June 21, 2019
June 21, 2019
Last week, the Federal Trade Commission (FTC) partnered with the Food and Drug Administration (FDA) to send warning letters to four manufacturers of e-liquids for electronic cigarettes. The companies, Solace Technologies, Hype City Vapors, Humble Juice Co. and Artist Liquids Laboratories, utilized social media through paid advertisements or direct posts from their accounts to promote their products.
The FDA determined the products were not advertised correctly because they did not contain the required health warning statement, which reads, “WARNING: This product contains nicotine. Nicotine is an addictive chemical.” The FTC and FDA are now requiring the manufacturers to add this warning message to all social media postings – including posts from paid influencers. The companies have been given 15 business days to address the FTC and FDA concerns, or they could face seizure or injunction.
According to Andrew Smith, director of the FTC’s Bureau of Consumer Protection, “These letters are a reminder that companies who use social media influencers to promote their products must comply with all applicable advertising requirements. Moreover, ads must disclose material health or safety risks – in this case, the fact that nicotine is highly addictive.”
President Trump this week announced a new rule which will prompt 800,000 employers to fund health reimbursement accounts (HRAs), which will allow employees to purchase insurance plans on the individual marketplace under the Affordable Care Act (ACA). Previously, these HRAs were only available to cover an employee’s out-of-pocket costs accrued through their plan (co-pays, co-insurance, prescription glasses, etc). Under the ACA, an employer with 50 or more full-time employees must provide health insurance coverage.
The rule will now allow employers the option to provide the HRA funds or provide a traditional group insurance plan. Should an employee select a plan with an HRA, the insurance plan must be ACA-compliant – meaning it meets all the essential health benefits and pre-existing conditions requirements. There is an exemption for employees whose employers offer both group plans and HRAs, allowing them to select short-term, limited duration plans which will lack ACA protections.
Without a clear sense of how many employers will participate, it’s difficult to determine the impact of this rule right now. Should more people purchase plans through HRAs, there’s the potential for growth in the marketplaces, which could lead to lower premiums. Critics are concerned that many will purchase inadequate coverage because they might not fully understand their insurance needs.
We will continue to monitor the story and provide updates.
Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) released their proposal to help protect patients from surprise medical billing, or an unexpected bill from a service outside of a patient’s insurance network. Legislators have been debating how to tackle the issue, with multiple options on the table.
Originally, Sen. Alexander’s preferred option was to make all providers in-network.
“It seemed to me, if the problem was out-of-network doctors, the solution would be to have in-network doctors,” he said.
He changed his position in a compromise to more closely align with the House Energy and Commerce “No Surprises Act,” which sets a benchmark rate for how much a patient will pay based on the median of in-network payments for the region.
The proposal received intense pushback from providers. American Hospital Association Vice President Tom Nickels called the benchmark rate “unworkable.”
“Arbitrary, government-dictated reimbursement would result in significant unintended consequences for patients and create a disincentive for insurers to maintain adequate provider networks, particularly in rural America,” he said.
The legislation is set for mark-up on June 26 and will also include a provision for air ambulances that extends the benchmark for those services as well.
Read Senator Lamar’s press release.
Three drug manufacturers, Merck, Eli Lilly and Amgen, sued the Trump administration this week, challenging part of the administration’s strategy to reduce drug prices—a requirement that drug manufacturers show the list price of their products in direct-to-consumer advertisements. The companies cited freedom of speech concerns and questioned the administration’s authority to force these disclosures.
Health and Human Services Secretary Alex Azar said, “We are telling drug companies today: You’ve got to level with people about what your drugs cost. Put it in the TV ads. Patients have a right to know, and if you’re ashamed of your drug prices, change your drug prices. It’s that simple.”
Azar is the former president of the American division of Eli Lilly, one of the plaintiffs in the case, and has been a big supporter of the president’s efforts to reduce drug prices since joining the administration in 2018.
Opponents of the rule, set to go into effect this summer, claim displaying list prices will only exacerbate the problem. List prices of drugs do not give patients a complete picture, because they don’t account for any product discounts negotiated between the drug makers and insurers or what is covered by a patient’s insurance policy.
According to comments in the lawsuit, the companies felt “Americans deserve accurate information about the price they will pay for prescription drugs,” and [the policy] fails to account for differences among insurance, treatments, and patients themselves.” Without the full picture, patients and consumers who feel the cost is too high may avoid talking with their doctor or may forgo the medication altogether.
We will keep you informed of any developments in the story.