Even if the U.S. Supreme Court finds a key provision of the Patient Protection & Affordable Care Actto be unconstitutional, it’s likely the medical device tax will live to fight another day.
Kevin Outterson, director of Boston University’s Health Law Program and a blogger on health policy at The Incidental Economist, told MassDevice.com that unless the most conservative position prevails, there will be a separate fight to determine how the Supremes’ ruling will impact the sweeping reforms contained in the President Barack Obama’s landmark legislation.
"The court must look at the issue of ‘severability’," Outterson told us. "The conservatives think that if the mandate is struck down, then the whole law comes down like a stack of cards. The government wants to limit the impact to 2 provisions."
Those provisions are ‘community rating,’ which prohibits insurance companies from charging different rates to people based on their health history, and ‘guaranteed issue,’ requiring insurers to offer coverage to anyone willing to pay for it, both of which "should go if the mandate dies," Outterson said.
That means the provisions directly affecting the medical device and biotechnology industries will stay intact, even if the health insurance mandate is ruled unconstitutional. In other words, the 2.3% medical device tax likely isn’t going anywhere, Outterson told us.
"The device tax is clearly constitutional," he said. "It isn’t in any way tied to the insurance mandate."
The same thing goes for the 12-year data exclusivity period provided by the biosimilar approval pathway for the biotechnology industry.
Outterson said the severability argument is complex, with precedent supporting both sides of the issue. In 2011, Judge Roger Vinson of the U.S. District Court for Northern Florida sided with plaintiffs looking to roll back Obama’s health care reform law on constitutional grounds, saying the law in its entirely should be declared "void." But the U.S. Court of Appeals for the 11th Circuit – which, like Vinson, leans conservative, Outterson noted – overruled Vinson on the point of severability in deciding that other parts of the law should remain "legally operative."
Media reports out of the Supreme Court in Washington D.C. today indicate that the Obama administration has had a tough day in court, with New Yorker legal scribe and high court expert Jeffrey Toobin telling CNN today that the hearing was a "train-wreck" for the White House and that "this law looks like it’s going to be struck down."
You can watch the video below, courtesy of Talking Points Memo.