports, costs “around $400,000 per patient per year.”Â There may be, then, cause for hope that in the coming years the private sector will increase its investment in the surpassingly important search for treatments for childhood cancers and other rare pediatric diseases.Â I welcome your thoughts.
Two weeks ago, New York City held the 11th annual name-reading ceremony for the victims who died in the collapse of the towers on September 11, 2001. Missing from the ceremony, however, were the names of victims who died years after the attacks.Â Since 9/11, a multitude of ground zero workers, first responders, and inhabitants of Lower Manhattan have been diagnosed with a variety of diseases, including cancer and mesothelioma, believed due, and now presumed to be due, to exposure to toxic dust. Some have died from their illness, some survived, and some are yet to be diagnosed.
On 9/11, people from all over the nation rushed to New York City to help with search and rescue.Â After the search and rescue mission ended, workers were hired to clean up and dispose of the rubble. Since the twin towers were constructed during the 1970s, there was an obvious concern that asbestos used to insulate the buildings, not banned at the time of construction, would pose major health and air quality concerns .
Former New Jersey Governor Christine Todd Whitman and then administrative head of the EPA assured the public that there was no need for alarm.Â After reviewing scientific data, Whitman issued a statement on September 18, 2001 declaring the area safe for workers and nearby inhabitants. In a press release , EPA Administrator Whitman stated,“‘We are very encouraged that the results from our monitoring of air-quality and drinking-water conditions in both New York and near the Pentagon show that the public in these areas is not being exposed to excessive levels of asbestos or other harmful substances,’ [...] ‘Given the scope of the tragedy from last week, I am glad to reassure the people of New York . . . that their air is safe to breathe and the water is safe to drink.’”
The credibility of this data was later called into question. In 2006, senior EPA scientist Dr. Cate Jenkins addressed a letter to members of the New York Congressional delegation stating,“[T]est reports in 2002 and 2003 distorted the alkalinity, or pH level, of the dust released when the twin towers collapsed, downplaying its danger. [...] The test results helped the E.P.A. avoid legal liability. [... and] had a costly health effect, contributing ‘to emergency personnel and citizens not taking adequate precautions to prevent exposures.’”
During a June 2007 Congressional hearing , former Governor Whitman received harsh criticism for her statements assuring ground zero workers and Lower Manhattan inhabitants of safe air quality.Â When pressed to acknowledge that the toxic dust from the collapsed buildings contributed to illness, she declined. Whitman stated that a lack of conclusive evidence existed “linking the dust to disease.” She denied any presence of pressure placed on her to report the air safe in order to quickly reopen the financial district.Â She also expressed no regret for her statements in 2001.
Victims of ground zero exposure brought multiple lawsuits against Christine Todd Whitman, however; the Second Circuit Court of Appeals found that Whitman could not be held liable .
In January 2011, President Barack Obama signed into law the Zadroga Act, which expanded the September 11th Victim’s Compensation Fund to include ground zero workers who died from cancer or respiratory diseases, “ under the presumption that the cause was due to exposure during recovery efforts.” The act “ sets aside money for medical care and $2.775 billion dollars to compensate claimants for lost wages and other damages related to the illnesses.”
Although initially excluded from the Act, the Act was amended to include cancer to the list of ground zero diseases, acknowledging a link between ground zero air and cancer. To date, 50 types of cancers will be covered.Â Noah Kushlefsky, an attorney representing 3,800 ground zero victims, foresees that with the addition of cancer, the $2.775 billion will be exhausted before all the victims receive adequate compensation. The addition of numerous cancers to be covered by the Act comes on the heels of Congressional attempts to reduce the deficit. The Zadroga Act faces $300 million in cuts.
The FealGood Foundation , an organization dedicated to supporting the health and welfare of 9/11 first responders, compiled a list of known first responders with cancer and those who died from cancer on their website. Ground zero victims and their families are now seeking legal representation in order to access the victim’s fund.
On September 19, the Oklahoma attorney general Scott Pruitt filed an amended complaint in Oklahoma v. Sebelius asking the court to decide that the IRS rule permitting federally facilitated exchanges to issue premium tax credits is illegal.Â While this case will almost certainly be dismissed for lack of standing, this issue is unlikely to go away.Â Reproduced below is testimony I recently submitted to a House Committee explaining why the IRS rule should in fact be sustained.
The Internal Revenue Service’s Implementation and Administration of the Democrat’s Health Care Law
Testimony of Timothy Stoltzfus Jost
In a little more than a year, millions of uninsured Americans will begin enrolling in health insurance plans through the American Health Benefits Exchanges.Â These Americans– your constituents– will be able to purchase health insurance because of the availability of premium tax credits.Â At this point, it appears that many states are choosing not to create their own exchanges in 2014, but rather to have their citizens purchase health insurance through federally facilitated exchanges.Â It is essential that these uninsured Americans be able to receive premium tax credits through these federal exchanges. My testimony addresses the provisions of the Affordable Care Act that will make it possible for this to happen.
My name is Timothy Stoltzfus Jost and I am a law professor at Washington and Lee University.Â I am also a consumer representative to the National Association of Insurance Commissioners and an elected member of the Institute of Medicine. I have written extensively about the Affordable Care Act, and blog regularly about Affordable Care Act implementation at www.healthaffairs.org/blog.
My remarks today address assertions by Michael Cannon of the CATO institute that the Department of the Treasury’s rule providing for the federal exchange to issue tax credits is not authorized by the Affordable Care Act. This assertion has been widely publicized and seems to be causing confusion among state lawmakers.Â Â Mr. Cannon’s position, however, is based on a misunderstanding of the law, its structure, and history, as I will explain.
The Affordable Care Act Â Exchanges and Premium Tax Credits
To understand this issue it is necessary to understand the role of the exchange in the Affordable Care Act.Â The American Health Benefits Exchange is fundamentally a market in which health insurance is bought and sold.Â The exchange is also responsible for ensuring that insurers who sell their products through the exchange meet certain minimum standards to ensure that individuals and small employers who purchase in the exchange are getting value for their dollar.Â Finally, the exchange is the gateway to federal premium tax credits, Medicaid, and other assistance programs for those unable to afford health insurance.Â The exchange concept has until very recently enjoyed broad bipartisan support as a tool for making private sector health insurance widely available and affordable to Americans.Â Indeed, Congressman and Vice President nominee Paul Ryan’s Roadmap for America includes health insurance exchanges.
