Supreme Court Decision May Have Sweeping Effects on Healthcare, Experts Say

A Supreme Court ruling on Friday that reigns in the power of federal agencies could have far-reaching impacts on healthcare, from drug approvals to nursing home regulations and Medicare drug price negotiations.

Moreover, an onslaught of legal challenges in its wake will likely delay rulemaking by agencies including the FDA and the Centers for Medicare & Medicaid Services (CMS).

The ruling overturned the Chevron doctrine, which originated from a 1984 decision that told courts that whenever a dispute emerges over regulating an ambiguous law, judges should defer to the interpretation of federal agencies, assuming those interpretations are reasonable.

The Medicare statute itself is “tremendously ambiguous,” Jacob Harper, JD, a partner at Morgan Lewis in Washington, D.C., told MedPage Today. “Virtually every decision that the agency makes could be subject to some kind of post-Chevron challenge.”

What the court determined, Harper explained, is that while agencies, as subject matter experts, play a role in interpreting the law, they should not automatically receive deference, constitutionally speaking.

“So, while they certainly can posit an interpretation, and it might be a very good interpretation, it doesn’t necessarily mean that the court has to agree with that interpretation every time,” he said, noting that the decision is “almost a double-edged sword.”

Drug Approvals Upended

Reshma Ramachandran, MD, MPP, MHS, of Yale School of Medicine in New Haven, Connecticut, said the decision has the potential to wreak havoc on FDA drug and device approvals.

The FDA might reject a new product from a company targeting a rare disease on the grounds that it hasn’t met the agency’s standard of an “adequate and well-controlled investigation,” she said, explaining that drugs for rare diseases usually need some regulatory flexibility given the small population that needs them.

Now, the drug company can challenge the FDA’s interpretation of its own standard, she pointed out.

The problem is magnified for approvals in areas where the FDA doesn’t yet have a clear standard written in statute, such as laboratory-developed tests, artificial intelligence, and digital health technologies, Ramachandran said. “That’s where a challenge can immediately occur.”

Stacy Cline Amin, JD, a partner at Morrison Foerster in Washington, D.C., told MedPage Today that she anticipates a “tremendous diversion of resources” relating to FDA lawyers and other staff who will need to craft legal memos to support drug and device approvals to prepare for challenges.

This is something the agency already does in cases in which litigation is expected, but it requires “a huge amount of effort … [and] will just divert resources from FDA’s core mission and make product approvals take longer and cost more,” she noted.

Amin also said that she anticipates that laboratory-developed tests and drug importation are “probably first on the list” of legal challenges. A final rule on laboratory-developed tests, which are used to measure or detect markers to help diagnose, monitor, or treat patients, was issued in April to mixed reviews.

Overall, Amin predicts a “huge increase in litigation,” the uncertainty from which could be destabilizing for industry.

Renewed Medication Abortion Challenges

The abortion medication mifepristone (Mifeprex) could also fall under new scrutiny because of the Chevron decision and another Supreme Court decision — Corner Post, Inc. v. Board of Governors of the Federal Reserve System — that expanded the deadline for filing a lawsuit from 6 years after a rule has been finalized to 6 years after an entity was affected by the rule.

A third Supreme Court case centering on access to mifepristone — FDA v. the Alliance for Hippocratic Medicine — was dismissed in mid-June for procedural reasons. In this case, the justices ruled that the group of anti-abortion doctors who sued over the approval of mifepristone do not actually have the right to sue — known as “standing” — because they haven’t been harmed by FDA’s approval and subsequent actions to remove barriers to accessing the drug.

Because the Corner Post decision increased the length of time allowed for filing, “mifepristone’s original approval is now on the table,” Ramachandran suggested.

The Chevron decision will also affect agencies’ ability to move quickly, particularly in the face of something unexpected like a pandemic, because agencies will be constantly “looking over their shoulder” for the next legal challenge, she added.

Nursing Home Staffing Rules, Medicare Drug Price Negotiation

Another area ripe for a challenge is nursing home staffing ratios, Harper said, suggesting that there’s “some daylight” between the statute itself and CMS’s implementation.

Those gaps and inconsistencies could lead some to argue that the statute is ambiguous “and the better reading is X, Y, and Z, because of these reasons,” he said. If a court agrees, it could declare the rule invalid and unenforceable.

Asked about the Inflation Reduction Act, which gave HHS the right to negotiate Medicare drug prices (a move already challenged by multiple lawsuits), Harper said parties will “look very closely” at how the rules are implemented to find ways to challenge them, based on inconsistencies with the underlying statute.

As a last example, Harper pointed to statutes in the Medicare and Medicaid Act regarding the concept of medical necessity, which is central to coverage determinations for countless services and products, including durable medical equipment. For years, CMS neglected to specifically define medical necessity, Harper said. In cases in which the agency’s interpretation of medical necessity isn’t clear, it’s likely to be challenged.

Harper said he doesn’t expect a wave of litigation to shut down the healthcare system, but broad changes in how the system operates going forward are likely.

An ‘Unworkable’ Doctrine

Friday’s decision overturning the Chevron doctrine came in response to two separate lawsuits: Relentless, Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo. In each case, fishermen challenged a requirement that they pay a fee to have government-mandated observers monitor their fish intake.

Ramachandran said that a seemingly “innocuous” case about fishing boats has become an avenue for those who support ideology over science, and deregulation over public health protection. “The implications of the case are pretty frightening.”

In the majority opinion for the 6-3 ruling, Chief Justice John Roberts wrote that the doctrine had shown itself to be “unworkable” because its most critical feature is ambiguity, which has always been challenging to define. Therefore, “courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority,” said Harper.

Healthcare lawyers depend on agencies to advise clients on regulatory guidance, but also to provide informal, off-the-record assistance on how to interpret how a statute or regulation works.

Harper said he is worried that getting questions about regulatory compliance answered will be that much more difficult because the next step in the event of a disagreement is to take the issue to court.

Leigh Feldman, JD, of McDermott + Consulting in Washington, D.C., told MedPage Today that “the doors to the courts are open that much wider” for any potential litigants who disagree with agencies’ interpretation of a statute.

In the past, these same litigants might have weighed the risks and benefits, and because of Chevron, dropped a case.

“Now they’ve got a different calculus … Anything controversial any administration does is now more likely than it was before to be litigated, and litigants are more likely to prevail than they were before,” Feldman said.

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