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May 2012 Clinical Laboratory News: Regulatory Profiles

Regulatory Profiles

Supreme Court Moves on Diagnostic Patents

In a case that dates back to 2004, the U.S. Supreme Court decided in favor of Mayo Collaborative Services, striking down a patent held by Prometheus over a blood test that helps physicians decide the proper dose of thiopurine, a drug used to treat gastrointestinal illnesses.

Mayo had purchased the test from Prometheus until 2004, when Mayo created its own version of the test. Prometheus sued for patent infringement and to block Mayo’s use of its new version of the test.

The case revolved around whether Prometheus should be able to patent the correlation between blood levels of thiopurine metabolites and the likelihood that the drug dose would be ineffective or harmful—not the assay itself. Mayo argued that this patent should be invalid because the correlation between a drug and the therapeutic effect on the patient is a natural phenomenon and not an invention. The court agreed, finding the patent invalid by a unanimous decision.

In a separate high-profile case concerning patents on human genes, the Supreme Court decided to return the case to the appeals court for further review. In 2009, the American Civil Liberties Union (ACLU) brought the lawsuit against Myriad Genetics and its patents on BRCA1 and BRCA2 genes, used to assess a woman’s risk of developing hereditary breast cancer. The ACLU argued that genes themselves should not be patented, even if taken through an extraction step for testing. The request for Supreme Court review followed a federal appeals court ruling in favor of Myriad in July 2011. That ruling overturned the original lower court decision that agreed with the ACLU and declared the patents invalid.

More on the court’s decisions is available online.

Final Rule Implements Large Medicaid Expansion

One of the largest pieces of the Affordable Care Act yet to be implemented, a final rule from the Department of Health and Human Services (HHS) will expand the Medicaid program to include some 16 million new enrollees beginning in January 2014.

Under the final rule published in the Federal Register, Medicaid will be available to individuals ages 19–64 with incomes up to 133% of the federal poverty level. These changes will become effective in 2014 at the same time as the Affordable Insurance Exchanges begin. The federal government will pay 100% of the cost of the Medicaid expansion for the first 3 years, gradually decreasing to 90% by 2020. States could receive $434 billion in additional funding for Medicaid during this time.

The final rule also makes it easier for eligible individuals and families to enroll in Medicaid and the Children’s Health Insurance Program (CHIP) by coordinating enrollment with the new Affordable Insurance Exchanges. Families will be able to enroll in the appropriate coverage program through a single, online application.

The expansion of Medicaid became a major point of contention in the Supreme Court’s consideration of the Affordable Care Act. The court is expected to publish its decision on the constitutionality of the Medicaid expansion, as well as the Affordable Care Act’s mandate for universal health insurance, in June.

In related news, HHS published a final rule establishing the Affordable Insurance Exchanges, including such information as how health plans will be certified and how consumer eligibility will be determined.

Both final rules are available from the Federal Register website.

House Votes to Repeal Independent Payment Advisory Board

The U.S. House of Representatives voted to repeal the Independent Payment Advisory Board (IPAB) created by the Affordable Care Act. One of the most controversial elements of the healthcare reform law, IPAB is charged with making cuts to Medicare if costs grow too quickly. IPAB recommendations will automatically become law unless blocked by both Congress and the President.

In repealing IPAB, the House passed on a largely partisan vote the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act that includes medical malpractice reforms. The White House has promised to veto the legislation if it reaches the President’s desk.

Beginning April 2013, the Affordable Care Act requires the chief actuary of the Centers for Medicare and Medicaid Services to project whether Medicare per capita spending exceeds the average Consumer Price Index, based on a 5-year period. If so, beginning January 15, 2014, IPAB must submit recommendations to cut Medicare spending. IPAB is prohibited from submitting proposals that would ration care, increase revenues, or change benefits, eligibility, or Medicare beneficiary cost sharing.

According to Republicans who led the repeal effort, a majority of the potential cuts recommended by IPAB will come from Medicare Part B and Medicare Part D provider fees, limiting physician’s and patient’s choices of treatments.

The full text of the bill, H.R. 5, is available from THOMAS.

1000 Genomes Project Data Now on Amazon Cloud

The National Institutes of Health (NIH) has made the world’s largest set of data on human genetic variation—produced by the international 1000 Genomes Project—publicly available on the Amazon Web Services (AWS) cloud. Researchers have been limited in their ability to access and use the data due to the sheer size of the project’s records.

The public-private collaboration to store the data in the AWS cloud allows any researcher to access and analyze the data at a fraction of the cost it would take for their institution to acquire the needed internet bandwidth, data storage, and analytical computing capacity. At 200 terabytes of data, the 1000 Genomes Project currently has some 1,700 of a 2,600 person goal for DNA sequences from 26 populations around the world.

More information about the project is available online.

CMS Clears 27 Accountable Care Organizations

The Centers for Medicare and Medicaid Services (CMS) named 27 Accountable Care Organizations (ACOs) that will participate in the Medicare Shared Savings Program, making them the first full-fledged ACOs under the Affordable Care Act. The Shared Savings Program provides ACOs with the financial incentives to strive for higher quality and lower costs by rewarding groups of providers who meet quality goals. The ACOs get a share in any money they save Medicare compared to benchmarks as long as quality stays high.

These first ACOs will serve an estimated 375,000 beneficiaries in 18 states. The types of organizations included are 10 hospitals, and 13 physician groups.

This new group of ACOs brings the total number of organizations now participating in Medicare shared savings initiatives to 65, which include 32 Pioneer Model ACOs that were announced last December and six Physician Group Practice Transition Demonstration organizations that started in January 2011. According to CMS, many more organizations want to create ACOs, and the agency is reviewing 150 other applications.

More information is available online.