Section 1311 of the Affordable Care Act asks the states to establish American Health Benefits Exchanges.Â The federal government cannot order a state to operate a federal regulatory program, so section 1321 of the ACA authorizes the Secretary of Health and Human Services to establish a federally facilitated exchange in states that choose not to establish their own exchange.
Mr. Cannon takes the position that federal exchanges cannot offer premium tax credits.Â He bases this opinion on two subsections of section 36B of the Internal Revenue Code (created by section 1401 of the ACA), which provides for tax credits to help middle-income Americans afford health insurance.Â In defining the premium tax credit amount and the coverage months for which it is available, sections 36B(b)(2) and 36B(c)(2)(A) refer to persons “enrolled in [a qualified health plan] through an Exchange established by the State under section 1311.”Â Mr. Cannon argues that this language precludes premium tax credits being issued through the exchanges operated in the states by the federal government.Â If this is true, it is likely that many–perhaps most–Americans will be denied access to an important middle-class tax benefit in 2014, as it now appears that many states will, at least initially, have federally facilitated exchanges.
In a recent article, Mr. Cannon, together with Professor Jonathan Adler of Case Western University, claims that this language is not only unambiguous but also intentional, that Congress intended to punish states that refused to establish exchanges by refusing premium tax credits to their residents.  Cannon and Adler further claim that final rules promulgated by the IRS making premium tax credits available through federal as well as state exchanges are unauthorized by law, and thus illegal.
If this claim is true, uninsured constituents of members of this committee stand to lose billions of dollars in federal tax relief that would have assisted them in purchasing health insurance.
The Affordable Care Act Explicitly Authorizes Federal Exchanges to Provide Premium Tax Credits
Fortunately for your constituents, Mr. Cannon’s claims are simply not true. If the sections that he cites were the only relevant sections of the Affordable Care Act, and if the legislative history and structure of the ACA could be simply ignored, his statutory construction claim would be plausible.Â But the availability of tax credits through federally facilitated exchanges is recognized through the language of the ACA itself.Â Moreover, the legislative history of the ACA also establishes that Congress understood that premium tax credits would be available through both federal and state exchanges.Â Â The IRS is explicitly authorized by Congress to interpret the statute and its interpretation of the law will be given deference by the courts.Â The existence of exchanges in every state was assumed both by the Congressional Budget Office and by both proponents and opponents of the ACA as it was being debated.Â Finally, the structure and purpose of the ACA requires that state or federal exchanges offer premium tax credits in every state.
I begin with the language of the ACA itself. Â The term “exchange” is a defined term under the ACA, a point that Mr. Cannon does not mention in his article but that would surely be paid great attention by the courts.Â Section 1563(b) of the ACA states: “The term ‘Exchange’ means an American Health Benefit Exchange established under section 1311 of the Patient Protection and Affordable Care Act.”Â Â Section 1311 literally requires that the states “shall” establish an American Health Benefits Exchange by January 1, 2014.Â Because the Constitution prohibits the federal government from literally requiring states to establish exchanges, Â however, section 1321(c), provides that “the [HHS] Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State.”Â Under the ACA’s definition of exchange, the term “Exchange” in section 1321 means a section 1311 exchange.Â This is reinforced by section 1321 itself, in which the term “such Exchange,” refers to the “required exchange” mentioned in section 1321(c)(1)(B)(i), which is to say the 1311 exchange.Â When section 1321 directs HHS to establish an “Exchange,” therefore, it means to establish a section 1311 exchange, which section 36B authorizes to provide premium tax credits.Â Moreover, section 1311(d)(1) defines an exchange as an exchange established by the state, therefore by definition a section 1321 federally facilitated exchange is an exchange established by a state under section 1311.
Section 36B is not the only section of the ACA that imposes duties on the state and federal exchanges relevant to premium tax credits.Â Section 1311(d)(4)(G) requires exchanges to provide their enrollees with premium calculators that include a deduction for premium tax credits.Â Section 1311(d)(4)(I), requires exchanges to forward to the IRS information about enrollees who are eligible for premium subsidies.Â Section 1311(d)(4)(J), requires an exchange to notify employers if their employees are receiving premium tax credits.Â Finally, section 1413 requires state and federal exchanges to use streamlined applications and eligibility assessments to help people qualify for “health subsidy programs,” which programs specifically include premium tax credits, see section 1413(e)(1).Â All of these sections apply to federal as well as state exchanges.
Most importantly, a third subsection of section 36B itself clarifies that premium tax credits are available through both state and federal exchanges.Â The ACA is composed of the Senate version of the Patient Protection and Affordable Care Act, Public Law 111-148, and the Health Care and Education Reconciliation Act, Public Law 111-152. The Senate adopted the bill that became Public Law 111-148 in December of 2009, but the House adopted it only in March of 2010.Â Shortly thereafter, the House and Senate adopted HCERA, through which the House made certain changes in the Senate bill.Â As a later-adopted statute, HCERA takes precedence over that of the PPACA, if there is a contradiction.Â Moreover, since the adoption of HCERA was necessary to secure House adoption of the Senate bill, it is doubly important that the provisions of HCERA be taken seriously. The House bill contained only a federal exchange.Â Section 1004 of HCERA adds to IRC section 36B, subsection 36B(f)(3) which requires both 1311 and 1321 exchanges to Â provide certain information regarding premium tax credits to the IRS and to taxpayers.Â Cannon and Adler admit the existence of this provision but simply say it is meaningless, as 1321 exchanges cannot authorize premium tax credits.Â This position, however, violates another canon of statutory construction–that every provision of a congressional enactment should be given effect.
It should be noted that several other sections of the ACA use the language on which Mr. Cannon relies–”an Exchange established by the State under section 1311.”Â One of them is section 2001, which prohibits states from reducing Medicaid eligibility until an exchange “Established by the State under section 1311 is operational.”Â If Mr. Cannon’s interpretation of the ACA is correct, states that decide not to establish a state exchange will be barred indefinitely from changing their Medicaid eligibility requirements.Â But this is not what the law means.
The Affordable Care Act’s Legislative History also establishes that Federal Exchanges can offer Premium Tax Credits
Mr. Cannon’s interpretation of the ACA is also refuted by the legislative history of the ACA.Â The Senate bill which became the ACA was derived from the S 1679,  the Senate Health, Education, Labor and Pensions Committee bill and S 1796  which emerged later from the Senate Finance Committee.Â Each of these bills included state and federal exchanges, which were called Gateways in the HELP bill.
