Midweek update

Gilead Sciences just came out with its second quarter earnings. Sovaldi sales totalled almost $3.5 billion in the second quarter or around $5.75 billion for the first six months of 2014. The Wall Street Journal reported earlier this week that the prescription drug manufacturers are engage in “unusual” patent litigation / tong wars with Gilead over Sovaldi. CVS officials discuss Gilead’s “unsustainable” pricing policy here.

Speaking of health care costs. Fierce Healthcare reports on a investment bank survey finding that hospital inpatient volumes trend slightly up (0.4%) in the second quarter of 2014, after several years of downward trends. “Researchers attribute the uptick to a combination of the improving economy, the implementation of the Affordable Care Act and patients waiting as long as possible for procedures, compounding demand.”

Yesterday, the U.S. Court of Appeals for the D.C. Circuit ruled that the Affordable Care Act (ACA) does not permit the federal government to pay subsidies to participants in the federal exchanges, only to those in state established exchanges or market places. . The U.S. Court of Appeals for the Fourth Circuit ruled the other way, affirming the Obama Administration’s position.

Employee Benefit News reports that a couple of leading benefits lawyers are predicting that these conflicting decisions could lead the federal government to delay the employer mandate for another year. Evidently the impetus for this prediction is that the employer mandate falls by the wayside if subsidies cannot be paid in the 36 states that use the federal exchanges. Talk about water torture.

The FEHBlog heard a law professor yesterday remark that it would not be a particularly heavy lift for states in the federal exchange to create their own exchanges in the wake of a Supreme Court decision siding with the DC Circuit. In that regard, Maryland is picking up the pieces of its hopelessly broken state exchange and switching to Connecticut’s exchange technology.

Of course, we don’t even know at this point whether the Supreme Court will take the case because there is a high likelihood that the entire bench of active DC Circuit judges (7 Democratic President appointees and 4 Republican appointees) will reverse the panel decision en banc leaving no split in the circuits. The Supreme Court still could take the case, but the lack of circuit split reduces the urgency to do so.

In other legal news, the Hill reports that on Monday the U.S. District Court for the Eastern District of Wisconsin dismissed Sen. Ron Johnson (R Wisc) challenge to OPM’s decision to provide a FEHBP government contribution to members of Congress and their official staffs who have transitioned from the FEHBP to the DC SHOP program, which is part of the ACA’s health insurance market place.  The Hill explains that

The judge dismissed the argument that, without a court challenge, there would be no other way to fix the regulation. Lawmakers can cite the regulation on the campaign trail to sway elections, the judge said, or Congress could use some of its other powers to rein in the executive.
“The Congress itself is surely not helpless to rein in the executive: It has spending authority, investigative powers, and it even wields the blunt instrument of impeachment,” the judge wrote.