In a court filing on September 11, 2013, attorneys for the U.S. Department of Health and Human Services (HHS) announced that HHS intends to issue further guidance on certain new marketing restrictions under HIPAA, finalized last January as part of the final HITECH omnibus rule, and to delay enforcement of those new marketing restrictions until November 7, 2013, instead of commencing enforcement on September 23, 2013, as previously announced.     

Background

The filing is part of a recent court challenge to new HIPAA marketing restrictions, specifically the new requirement that, in order to avoid the need to obtain individual authorization, any financial remuneration made for communications about currently prescribed drugs (e.g., refill reminders) must be reasonably related to the covered entity’s cost of making the communication.  In the preamble to the final rule, HHS explained that “reasonably related” means a third-party may reimburse a covered entity or business associate for costs of labor, supplies, and postage to make the communication.  Financial remuneration for making the communication cannot generate a profit for the covered entity or business associate or include payment for other costs.  We previously addressed this and other aspects of changes to HIPAA’s marketing rules here.

This provision was challenged by Adheris, Inc., a company that provides refill reminders and adherence message services that are often subsidized by pharmaceutical companies.   In the complaint and accompanying memorandum of law, Adheris alleges that the new marketing restrictions violate the First Amendment because the content-based and speaker-based restrictions do not survive heightened scrutiny under Sorrell v. IMS Health, Inc.  In Sorrell, the Supreme Court found that a Vermont law prohibiting pharmacies from selling information about physician prescription practices violated the First Amendment, explaining that “speech in aid of pharmaceutical marketing” is protected by the First Amendment.  Adheris also alleges that HHS’s interpretation does not accord with the statute, in violation of the Administrative Procedure Act.

New Guidance

In a joint motion filed by both parties seeking to suspend the schedule for the plaintiff’s motion to enjoin the rule’s enforcement, the attorneys indicate that HHS “intends to issue further guidance concerning the provision challenged by plaintiff in this litigation” by September 23, the date that enforcement was previously scheduled to begin.  The motion explains that the guidance will pertain to acceptable financial remuneration for refill reminders and other communications about a drug or biologic that is currently being prescribed for an individual.  The motion also indicates that the Secretary will not enforce these restrictions for a period of 45 days, until November 7, 2013.

It remains to be seen whether HHS will reverse course in the new guidance and revert back to the interpretation put forth in the proposed HITECH rule to allow subsidized refill reminders as long as certain notice and opt-out procedures are met or whether HHS will broaden its interpretation of what constitutes “reasonable” compensation for these communications.

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Photo of Anna D. Kraus Anna D. Kraus

Anna Durand Kraus advises on issues relating to the complex array of laws governing the health care industry. Her background as Deputy General Counsel to the U.S. Department of Health and Human Services (“HHS”) gives her broad experience with, and valuable insight into…

Anna Durand Kraus advises on issues relating to the complex array of laws governing the health care industry. Her background as Deputy General Counsel to the U.S. Department of Health and Human Services (“HHS”) gives her broad experience with, and valuable insight into, the programs and issues within the purview of HHS, including Medicare, Medicaid, fraud and abuse, and HIPAA privacy and security. Anna is co-chair of the firm’s Health Care Industry practice group.

Anna regularly advises clients on Medicare reimbursement matters, particularly those arising under Part B and the Part D prescription drug benefit. She also has extensive experience with the Medicaid Drug Rebate program. She assists numerous pharmaceutical and device manufacturers, health care providers, pharmacy benefit managers, and other health care industry stakeholders to navigate the challenges and opportunities presented by the Affordable Care Act.

Anna is a trusted adviser on health information privacy, security and breach notification issues, including those arising under the Health Insurance Portability and Accountability Act (“HIPAA”) and the Health Information Technology for Economic and Clinical Health (“HITECH”) Act. Her background in this area dates back to the issuance of the original HIPAA privacy regulations.

Anna’s clients depend on her to guide them through compliance with the Anti-Kickback statute, the Stark regulations, and other laws preventing fraud and abuse in the health care industry. Her deep knowledge of these laws has made her an important component of the firm’s representation of pharmaceutical companies and health care organizations under federal investigation or facing allegations under the False Claims Act. In addition, clients contemplating acquisitions in the health care sector rely on her to guide due diligence efforts.