The HELP bill (section 142, adding section 3104 of the Public Health Services Act) created an elaborate structure under which states could either establish exchanges themselves (”establishing states”), request the federal government to establish an exchange in the states (”participating states”), or fail to do either, in which case four years after the enactment of the statue the federal government would create a fallback exchange in the state.Â Premium tax credits were available in establishing and participating states, but would only be available through the federal fallback exchanges in states that complied with the employer responsibility provisions for state and local employees.Â In other words, the states were threatened with loss of premium tax credits, not for failing to establish exchanges but for not complying with the employer responsibility provisions for their employees.
The Finance Committee bill did not use this elaborate structure.Â In fact, the rules it creates are very similar to the final ACA.Â It creates section 2235 of the Social Security Act, which provides that states “shall” establish an exchange, and sets out the duties of the exchange.Â Section 2225(b) provides, in language very similar to current ACA section 1321, that HHS shall contract with a nongovernmental entity to operate an exchange in states that fail to “establish and operate” an exchange in states that fail to create one within 24 months. The Finance Committee Report  refers to these federally established exchanges as “state exchanges.”Â Â In a number of places, including the precursor of the current premium tax credit provision, the bill refers to exchanges “established by the state,” but nowhere does it provide, as did the HELP bill, that premium tax credits would not be available in the any of the exchanges created by the federal government.
The provisions of the current ACA addressing this issue are taken largely from the Finance Committee bill, which makes sense because the Finance Committee has jurisdiction over tax matters.Â The punitive provisions of the HELP bill were abandoned.
The Senate debated the ACA extensively during November and December 2009.Â The version of the Act they were considering included both state and federal Exchanges.Â Throughout the debate, Senators assumed that tax credits would be available in all 50 states.Â Thus Senator Bingaman stated on December 4, 2009, that the ACA “includes creation of a new health insurance exchange in each State which will provide Americans a centralized source of meaningful private insurance as well as refundable premium tax credits to ensure that coverage is affordable.”  Senator Johnson stated on December 17, “the legislation will also form health insurance exchanges in every State,” which will “provide tax credits to significantly reduce the cost of purchasing that [insurance] coverage.” 
If Congress had meant to limit premium subsidies to state-established exchanges, as an incentive to States, one would have expected the Finance Committee report on S. 1796Â to have mentioned this, and for at least one Senator to have pointed this out during the debate in November and December 2009.
Most importantly, the Congressional Budget Office (together with the Joint Committee on Taxation)Â provided Congress on November 30, 2009, with an analysis of the impact of the legislation on premiums that assumed that premium tax credits would be available in all states, making no distinction between federal and state exchanges.  Over the next few days this analysis was discussed by Republican Senators Grassley,  Enzi,  and Coburn.  None raised what Cannon and Adler see as an obvious point–that the CBO analysis was flawed because it failed to recognize that premium tax credits would not be available though federally facilitated (sec. 1321) exchanges.Â In fact, the CBO repeatedly provided cost estimates of the ACA and HCERA in late 2009 and early 2010, but never suggested that premium tax credits might be reduced if states failed to establish exchanges.Â In their most recent report from two weeks ago updating ACA coverage estimates in the wake of the Supreme Court decision, the CBO and JCT reiterates again that premium tax credits will be available though state, federal, and partnership exchanges.  As Yale Professor Abbe Gluck notes in a recent blogpost  (and forthcoming article), Senators often don’t listen to each other, but they all listen to the CBO,Â which assumed that premium tax credits would be available to all Americans in all states.
Mr. Cannon claims, however, to have found a smoking gun, a colloquy between Senators Baucus and Ensign during the Finance Committee debate on the bill, in which, they claim, Senator Baucus admits that premium tax credits could not be made available through federal exchanges.Â In fact, the colloquy had nothing to do with federally facilitated exchanges, but rather with whether the Finance Committee or the Judiciary Committee had jurisdiction over malpractice reform legislation that Ensign wanted to attach to the bill.Â In fact, there is nothing in the legislative history of the ACA that supports the notion that premium tax credits will not be available through federal exchanges.
Mr. Cannon argues that Congress prohibited the federal exchanges from offering premium tax credits as a way of encouraging the states to adopt exchanges.Â It is in fact clear that Congress favored state exchanges, and offered generous grants to the states–which to date have totaled nearly $850 million dollars with more on the way.  States that fail to establish exchanges will also lose some control of their insurance markets.Â But Congress did not try to “coerce” states to create state exchanges by threatening their citizens with loss of billions of dollars of premium tax credits.Â Indeed, under the Supreme Court’s recent Medicaid decision, such coercion might have been suspect.
The Structure of the Affordable Care Act Makes it Clear that Federal Exchanges may Offer Premium Tax Credits
Moreover, not only do a number of provisions of the ACA, already described, refer explicitly to federal and state exchanges performing functions relating to premium tax credits, but the entire structure of the ACA’s insurance reforms are based on the availability of premium tax credits in all states. The ACA’s guaranteed issue and community rating requirements apply to insurers in all states, regardless of whether they have federal or state exchanges. So do the ACA’s risk mitigation programs.Â So does the ACA’s individual mandate. The premium tax credits are intended to bring millions of new participants into insurance markets, and if they are not available in many states, the nature of insurance markets will change dramatically, increasing the risk of insurers and decreasing availability to middle-income Americans.Â If this was the intent of Congress, it surely would have made it far more evident.
The ACA is admittedly not a model of clear drafting.Â It contains three sections with the same number (1563) and amends an existing provision of the Public Health Services Act inconsistently twice within the scope of a few pages.Â The Senate bill was not supposed to be the final law.Â Only the Senate election in Massachusetts in early 2010 made a conference committee bill that would have reconciled the House and Senate versions and cleaned up the current bill impossible.Â The courts are unlikely to find the “established by the state” language a “scrivener’s error.”Â But the courts will interpret the ambiguous language in the context of the ACA’s structure and purpose, in light of the ACA’s legislative history, and putting great weight on the HCERA amendment, and find that federally facilitated exchanges can in fact issue premium tax credits.
