Once Upon a Time
Jan 15, 2020


Even as the Academy of Motion Picture Arts and Sciences released its 2020 Oscar nominations, California Governor Gavin Newsom made his bid for actor in a leading role to launch a unique generic prescription drug offering.  This would be the first U.S. state to create a generic label.  The governor proposes to contract with generic drug companies to manufacture medications on the state’s behalf for sale to 40 million Californians.  The goal is to lower prices by increasing competition in the generic drug market. Newsom's proposal would create a single market for drug pricing in California, with companies having to bid to sell their medicine at a uniform price. Governor Newsom is expected to release the plan to the California Legislature later this week.



The United States Supreme Court will hear an appeal that could determine whether states have the right to regulate pharmacy benefit managers (PBMs). The U.S. Court of Appeals for the Eighth Circuit ruled that the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets minimum standards for voluntarily established retirement and health plans in private industry, superseded an Arkansas law that sought to regulate PBMs.  In effect since 2015, Arkansas Act 900 required PBMs to raise reimbursement rates for drugs if they fell below the pharmacy’s wholesale costs and effectively prohibited PBMs from reimbursing pharmacies below the pharmacies’ cost of acquisition.  Pass the popcorn. We’ll be watching this courtroom drama.



The Federal Motor Carrier Safety Administration (FMCSA) set a random drug testing rate of 50% of CDL drivers in 2020, up from 25% in 2019.  At a 50% annual random testing rate, approximately 2.1 million random controlled substances tests will need to be conducted in calendar year 2020, which Secretary of Transportation Elaine Chao predicts will result in an estimated $50 million to $70 million increase in costs to employers in the truck and bus industries.  In related news, employers of commercial drivers also are now required to submit (and query) drug testing data to the new FMCSA CDL Drug and Alcohol Clearinghouse, although the system is experiencing some technical difficulties and “connectivity issues.” 



Nebraska lawmakers pre-filed legislation, in advance of the state’s legislative session, seeking to adopt an evidence-based drug formulary for prescription drugs on Schedules II through V that would apply to all drugs prescribed in connection with workers compensation cases. The bill states that any drug listed on the formulary could be prescribed under workers comp without prior authorization, and mandates that the Nebraska Workers Compensation Court meet with stakeholders including employers, insurers, private and public sector employee representatives, treating physicians, pharmacists, and workers compensation attorneys to develop and adopt the formulary.  In a related story, the California Department of Industrial Relations will hold a public hearing of the Pharmacy and Therapeutics Committee next Wednesday in Oakland, CA to review a set of opioid medications for inclusion in the state’s formulary.



Finally, a three judge panel of the New Jersey Appellate Division ruled a construction company must pay for a former employee’s medical marijuana, which he uses to treat injuries sustained when a truck dumped cement on him nearly 20 years ago.  The employer is ordered to pay the inured worker’s $616 monthly medical marijuana bill as he continues to suffer from injuries he sustained in 2001.  The Court stated in its opinion, “[w]e are satisfied that under the circumstances of this petition, the use of medical marijuana was reasonable and necessary for the treatment of petitioner’s chronic pain.”


Department of Labor


The White House is calling on federal agencies to develop new strategies to reduce injuries in the federal workplace and to help those who are hurt to get back to work more quickly.  Led by the Department of Labor, the Protecting Employees, Enabling Reemployment (PEER) Initiative will task each agency with developing specific strategies and goals to slash injuries on the job and time off of work due to injuries.  Federal employees filed almost 107,000 new workers’ compensation claims in 2018 and received $3 billion in payments.  All agencies, including the U.S. Postal Service, will face a requirement to improve or maintain performance in a series of areas, including total injury and case rates, time lost due to injury and sickness, and filing claims in a timely manner.  The Office of Management and Budget intends for the PEER initiative to “relieve unnecessary suffering by workers and reduce the financial burden of injury on taxpayers.”  Win. Win.



The DOL’s Occupational Safety and Health Administration (OSHA) issued a letter of interpretation for a series of employers in the construction industry concerning audio headphones on worksites.  OSHA made clear that music players and music headphones are not appropriate substitutes for hearing protection.  The safety agency further stated that headphones may be allowed at the employer’s discretion, but employers need to consider whether the use “creates or augments other hazards apart from noise” pursuant to OSHA’s General Duty Clause.  


Making Our Way Around the Country


Speaking at the Consumer Electronics Show last week, Transportation Secretary Chao announced that the U.S. DOT will be rolling out “AV 4.0,” a set of guidelines to ensure a safe, effective growth in Autonomous Vehicle Technology. Through AV 4.0, Secretary Chao seeks “to address legitimate public concerns about safety and security, cybersecurity, because automated vehicles can be “weaponized.” In the skies, the DOT is also going to be working to require remote ID of all drones that are over half a pound that are required to be registered with the FAA, so law enforcement, the military, and the FAA, will know the vehicles occupying airspace.  



Keeping with our continuing coverage on AB5, California’s effort to streamline worker classification, a Los Angeles County Superior Court ruled this week that California law is pre-empted by the Federal Aviation Administration Authorization Act, which largely pre-empts states from regulating interstate motor carriers.  The state court ruled that AB5 doesn’t apply to trucking companies, bolstering an industry push to carve out an exemption from the law targeting “gig-economy” business models. The decision comes after a federal judge extended the California Trucking Association’s request for a temporary restraining order blocking the law’s immediate enforcement for independent truck drivers.  To be continued.



Back to our main story this week, academic research at NYU and the University of California, Davis, suggests that adoption of Medicaid expansion was associated with a 6% lower rate of total opioid overdose deaths, 11% lower rate of death involving heroin, and a 10% lower rate of death involving synthetic opioids.  In all, Medicaid expansion was associated with the prevention of up to 8,132 opioid related deaths.  This news comes as the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing yesterday to highlight how federal funds have helped states combat the opioid crisis and to learn what additional help Congress can provide the states.  We at The Way applaud the efforts of the numerous stakeholders hard at work to protect patients from the potentially serious effects of these powerful, yet critical, medicines.


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