Supreme Court Upholds Constitutionality of the PPACA

Last Thursday, June 28, the Supreme Court upheld the individual mandate and other contested provisions of the Patient Protection and Affordable Care Act (PPACA). In an unexpected 5-4 decision by Chief Justice Roberts and Justices Breyer, Ginsburg, Kagan and Sotomayor, the court held that the tax code penalty used to enforce the individual mandate is a “tax” and, as a result, the mandate and the related penalty are constitutional. The court struck down, however, the Administration’s argument that the mandate is constitutional under the commerce clause.

Republican leaders were quick to label the individual mandate enforcement penalty a “tax” on the middle class that the President and congressional Democrats had previously argued was not a “tax.” House Republican leadership announced they will hold a vote on Wednesday, July 11th to repeal the entire PPACA. Republicans indicated that repeal efforts on individual parts of the PPACA also are not out of the question this year, at least in the House. As to House efforts to repeal the law, Senate Majority Leader Harry Reid said the scheduled House vote to repeal the law is just “a show vote.” Senate Republicans threatened to use budget reconciliation next year – should they acquire 51 seats in the Senate – in an attempt to curtail the law.

States Gain Marginal Win on PPACA Medicaid Challenge

In a 7-2 decision, with regard to whether the PPACA’s Medicaid expansion and provisions to withhold existing Medicaid funding for a state’s noncompliance constitutes coercion, all but Justices Ginsburg and Sotomayor agreed that the penalty amounting to the loss of existing funding does violate the constitution. As a result, a state is free to reject new federal funding for expanding Medicaid to persons up to 133% of the federal poverty level in 2014 and that the federal government is barred from withholding federal funding for the state’s existing Medicaid program. In states that do reject the expansion, those persons who would otherwise become eligible under Medicaid will nonetheless be eligible for federal health insurance subsidies under the health insurance exchanges.

Congress Sends FDA User Fee Bill to President

The Senate voted 92-4 to agree to S. 3187 after the House added the conference agreement on the landmark FDA user fee legislation. The bill, which the Congressional Budget Office (CBO) says would reduce direct spending by $307 million, is awaiting President Obama’s signature to become law. In general, for FY 2013-2017 the bill: reauthorizes the Prescription Drug User Fee Act (PDUFA) and the Medical Device User Fee Authorization (MDUFA); authorizes new generic drug and biosimilars user fee programs; and, among other things, provides new incentives for the development of antibiotics; adds provisions to address drug shortages; adds a new fee program related to rare pediatric diseases; and adds a requirement for the FDA to issue guidance on the use of the Internet and social media to promote FDA regulated medical products.