The Department of the Treasury is Authorized to Interpret Section 36B and the Courts will Defer to its Interpretation
Finally, the courts are likely to grant great deference to the IRS premium tax credit regulation.Â Section 36B explicitly grants authority to the IRS to interpret the section.Â A recent CRS Legal Analysis of this issue states clearly that under the ruling “Chevron doctrine,” derived from the case of Chevron v. NRDC,  courts will defer to the interpretation of the IRS of section 36B unless they conclude that “Congress has spoken to the precise question at issue.” Â As should by now be amply clear, Congress has not clearly said that federal exchanges cannot grant premium tax credits.Â If a court finds the issue ambiguous, however, “the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”Â In this situation, “legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.”Â As noted above, the interpretation of the ACA by the IRS is completely consistent with rather than “manifestly contrary” to the statute, and thus will be granted judicial deference.
In 2014, millions of your constituents will gain access to private health insurance coverage with assistance with premium tax credits. It was the hope of Congress and remains the hope of the federal agencies implementing the ACA that they will receive these premium tax credits through state exchanges.Â But the ACA also created fallback federal exchanges, which will be available in states represented by other members of this Committee to ensure that all Americans get access to affordable health insurance.Â The Department of the Treasury has correctly determined based on the language and history of the ACA that premium tax credits will be available through all exchanges, state and federally facilitated.Â None of your constituents will be denied the tax credits made available through the ACA to ensure them access to affordable health insurance.Â I thank you for the opportunity to address this important issue.
References Jonathan Adler and Michael Cannon, Taxation without Representation:Â The Illegal IRS Rule to Expand Tax Credits Under the PPACA (2012), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2106789
 S 1796, http://thomas.loc.gov/cgi-bin/query/z?c111:S.1796:/
 Senate Report 111-89
 155 Cong. Rec. S12358.
 155 Cong. Rec. S13375.
 155 Cong. Rec. S12107, 12/2/09
 155 Cong. Rec. S12378, 12/4/09
 155 Cong. Rec. S13687
 467 U.S. 837 (1984).
In her article, “Institutional Competence to Balance Privacy and Competing Values: The Forgotten Third Prong of HIPAA Preemption Analysis,” Barbara J. Evans takes on the well-settled belief or “rumor,” as she calls it –Â that the HIPAA “Privacy Rule merely sets a floor of privacy protection that leaves states free to set stricter privacy standards.” Â (A draft of this article is available on SSRN , and it will be published in the University of California-Davis Law Review in 2013.)Â Although this general rule of HIPAA preemption Â is largely accurate, the article argues that it is wrong with respect to an enumerated “class of public health activities that Congress deemed to have high social value,” including “reporting of disease or injury, child abuse, birth, or death, public health surveillance, or public health investigation or intervention.”
Professor Evans begins with a textual argument, pointing out that HIPAA’s statutory text specifically includes a third prong, while HIPAA’s Privacy Rule, one of HIPAA’s key implementing regulations, collapses the statutory language into two prongs.Â The article maintains that in doing so, the “Privacy Rule ignored a clear statutory instruction to preempt state privacy law in a specific circumstance where Congress determined that individual privacy interests should give way to competing public interests.”Â In this specific public health context, she continues, “the HIPAA statute creates what might be called a ‘canopy,’ to shelter specific socially important data uses from more stringent privacy laws.”Â The author buttresses her analysis with legislative and regulatory history as well as a comparison with the structure of ERISA preemption provisions.
Noting that the statute speaks directly to this issue, Professor Evans maintains that the public health portion of the Privacy Rule is not entitled to Chevron or Skidmore deference where its interpretation is contrary to the statute and the agency did not offer a persuasive account to justify its interpretations. Rather, “the HIPAA statute preempts state privacy laws even ones that are more stringent than the HIPAA privacy Rule in situations where state laws would interfere with public health surveillance and investigations.”
Professor Evans attributes the inconsistency between the Privacy Rule and HIPAA to politically savvy rather than incompetent agency drafting.Â She asserts that HHS was aware that states were afraid that their privacy laws would be preempted, and thus the agency took a modest approach in the Privacy Rule, leaving unspoken the effect of the third prong on more stringent state laws in the limited context of enumerated public health activities.Â The statutory text, however, reflects Congress’s choice to Â ”trust no institution other than itself” to “strike the balance between privacy and competing public interests.”Â There was a conscious choice not to permit a patchwork of varying state laws to frustrate the development of multi-state, interoperable databases needed for the enumerated public health activities.
This article breathes new life into statutory language that has been largely overlooked in the sixteen years since HIPAA’s enactment and is critical reading for anyone interested in public health surveillance, investigation, and privacy law.Â Professor Evans argues that facilitating access to large-scale, multi-state, interoperable databases of health-related data for tens or even hundreds of millions of people could speed “the detection of drug safety risks, unmask ineffective or wasteful treatments, and understand disparities in health outcomes among various populations subgroups,” while “unduly restrict[ing] access to data and biospecimens can very literally kill people.”
The article closes with an invitation to scholars for further “dialogue about [HIPAA']s forgotten preemption provision,” an invitation the health law community would be wise to accept.Â While she readily acknowledges that her conclusions are unorthodox, Â they will undoubtedly generate substantial and serious academic discussion.
Another important article for interoperability policymaking is Leslie P. Francis ’s article, “Skeletons in the Family Medical Closet: Access of Personal Representatives to Interoperable Medical Records,” which recently was posted to SSRN and was published in volume 4, issue 2 of the 2011 Saint Louis University Journal of Health Law & Policy .
With HIPAA’s Privacy Rule and the HITECH Act, federal law now grants patients the right to access their own medical records, including EHRs, with some limitations for certain records, such as psychotherapy notes.Â Importantly,Â personal representatives now generally enjoy the same rights of access to medical records that patients themselves hold, consistent with state law.
In addition, although HIPAA preempts state laws that are inconsistent with federal law, HIPAA generally (see Professor Evan’s important caveat above) does not preempt state laws that protect privacy more stringently than federal law.Â A state law is deemed more stringent when, for example, it provides individuals with greater access to their health information.Â As a result, “states may expand the individual right of access to health information, but may not contract it.”
The article points out an unintended consequence of such an expansion, however, given federal law on access: states that provide equal rights of access to patients and their representatives would be expanding personal representative access in step with any increased rights for patients.
But given the breadth of interoperable EHRs, patients may not want or expect their personal representatives to have access equal in scope to their own.Â Interoperable EHRs may very well Â contain records of medical care that are not directly relevant to the patients’ current care and that patients may not want their personal representatives to see.Â Professor Francis offers the example of an older patient being treated for a stroke who may not want her child to learn about her prior, unrelated pregnancy termination or psychiatric history - what Professor Francis calls “the metaphorical skeletons in her closet.”
