Medical Device Daily Washington Editor

A federal judge in Virginia has ruled that the mandatory enrollment provision in the Patient Protection and Affordable Care Act of 2010 (PPACA) is unconstitutional in a decision announced yesterday. The development sets up a showdown between opponents and the federal government in the Supreme Court, although the next normal judicial stopping point would ordinarily be the U.S. Court of Appeals for the Fourth Circuit.

In a 42-page document, Judge Henry Hudson of the U.S. District Court for the Eastern District of Virginia wrote that the enrollment mandate runs afoul of the Commerce Clause of the Constitution inasmuch as such a mandate is an unprecedented requirement to engage in commerce. In his ruling, Hudson said that while a number of issues were raised during the course of the proceedings, they “all seem to distill to the single question of whether or not Congress has the power to regulate – and tax – a citizen's decision not to participate in interstate commerce.“

Hudson added later in his decision that the government posits that the mandate serves as “the vital kinetic link that animates Congress's overall regulatory reform of interstate healthcare and insurance markets,“ but that this use of the Necessary and Proper Clause “is not without limitation“ and “must not violate an independent constitutional prohibition.“

According to the decision, Hudson said that in order for a law to survive a constitutional challenge, “the subject matter must be economic in nature and must affect interstate commerce,“ but “must also involve activity.“ He writes that the federal government had argued that every individual . . . will require healthcare at some point in their lifetime“ and that “purchasing insurance based on a future contingency is an activity that will inevitably affect interstate commerce.“ However, Hudson argues that “such a broad definition of the economic activity subject to congressional regulation lacks logical limitation and is unsupported by Commerce Clause jurisprudence.“ Hence, he decreed, the enrollment mandate “exceeds the constitutional boundaries of congressional power.“

The ruling does not immediately affect the enforcement of any provisions of the law since the enrollment mandate does not go into force until 2014, but the law has been under attack in several other states, and several other lawsuits on the issue have already failed or been dismissed outright. A legal action in Florida is still pending, but Virginia's attorney general Ken Cuccinelli, has suggested that the litigants bypass the Fourth Appeals Court and apply for a writ of certiorari immediately from the Supreme Court of the United States.

The decision drew the expected immediate reaction from various members of Congress. In a Dec. 13 statement, Sen. Tom Harkin (D-Iowa), criticized the lawsuit, noting the party affiliation of Cuccinelli, who is a member of the GOP. Harkin argued that “on the merits, the Virginia Attorney General's suit is clearly wrong,“ stating that a failure to buy insurance does not constitute opting out, but “instead . . . adds more than $1,000 per year to the premiums of American families who act responsibly by having coverage.“ This, Harkin argued, “clearly affects interstate commerce and is thus within Congress' power to regulate.“

Rep. Henry Waxman (D-California), chairman of the House Energy and Commerce Committee, noted in another Dec. 13 statement that there have been “almost 20 cases filed challenging health reform,“ asserting that all other cases that have come to a decision “have been dismissed.“

Waxman continued: “We always knew that there was a chance that one or two judges would buck the clear legal consensus that the law is constitutional, just as some judges once ruled that Social Security was illegal. But one way or another, this question is clearly headed to the Supreme Court. When it gets there, I am confident that cooler heads will prevail and that the health reform law will be upheld in full.“

FDA calls for patient groups on device user fees

In discussions regarding the upcoming device user fee schedule, managers at the Center for Devices and Radiological Health included patient and consumer advocacy groups in a webcast session earlier this year, and CDRH managers announced in yesterday's Federal Register that any such groups are invited to make known their interest in participating.

According to the FR notice, participation by these groups is mandated by law and that the agency will be seeking their input each month throughout the negotiation process. The notice states further that the first meeting will be held Jan. 13, 2011 at a location not disclosed.

Consumer and patient groups criticized the user fee schedule during a recent public meeting on the subject, with one industry critic arguing that PMA fees should be closer to the levels set for fees for new drug applications (Medical Device Daily, Sept. 15, 2010). Patient groups also took the opportunity to assail the 510(k) program as well, saying that the agency should “not continue to approve dangerous [medical] devices just because they're similar to other dangerous devices.“

The current device user fee agreement expires in September 2012 and the agency indicated earlier this year that it hopes to have an agreement to present to Congress by the beginning of 2012.

Congress passes SGR patch for calendar 2011

The Medicare Part B physician fee conundrum will be out of play for another 13 months thanks to a bill passed by Congress last week, but the cost of the one-year patch is expected to run to $15 billion spread out over a decade. However, the bill also extends some Medicaid programs for another $4.6 billion.

Part B doctor fees have worked under the sustainable growth rate (SGR) hangnail for several years, and Congress has always moved in to thwart those cuts, which now stand in excess of 23%, should they be enacted. The latest fix is expected to be offset at least in part by more aggressive recapture of tax credits for citizens who enroll in taxpayer-sponsored healthcare programs. Subsidies for such coverage are expected to apply to those making up to 400% of the federal poverty level.

The legislation pushing aside SGR for 2011 blew past both chambers with nary a whimper, passing the Senate by unanimous consent and leaving only two votes against vs. 409 ayes in the House. The development comes shortly after the patch provided for the month of December that made its way through Congress toward the end of November (Medical Device Daily, Nov. 30, 2010).

Mark McCarty, 703-268-5690