Comply With Us

SCOTUS is Back…And So Are We!

October 6, 2021

We’re back friends!  We took a little bit of a summer break, but sadly summer officially ended on September 21st. As much as we are struggling to believe it, it’s already the beginning of October.  

For us, the start of October brings many things.  As working Mamas, it means we are busy getting the Halloween decorations out, giving in to the call of pumpkin spice munchkins at Dunkin, and getting used to all of the back-to-school and fall activity schedule changes.  But as health policy/employee benefits/legal nerds, early October also brings the start of the Supreme Court of the United States’ (SCOTUS) annual term, and you know we can’t resist obsessing a bit about that!  

The SCOTUS docket this term is a doozy. The justices will be dealing with abortion access, gun rights, the separation of church and state, and quite a few other issues that should never be discussed at the Thanksgiving dinner table.  From an employee benefits perspective, though, SCOTUS’ 2021-2022 term looks to be pretty sedate.  It certainly can’t compare to last year, when the High Court not only affirmed the constitutionality of the ACA (again), but also voted 9-0 in Rutledge v. PCMA to narrow the scope of the ERISA preemption.  However, there is one case already on the SCOTUS schedule we will be watching closely – CVS Pharmacy v. Doe.

CVS Pharmacy v. Doe asks if Section 1557 of the ACA creates a private right of action for discrimination on the basis of race, sex, age, and disability in federally funded health programs and activities.  In doing so, the case gets at both the structure of employer-provided group health plans, and the anti-discrimination provisions of the Rehabilitation Act of 1973 as extended by the ACA. Plus, it dances around prescription drug costs and access to specialty medications.  In this class-action case, the respondents (whose anonymity is protected by the use of the name John Doe) are all covered by an employer plan that uses CVS Caremark as the pharmacy benefit manager for specialty medications. Each of the class members also has HIV. 

The case centers around a recent CVS Caremark policy change concerning specialty drug delivery. Previously, individuals could access in-network cost-sharing rates if they went to any pharmacy in a broad plan network to pick up their specialty medications.  They could access in-network rates via mail order delivery. CVS Caremark later changed the parameters for in-network access to specialty drugs, limiting it to either home mail-order delivery or in-person pickup at CVS retail locations only.

CVS Pharmacy v. Doe class members contend this policy disproportionately affects individuals with HIV or AIDS.  They argue the change limits their access to the advice of preferred community pharmacists who have expertise with their specific medications and can track potentially life-threatening drug interactions. Further, they contend CVS Caremark’s actions may leave them vulnerable to issues like shipping errors, medication theft, and privacy violations.  They argue that the policy violates both the federal Rehabilitation Act and the ACA. The Rehabilitation Act prohibits entities that receive federal funds from discriminating against people with disabilities. (CVS Caremark receives federal monies through Medicare and Medicaid reimbursements, among other sources.) Section 1557 of the ACA both enforces the provisions of the Rehabilitation Act and allows private citizens to challenge perceived discrimination embedded in the terms of their health benefit plans.

CVS Pharmacy v. Doe was initially dismissed at the U.S. District Court Level, but the U.S. Court of Appeals for the 9th Circuit vacated part of that decision, finding that the CVS violated both the Rehabilitation Act and the ACA and in doing so harmed the claimants by denying them “medically appropriate dispensing of their medications.” CVS Caremark appealed the case to the SCOTUS, which agreed to consider it during this term and scheduled oral arguments on December 7, 2021. 

We are fascinated by CVS Pharmacy v. Doe for several reasons.  First of all, if SCOTUS rules in favor of John Doe, then all sorts of health plan policies applicable to all plan participants will be at risk.  We can think of many scenarios under which nonquantitative treatment limitations (forgive us) could be considered discriminatory against a limited but distinct group of participants. This could really shake up the way plan limitations, exclusions, and other utilization management policies are formed and executed.  For example, just about every specialty drug benefit we can think of includes benefit access and network limitations. So will all of them need to change their ways?  It also makes us think of all the plan controls on what constitutes “in-network” benefits—as if the No Surprise Act isn’t already hard enough.  

Second, cost control is the reason CVS Caremark and other PBMs give for imposing access and delivery limitations on specialty medications.  So what potential does this case have to impact the price of prescription drugs moving forward? What about other health plan provisions intended to control costs?  

Third, while the CVS Caremark policy in dispute affects employee benefit plans, and all class members are group health plan participants, we find it notable that this is not an ERISA case.  Originally it was—when this case was first filed, the class members asserted that the policy change at issue amounted to a denial of their ERISA-protected benefits and a violation of the Americans with Disabilities Act. But, the U.S. Court of Appeals for the Ninth Circuit affirmed the lower court’s dismissal of the ERISA and ADA claims.  This essentially took those arguments off the table.  So, when SCOTUS agreed to hear the case, it limited its consideration to the question of “whether section 504 of the Rehabilitation Act, and by extension the ACA, provides a disparate-impact cause of action for plaintiffs alleging disability discrimination.”  So, it is not an ERISA case.  Nevertheless, it’s hard to imagine a world in which this case doesn’t have a huge impact on group health benefit plans and plan participants moving forward. 

So, this is what we think about when we allow our minds to wonder. Aren’t you glad that you are friends with us? At least we give you a high benchmark to use to measure your own oddities! What do you think, now that you’ve learned more about it, do you agree CVS Pharmacy v. Doe bears watching? Or should we go back to figuring out what age is too old to trick-or-treat and/or speculating about when/if ever the Biden Administration will issue group health plan compensation disclosure rules or sub-regulatory guidance? Leave us a comment and let us know!