The article thus explores the extent to which states may protect patient privacy and confidentiality in this legal framework by regulating personal representatives’ access to patient records.Â Â Â For example, although states generally either grant or deny personal representatives access to patient records, Professor Francis details how some have been more nuanced.Â For example, some permit patients to use advance directives to define the scope of access by personal representatives, such as on a need to know basis, while others restrict personal representative access to mental health or substance abuse treatment records.
Given the importance of respect for private autonomy, Professor Francis then makes four recommendations:
(1)Â Â Â Advance directive statutes should permit competent patients to designate the scope of their personal representatives’ access to interoperable medical records, ideally with respect to specific types of information, such as mental health, substance abuse, and reproductive history, and options such as all information, information only as needed to make care decisions, or no information.
(2)Â Â Â When patients do not have advance directives, there should be a presumption that personal representatives only have access to records needed for decision making about their care.
(3)Â Â Â Interoperable medical records should be designed to permit special management of sensitive medical information, such as mental health or substance abuse treatment records, to which personal representatives would have access only when necessary for emergency care.
(4)Â Â Â These recommendations generally should apply regardless if patients have mental illness or cognitive disabilities.
In Not Sick Yet: Food-Safety-Impact Litigation and Barriers to Justiciability (forthcoming in the Brooklyn Law Review), Diana R.H. Winters focuses on a number of hurdles that must be cleared by plaintiffs challenging the “behemoth” that is America’s food safety regulatory apparatus.Â Among these hurdles, “[p]laintiffs in food-safety-impact suits must find a way to show that they have suffered concrete and particularized injury from the challenged regulation although they have not contracted a foodborne illness.”
At least in certain circuits, plaintiffs can show the requisite concrete and particularized injury by “alleging an increased risk of contracting foodborne illness because of an established governmental policy.”Â The Second Circuit, for example, held in Baur v. Veneman that “[a]lthough this type of injury has been most commonly recognized in environmental cases, the reasons for treating enhanced risk as sufficient injury-in-fact in the environmental context extend by analogy to consumer food and drug safety suits.Â Like threatened environmental harm, the potential harm from exposure to dangerous food products or drugs ‘is by nature probabilistic,’ yet an unreasonable exposure to risk may itself cause cognizable injury.”
I recommend Professor Winters’ article for her cogent analysis of the litigation challenges that arise when a food-safety-impact plaintiff’s only harm is exposure to allegedly unreasonable risk (which, as the Second Circuit points out, has obvious implications for drug safety litigation).Â However, her article is also well-worth reading for its overview of the “inefficiencies, inconsistencies, and even some absurdities” that characterize federal agency oversight of food safety and for its very interesting discussion of the significance of the lack of a well-organized food-safety-impact plaintiff movement.
I also recommend Against Liability for Private Risk-Exposure (forthcoming in the Harvard Journal of Law and Public Policy), in which Sheila B. Scheuerman focuses, like Professor Winters, on suits brought by plaintiffs whose only harm is exposure to allegedly unreasonable risk.Â While Professor Winters’ article addresses Administrative Procedure Act suits brought against government agencies, Professor Scheuerman discusses tort and warranty suits brought against private companies.Â Establishing a concrete and particularized injury is a hurdle confronting “no injury” plaintiffs in cases brought against corporations as it is in cases brought against the government.Â Plaintiffs in tort and warranty cases do not typically allege that they suffered emotional harm as a result of their risk of exposure, or that they suffered economic harm because they sold the product at issue at a reduced value, because allegations such as these would raise “individual issues, thereby precluding class certification.”
In Cole v. General Motors, a Fifth Circuit case, the class representatives “brought claims for breach of the implied warranty of merchantability and breach of the express warranty against a car manufacturer based on alleged defects in the car’s air bag system.”Â The Cole court allowed the case to proceed, on the grounds that while the plaintiffs had not sustained physical harm as a result of the air bag issue, they had sustained “‘actual economic harm … emanating from the loss of their benefit of the bargain.”Â As one could guess from the title of her article, Professor Scheuerman believes that Cole and the other similar cases she discusses were wrongly decided and that “[a]llowing liability for private-risk exposure is not justified by any of the dominant rationales for the tort or warranty law.”Â She quotes with approval a court that held that allowing such liability only benefits “‘the lawyers handling the case and perhaps the few consumers directly involved in the litigation,’” and notes that the class representatives in Cole consisted of a paralegal who worked for plaintiffs’ counsel, the paralegal’s cousin, and the mother of one of plaintiffs’ counsel.Â Professor Scheuerman concludes that “the solution to encouraging risk reduction by manufacturers, without exposing companies to bankrupting litigation, lies with government regulation.”Â Coming full circle, it is worth noting that none of the arguments Professor Scheuerman makes against no-injury tort and warranty suits would apply to preclude no-injury suits of the sort that Professor Winters discusses, brought to challenge-or enforce-such regulation.
Through its Center for Health & Pharmaceutical Law & Policy, Seton Hall Law School offers 3 graduate certificate programs in Pharmaceutical & Medical Device Law & Compliance. These flexible, 8-week certificate programs are designed for professionals seeking to enhance their knowledge about legal, regulatory, and ethical issues within the pharmaceutical and medical device industries. Featuring intensive, individualized feedback, the programs provide both an immersion in key substantive issues and an opportunity to develop the practical skills necessary to research and communicate effectively about the law. Online classes for the Bringing Products to Market Certificate start on October 7, 2012.
The Pharmaceutical & Medical Device Law & Compliance Certificate: Bringing Products to Market covers the following topics:
It takes 8 weeks to complete the certificate program.Â All coursework must be completed in the sequence in which it is offered. Students should plan to spend 6-8 hours per week on online coursework, including reading assignments, research and writing projects, and online discussions.
Seton Hall Law School’s online Graduate Certificate Programs are offered during our Spring, Summer, and Fall semesters.Â Start dates for upcoming offerings of the Bring Products to Market certificate and are indicated in the Certificates At-A-Glance section .
No. While the program is specifically designed to meet the needs of mid- to senior-level professionals in the pharmaceutical and medical device industries, it is also open to qualified students from other backgrounds.
Applicants must submit the following:
No entrance exam is required for admission. However, international applicants who are not native speakers of English must submit a TOEFL score.
