ACA Supreme Court Deliberations and Any Impact on Biosimilars?

Back in 2013, the specific questions that were decided by the Supreme Court of the United States (SCOTUS) included: (1) whether Congress exceeded its enumerated powers in Article I of the U.S. Constitution(including its power to lay taxes and to regulate interstate commerce) by requiring that most Americans obtain health insurance by January 1, 2014, or pay a fine (the minimum-coverage provision, also called the “ individual mandate ”) and (2) whether Congress unduly “coerced” state governments into increasing their contributions to Medicaid.

In addition to and related was the temporary risk-corridor program was one of three programs (along with temporary reinsurance and permanent risk-adjustment) the ACA created to stabilize health insurance premiums and backstop insurance companies willing to offer a new and risky product as the ACA was rolled out (i.e., comprehensive, guaranteed issue, individual and small-group insurance that covers preexisting conditions). Those programs were eliminated by the Supreme Court mixed impact decision on the case heard in 2013/2014.

Now we have Texas v. United States that landed in front of the Supreme Court for 2020, Arguments were heard early in November 2020, and a decision expected early 2021 if not in December 2020. 

There are so many political and self-interest group perspectives surrounding any case or decision about the ACA.  Some opine that If the lower court ruling is ultimately upheld, the case, Texas v. United States, has the potential to shake the nation’s entire health care system to its core. For example, it would immediately affect the estimated 20 million people who get their health coverage through programs created under the law. Such catastrophe hasn’t happened in the past and unlikely in the future as programs adjust or unwind.

But ending the ACA all together could create chaos in other parts of the health care system that were directly or indirectly changed under the law’s multitude of provisions — including calorie counts on menus, a pathway for approval of generic copies of expensive biologic drugs (biosimilars, BCPIA).

How we got to this SCOTUS case in 2020 has a few actions to recall after the 2016 Presidential election.

• The tax bill Republicans passed in 2017. The big tax cut bill passed by the GOP Congress in December 2017eliminated the penalty included in the ACA for failure to maintain health insurance coverage. This lawsuit, Texas v. United States, was filed in February 2018 by a group of Republican attorneys general and two governors. They argued that since SCOTUS had upheld the ACA in 2012 specifically because it was a valid exercise of Congress’ taxing power, taking the tax away makes the entire rest of the law unconstitutional.
• State and federal Democrats defending the Affordable Care Act. A group of Democratic attorneys general, led by California’s Xavier Becerra, is arguing that the rest of the ACA remains valid, despite the Republican tax cut legislation.
• Legal scholars — including those who oppose the ACA — consider the Texas case dubious. State and federal arguments from all scholars, political parties or vested interests have weighed in on the Texas case so it’s important to identify the perspective of the scholar or expert who is providing the opinion on the merits of the case. Most tend to identify towards a centrist decision that is not draconian but still adheres to some fundamental constitutional underpinning. Such a ruling could send the issue back to Congress who ultimately has the power to legislate with clear or specific intent as to the purpose of a Congressional Act or action. Separation of powers remains an important consideration in a deadlocked Washington, DC political landscape.

More specific to biosimilars becoming collateral damage, as one example, from any SCOTUS ruling.

I think the outcome of the Affordable Care Act case before the Supreme Court will be similarly mixed as a ruling like last time.  I doubt they will rule the ACA is severable but will keep that door open.  That will cause winners and losers short-term plus reopen the Executive Branch taking Presidential license to issue orders in the absence of Congressional action. If the court strikes down the ACA entirely, biosimilars on the U.S. market or in the FDA approval pipeline would have to either be grandfathered in or face a regulatory wind-down.

More likely due to regulatory discretion included in ACA we would see a continuation of BCPIA intended efforts without much disruption. A likely scenario due to final rules established is that manufacturers be able to continue selling them while they apply for approval through current or the 351(a) pathway. It’s unlikely they would have to conduct additional trials to get that approval given availability of RWE, etc.

It is also possible that Congress could step in and pass legislation essentially reinstating the BPCIA.

Good business practices would recommend that biosimilar manufacturers should be preparing for the possibility of the ACA, and thus the BPCIA, being struck down.  What should they be doing is scenario planning and being prepared for the best or worst and everything in-between.

If biosimilars are not available, this could impact payers that have them on formulary should a disruption occur in their marketing.  As a result, payers like manufacturers need to scenario plan for the potential unavailability of biosimilars.

Another question is could the BPCIA being struck down impact patients / plan members or employees currently receiving biosimilars? Should that scenario happen, there likely would be a wind-down process that includes the FDA along with other health care agencies at the federal level. Coordination of that worst case scenario would likely play out over months and possibly years due to the adverse economic effect of losing a lower product cost option in the marketplace.

Others in the supply or care delivery chain impacted include healthcare professionals (physicians, nurses, pharmacists), pharmacies, specialty pharmacies, wholesalers or distributors, self-funded employer plan sponsors, hospitals, medical offices or clinics, and other care delivery entities currently using biosimilar products.

Healthcare is a complex marketplace with many direct and indirect stakeholders, so change Is difficult. Added to the clinical aspects of this market is the important economic impacts of any change in healthcare as it remains one of the biggest sectors of our economy.  As a result, any and all decisions are inherently complex along with politically charged in trying to make drastic change during this crazy, rollercoaster year of 2020.

Randy Vogenberg, Principal, Institute for Integrated Healthcare And Board Chair, Employer-Provider Interface Council

randy@iih-online.com