On August 15, 2024, the Biden Administration announced their successful negotiation for lower prices on 10 high-cost drugs for Medicare enrollees. This marks the first time the government has engaged in price negotiations with drug manufacturers. These negotiations are the result of the Biden Administration’s efforts to ease financial hardship for seniors on Medicare due to prescription drug costs. These drugs are commonly used in the treatment of cancers, heart disease, diabetes and other ailments. These prices are set to take effect in 2026 and are estimated to save Medicare enrollees roughly $1.5 million in out-of-pocket costs in the first year. The government expects to negotiate further price cuts on other drugs in an effort that will bring even more savings to Medicare enrollees.

On August 8, 2024, the Department of Health and Human Services (HHS) published updated civil monetary penalty amounts for HIPAA violations. The updated penalty amounts will be applied to any penalty assessed on or after August 8^th, 2024. HHS is responsible for assessing HIPAA penalties, penalties associated with failing to distribute Summaries of Benefits and Coverage (SBCs) and penalties under the Medicare Secondary Payer statute. These penalties are updated annually to ensure that they increase with inflation and therefore retain their deterrent power against violations.

On June 17th, 2024, the Internal Revenue Service (IRS) and Treasury issued new FAQ guidance clarifying the rules governing educational assistance programs (“Programs”).  These Programs were designed to allow for tax-favored reimbursement of qualified educational expenses. Among other clarifications, the new guidance clarifies that student loan payments are one of a variety of expenses included within the definition of “qualified educational expenses,” and as such, they can be reimbursed on a tax-favored basis.

On June 27, 2024, the U.S. Supreme Court issued a decision in Moyle v. United States, in which it affirmed that the Emergency Medical Treatment and Labor Act (EMTALA) necessitates the performance of emergency medical treatment for abortion, and thus, it preempted an Idaho law that restricted medically necessary abortions. As background, enacted in 1986, EMTALA requires any hospital with an emergency room that receives Medicare funds (virtually all hospitals) to provide stabilizing treatment to anyone who comes to the hospital experiencing an emergency medical condition.

On June 28, 2024, the U.S. Supreme Court overturned the long-standing doctrine of “Chevron deference,” a doctrine that gave significant power to government agencies in interpreting and implementing statutory rules for the statutes those agencies administer. Chevron deference required courts to defer to agencies’ reasonable interpretations of statutory language. While the Court made this decision prospectively, it also specified that previous decisions implementing Chevron deference would not be overturned. Given that most benefits-related rules and regulations are implemented by government agencies, the Court’s decision could spark litigation surrounding benefits rules that have been in place for a long time.

On July 3, 2024, a federal district court in Mississippi issued a nationwide preliminary injunction prohibiting the U.S. Department of Health and Human Services (HHS) from enforcing the gender identity provisions of HHS’ final rule implementing Section 1557 of the Affordable Care Act (ACA). The new final rule under Section 1557 of the ACA (discussed in our E-Alert here) was set to go into effect on July 5, 2024. On the same day, ruling on a separate lawsuit against the same final rule, a federal district court in Texas granted another preliminary injunction against the rule as it applied to Texas and Montana. These injunctions come on the heels of Loper Bright Enterprises v. Raimondo, the recent U.S. Supreme Court decision that overturned 40 years of precedent by ending the Chevron doctrine (also known as “Chevron deference”), a doctrine which required courts to defer to government agencies’ reasonable interpretations of statutory language for statutes those agencies administer. The courts in these decisions reasoned that HHS had overstepped its authority when creating this regulation.

On July 30, 2024, former Wells Fargo employees filed a class action lawsuit against Wells Fargo alleging that the bank and its plan fiduciaries breached their fiduciary duties and mismanaged the bank’s prescription drug benefits program, costing their plan and their employees millions of dollars. Among other allegations, the lawsuit alleges that the plan failed to fulfill their fiduciary duties in selecting Express Scripts as the plan’s pharmacy benefits manager (PBM). One example of mismanagement alleged in the complaint was a plan participant paying nearly $10,000 for a 90-day supply of a generic drug used in the treatment of multiple sclerosis, a prescription that would have cost around $650 without insurance.

This complaint’s allegations closely mirror those made in a class action filed against Johnson & Johnson in February (see our e-Alert here). This lawsuit is the second in what is expected to be a new wave of ERISA class action lawsuits focusing on excessive plan costs and service provider fees.

Louisiana Governor Jeff Landry signed a new bill into law which will take effect October 1st that reclassifies two medications commonly used in abortions as Schedule IV drugs. The two drugs—mifepristone and misoprostol—are drugs used to induce abortions up to ten weeks into a pregnancy. Possessing these drugs without a valid prescription can now be punishable with up to 10 years in prison.