Chaplain Sharon Hindle
[Ed. note, we are pleased to welcome Suzan Sanal to HRW. A second year law student at Seton Hall University School of Law pursuing a Health Law concentration, she is a representative of Seton Hall's Health Law Forum and is presently interning at the Community Health Law Project, a New Jersey based nonprofit advocacy and legal services organization, working on issues relating to the Affordable Care Act and grant writing.]
As Health Reform Watch author Jae W. Joo wrote back in 2010 , studies have shown a “woeful lack of communication (and a wide gap in perception) between hospital staff physicians and ‘their’ patients.” Chaplain Sharon Hindle, oncology chaplain and educator at Robert Wood Johnson University Hospital, knows this woe all too well.Â Hindle began in 1998 working as a hospital chaplain to comfort patients during the most traumatic period of their lives.Â She soon found out, however, that patients not only need comfort, but they also need advocacy.
“I end up being a liaison between the doctors and the patients,” Hindle stated in an interview with Health Reform Watch. “I really felt that people were the most vulnerable and the least capable at this point in their life, because they don’t know the language and they’re making a life altering decision. I became a chaplain because I first wanted to become an advocate.”
Hindle places blame on medical education, “There are very few opportunities where [medical students] are being told how to communicate the medical information that they have to the patient.”Â In response to this, Hindle began running workshops for medical students, interns, and fellows in order to address patient concerns. Through these workshops, she said, “We’re teaching physicians to be engaging, loving, caring, and intuitive.”
These workshops teach skills such as how to have a family meeting, how to deliver bad news, and how to train the patient to provide self-care. In these workshops, Hindle stresses two questions physicians should be asking their patients, the first being “Can you tell me about your medical situation?” From this, physicians can gather what the patient, or the family member if the patient is not conscious, understands and assess their intellectual, language, and emotional skills.Â Hindle said, “That question gives you their starting line- that way you don’t offend, patronize, or start way ahead of the patient or family’s capability to comprehend.”Â She described that doctors sometimes think that a patient is experiencing denial if they do not seem to understand the gravity of the situation, when in fact, the patient simply does not comprehend his or her diagnosis.
The second question is “Do you have any questions before we begin this conversation?” Hindle said that asking this question before communicating medical information allows the patient and the family to “Open-up their listening skills because they’re no longer ruminating about what questions they need to ask.”
At the cardiac and neurology intensive care units workshop held in Robert Wood, she meets with students during their one-month rotation.Â Hindle teaches the importance of asking these two questions and holds a discussion on a current case where students are having difficulty communicating to the patient and/or the patient’s family. At the University of Medicine and Dentistry of New Jersey (UMDNJ), she participates on a panel that includes a social worker, a physician, and a psychiatrist.Â The panel reviews a case and each professional discusses their role in interacting with the patient. Students may then ask questions.
There are also opportunities for students to participate in small groups reviewing a mock case study with an attending physician and professor at UMDNJ and a professional considered trained in verbal skills, like Hindle. In review of these mock scenarios, Hindle says, “When you are telling someone that they have a life-threatening or life-ending illness, it’s terrifying because you don’t know how the patient and the family is going to react, so it sets-up a situation where maybe these young medical students try to dance around it and make it seem less catastrophic than it is.Â It’s important for them to practice the words coming out of their mouth.”
Hindle finds that family practice and oncology are probably the most engaged specialties in running these workshops.Â She labels these types of fields as “relational,” because the physician may have a relationship with this patient over a lifetime, which is why she stresses the value of communication.Â Hindle contrasts these types of fields with specialties such as surgery and orthopedics, where a patient may have only a short-term relationship with a doctor.Â She therefore believes there is less of a need for refined communication skills with this second group. Hindle said, “If I need brain surgery, I don’t care if the guy’s a jerk, I just need him to do this brain surgery once.Â I just need him to be the best brain surgeon in the world.Â But If I need a physician that I’m going to have a relationship with, there needs to be a symbiotic relationship where there’s trust.Â Trust that I’m heard.”
If patients do not feel that a symbiotic relationship is present, Hindle strongly encourages patients to speak up. “As a patient, you need to be your own advocate,” Hindle said.Â She continues, “If, in fact, you do not believe you are being heard, you need to speak up until you believe you’ve been heard.Â Nobody is going to know your body as well as you.Â It’s terrible, but you’re a consumer.”
Other particular areas which Hindle believes need to be addressed are: teaching physicians how to cope with loss, failure, and rejection. She believes there is a need to have an appropriate connection with a patient while not becoming emotionally involved.
In the broad view , Hindle understands that good communication with a doctor can have a profound impact on the patient’s physical well-being and recovery. Hindle said, “My feeling is that our body only has so much energy. [...] If you feel you’ve been heard by your medical team, it really alleviates stress.Â Your body can now use all of that towards healing.” In close, Hindle continues to feel encouraged about the strengthening of patient-doctor communication, “In the ten years I’ve been at Robert Wood, I’ve seen a tremendous difference in the patient perception on communication.Â They see that on the whole, doctors are communicating better and they really do care.”
Chaplain Sharon Hindle is an oncology chaplain and educator at Robert Wood Johnson University Hospital in New Brunswick, New Jersey.Â She also volunteers her expertise at the University of Medicine and Dentistry of New Jersey.Â Hindle has a blog entitled “Taken Oasis” (
I’ve noted the issues raised by financialization inÂ nursing homes , billing &Â payment systems , and hospitalÂ chains before on blogs. Â I wanted to present a few paragraphs from aÂ recent book review (of Robert Shiller’sÂ Finance and the Good Society), whichÂ explore the problems raised by the finance sector’s interaction with pharma:
Whether we are contemplatingÂ drug shortages orÂ lack of innovation in antibiotics, we should always complement critiques of policy failures with critical examination of the financial methods of those at the commanding heights of the economy. Â Contemporary financialization is agnostic to human outcomes. We should not be surprised if it generates some troubling ones in health care.
The last thirty years have witnessed an exponential rise in financialization , the reduction of exchanged value in an economy (past or present, tangible or intangible) into financial instruments. Monetary promises that once seemed like fanciful bets were rationalized into derivatives (contracts that derived their value based on other price levels). Â As these contracts and other forms of betting interact with advanced computing and telecommunications technology, they can cause volatility, instability, and a short-termist mindset that is inimical to the long-term planning necessary to rational public health and pharmaceutical policy.
On the other hand, there are some aspects of health care reform that will require financial skills. Â Consider, for instance, risk adjustment among insurers, which can only be done well given complex modeling. There is a very good brief on the topic now available at Health Affairs.Â Â The brief notes that, “Health insurance plans having costs at least 3 percent more than target projections will receive payments that have been assessed from plans having costs at least 3 percent less than projections.”Â As they explain,
Perhaps redundant Wall Street quants could step into these roles? Â As Crotty has noted , the main negative consequences of financialization for some companies in the US are that “1) they cut wages and benefits to workers; Â 2) they engagedÂ in fraud and deception to increase apparent profits and 3) they moved intoÂ financial operations to increase profits.” Â Moving finance workers out of financialization, and into the workaday realities of risk adjustment in health, may be a way to direct those with quantitative skills toward more constructive ends .Â Risk adjustment is one more step toward a utility model for insurers–a welcome change that should be considered throughout the financial sector .
CNBC, NASDAQ, Photo by ed100 via Flickr
The impoverished of the world, at present, freely considering their options in a market economy, have taken to selling their kidneys, valued at roughly $160,000 on the less than open market, to kidney brokers for the approximate sum of, give or take , $10,000 .
At present one may sell a body part legally only in Iran . Thus, as anyone steeped in the strict virtues of Chicago School economics would tell you, the Market in Kidneys suffers at present from “distortions.” The problem, of course, is two fold: the almost universal illegality has added risk to the cost; and limited access to the market has allowed the brokers , through government interference and lack of open competition, to exclude others from their fair share of the profit.
The Kidney Exchange
J. Pierpoint Morgan, 1901 via google/LIFE
Patterned after the stock exchange (or perhaps the commodity exchange is a more apt analog), I propose we create, as part of a market driven health reform initiative, a Kidney Exchange. Value maximization will ensure the free flow of kidneys into the most appropriate markets and the most appropriate recipients.
In the interest of fairness and transparency, full reports on each putative “donor” will be submitted to the exchange by medical clinicians who ( as is the current practice among medical device researchers ) will be paid in stock options in the subjects of their examinations. This stake in the endeavor will ensure commitment to the process. These reports will function as the basis for prospectus and, in the case of those not yet ready for immediate harvest, ongoing quarterly reports.
We would not, of course, limit the purchase of kidneys to those who “ need ” the actual kidneys, as that too would tend to skew the market. “Need” must be determined through the time-tested criteria of the market: availability of, and a willingness to use, investment capital.
Because, however, even with the most thorough information that money can buy, things can on occasion go awry, we will need a market instrument to ensure protection in the event of failure. Kidney Default Swaps (KDS), an insurance of sorts keyed to whether or not the putative “donor” ultimately tenders a viable kidney. Further, KDS could be patterned after the Credit Default Swap–in that we can allow investors with no connection or insurable interest in the transaction to wager freely on the ultimate outcome–thus creating another lucrative market.
Of course, to combat inefficiencies, a wholesale market will ultimately develop, procurement and development syndicates will be set up, and branded groups of similar subjects will be packaged together for large investors like collateralized mortgage securities.
This investor/market driven approach will further ensure the development of a “Pipeline” to enhance quality and dismiss with the vagaries of procurement.
And lest we forget the benefit to the “donor,” the market too will provide for it. Obviously, anyone who has invested a handsome sum in 4 year old boys from Pakistan (”Pak-Neph B4, b. type O+, trading at…”) will have great interest in safeguarding his investment–nourishing well those kidneys until they are ready for harvest upon demand.
Considering the environmental risks involved for the “free range” donor in many prime but impoverished areas, “harvest banks” to house homegrown investments will, of course, be built. Within the sterile confines of such banks, subjects will grow, watered and fed and exercised to ensure sufficient blood flow and proper kidney function. Subjects kept thus would of course demand a premium on the open market.
Furthermore, upon harvest and release into world, such harvest bank subjects can also readily be expected to breed. Uneducated and untrained in any vocation (market contraindicated) one can reasonably expect them to turn over for modest profit the products of their breeding to the market for eventual harvesting–thus ensuring a steady supply of prime kidneys for generations to come. Naturally, the best genetic lines of kidneys will be identified–arrangements can be made (”Pak-Neph B14/Braz-NephG16, b. type AB+, trading at…), profits in accord.
The addition to one’s portfolio of such financial instruments as “Kidney Futures” or “Kidney Options,” will, I believe, prove a handsome reward to savvy holders. And a thriving business in Kidneys could well be just the market innovation that this economy needs to pull it out of its current doldrums. A Kidney Exchange will provide a swift feast of employment and real wealth.Â And of course, we need not be limited to kidneys , there are many other organs that the poor do not, and cannot, use to best advantage.
Gulliver Exhibited to the Brobdingang Farmer, Richard Redgrave (1804-1888)
280 years have passed since Jonathan Swift offered his “ Modest Proposal ” for solving the pangs of poverty in Catholic Ireland through the sale and eating of Irish babies .  Consider this an update of sorts.
There is, however, one distinction between the Swift model that is worth noting: considering the high market value of Irish babies, Swift proposes a preference in procurement for ravenous English Landlords:
A Kidney Exchange, less sentimental but more modern, would, of course, put the preference where the invisible hand of the market deems it best (though under Swift’s criteria theÂ IMF , and World Bank would seem to be theÂ sentimental favorites). In this way it would allow, as we do now with private health insurance, that most efficient of instruments, the market, to decide who lives or dies. Swift notes that before the age of 12, Irish children wereÂ not particularly saleable or employable, and that “They can very seldom pick up a livelihood by stealing till they arrive at six years old.” His solution stems from the following:Â “I have been assured by a very knowing American of my aquaintance in London that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee or a ragout.” His modest proposal: “I do therefore humbly offer it to public consideration that of the hundred and twenty thousand children, already computed, twenty thousand may be reserved for breed…. That the remaining hundred thousand may at a year old be offered in sale to persons of quality and fortune through the kingdom, always advising the mother to let them suck plentifully in the last month, so as to render them plump and fat for a good table.”
The full title of the piece is “A Modest Proposal For Preventing The Children of Poor People In Ireland From Being A Burden To Their Parents Or Country, And For Making Them Beneficial To The Public.” Though most noted for his relatively benign Gulliver’s Travels, Swift’s Modest Proposal helped make him a hero among the Irish.
As Frank Pasquale noted recently at the Health Law Prof Blog and here at HRW , law review scholarship is starting to emerge on the Supreme Court’s holding in National Federation of Independent Business v. Sebelius that the Patient Protection and Affordable Care Act’s expansion of the Medicaid program was an unconstitutionally coercive exercise of Congress’ Spending Clause authority.Â Professor Pasquale recommends Plunging into Endless Difficulties: Medicaid and Coercion in the Healthcare Cases , an article co-authored by Nicole Huberfeld, Elizabeth Weeks Leonard & Kevin Outterson, writing that it is “sure to make an impact.”
Also well worth reading is Samuel R. Bagenstos’ article, The Anti-Leveraging Principle and the Spending Clause after NFIB , which is forthcoming in the Georgetown Law Journal.Â Professor Bagenstos contends that Chief Justice Roberts’ opinion in NFIB is best read narrowly as setting forth a three-part test–which Professor Bagenstos terms the “anti-leveraging principle”–for determining whether a condition Congress places on participation in a joint federal-state program unconstitutionally coerces the states to participate.Â To apply the anti-leveraging principle, one must first ask whether a condition on federal spending “change[s] the terms of participation in [an] entrenched cooperative program[.]” Â The second question is whether the condition leaves a state without a real choice to decline the funds at issue because, for example, there is a “very large amount of money at stake[,]” as there was with the Medicaid expansion.Â The third and final question is whether “Congress was using a state’s desire to continue to participate in a lucrative program as leverage to force the states also to participate in a separate and independent program.”Â Only if the answer to all three questions is yes, Professor Bagenstos contends, should a court find that a spending condition is unconstitutionally coercive.
The final section of Professor Bagenstos’ article, in which he applies the anti-leveraging principle, is particularly interesting.Â Professor Bagenstos analyzes, among other things, the Affordable Care Act’s Medicaid maintenance-of-effort requirement, which Maine Governor Paul LePage has challenged, the Clean Air Act, the No Child Left Behind Act, Mitt Romney’s education reform proposal, and Section 504 of the Rehabilitation Act, and concludes that the Clean Air Act, which requires states to comply with certain provisions on pain of losing federal highway funding, is particularly vulnerable post-NFIB.
Stepping away from the constitutional questions addressed by the Supreme Court in NFIB, Jessica L. Roberts’ article Health Law as Disability Rights Law , which is forthcoming in the Minnesota Law Review, views the Medicaid expansion and other changes the ACA makes through the lens of “the historical division between the health and civil rights paradigms within disability law.”Â As Professor Roberts explains, in the 1970s and beyond, disability rights activists actively rejected the health paradigm as grounded in an outdated, medical model of disability that failed to recognize that the barriers to access that people with disabilities faced had a strong social component.Â The civil rights paradigm has its limits, though.Â Courts have been reluctant to apply civil rights legislation such as the Rehabilitation Act and the Americans with Disabilities Act to Medicaid and other public programs “in a manner that ensures health-care services for people with disabilities.”Â In the landmark Supreme Court case Alexander v. Choate, for example, the Court found that a state Medicaid program’s fourteen-day limit on in-patient hospital care did not discriminate against people with disabilities.Â In so doing, the Court “construed the benefit at stake as a ‘package of health care services,’ not adequate, equitable, or accessible health care.”Â Professor Roberts argues that “the ACA’s changes to public health insurance hold the promise to eliminate those barriers previously experienced by people with disabilities and, consequently, to reduce existing health disparities.”Â Thus, while the Medicaid expansion and certain of the Act’s other changes “fall under the health law umbrella substantively, insofar as they promote access and equality for people with disabilities, they make a civil rights law impact.”Â Professor Roberts’ article is thoroughgoing and thoughtful; I highly recommend it.
More than two years ago, the Federal Drug Enforcement Administration (DEA) issued interim final regulations permitting practitioners to issue and pharmacists to fill electronic prescriptions for controlled dangerous substances (”CDS”) (see, e.g., 21 C.F.R. Â§ 1306.08).Â Regulations of the New Jersey State Board of Medical Examiners (N.J.A.C. Â§ 13:35-7.4A(g)-(h)) and Board of Pharmacy (N.J.A.C. Â§ 13:39-7.11(h)-(i)) similarly permit electronic CDS prescriptions, subject to certain requirements.Â But the State’s CDS regulations do not currently permit electronic CDS prescriptions (N.J.A.C. Â§ 13:45H-7.8).
On August 20, 2012, Eric T. Kanefsky, the Acting Director of New Jersey’s Department of Consumer Affairs (”DCA”), proposed regulations to resolve this regulatory inconsistency.Â DCA would add a new rule, N.J.A.C. Â§ 13:45H-7.20, which would permit “[a]n individual practitioner [to] issue, and a pharmacist [to] accept for dispensing, an electronic prescription for a controlled dangerous substance, consistent with the requirements of this chapter and Federal law.”Â This proposed rule would define “electronic prescription” as “a prescription that is transmitted by a computer device in a secure manner, including computer-to-computer and computer-to-facsimile transmissions.”Â DCA also proposes to amend N.J.A.C. Â§ 13:45H-7.8 to expressly permit an electronic prescription for Schedule II narcotics “[i]f permitted by Federal law, and in accordance with Federal requirements.”
These Federal requirements, set forth in 21 C.F.R. Parts 1300, 1304, 1306, and 1311 , include provisions intended to balance the desire to permit the use of modern technology while “maintaining the closed system of controls on controlled substances dispensing” (75 Fed. Reg. 16236).Â Thus, if DCA ultimately adopts these rules, New Jersey prescribers and pharmacists seeking to exercise their option to issue or fill electronic prescriptions will need to ensure that they comply with all Federal rules, including, as DCA’s proposed rule reminds, a requirement for a third-party audit by a DEA-approved certification organization to verify that the technology used satisfies DEA security standards (see 21 C.F.R. Â§ 1311.300).
In addition to “eliminating any confusion that may exist with respect to filling electronic prescriptions for controlled dangerous substances,” DCA also believes that “[e]lectronic prescriptions are more efficient and less susceptible to errors.”Â With proper controls and checks, electronic prescriptions can make it more difficult for patients to try to fill fraudulent prescriptions by, for example, forging doctor’s signatures on stolen prescription blanks or altering the dosage that the doctor prescribed. Electronic prescriptions also support other health care reform initiatives, including increasing the use of electronic medical records, which can facilitate improved care coordination.
The public may comment on DCA’s proposal until October 19, 2012.Â But given the potential advantages of electronic prescriptions and the strong controls required by Federal law to prevent their abuse, I would expect the comment to be light and these regulations to be adopted.