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The Day the BPCIA Was Struck Down

The latest Supreme Court challenge to the Patient Protection and Affordable Care Act of 2010 (ACA), also known as Obamacare, relates to the interpretation of the tax-credit provisions of the Act and will not affect the Biologics Price Competition and Innovation Act (BPCIA), which was enacted as Title VII to the ACA. As more broadly-focused Supreme Court observers battle déjà vu analyzing the tea leaves of oral argument (transcript here), Biologics Blog marks the occasion by briefly looking back at the previous constitutional challenge to the ACA that culminated in the Act being largely upheld by the Supreme Court in Nat’l Federation of Independent Business v. Sebelius. In that challenge, unlike the present one, the survival of the BPCIA was indeed at stake – and the BPCIA was in fact briefly struck down by one federal judge – although this fact was barely ever mentioned in the extensive debate and commentary on the case.

To be sure, nobody ever directly challenged the constitutionality of the BPCIA. The BPCIA nevertheless was at issue in the constitutional challenges to the so-called individual mandate, the provision requiring most Americans to purchase “minimum essential” health insurance coverage, because of the issue of severability. Unlike many federal statutes, the ACA does not contain a severability clause stating that the remainder of the statute remains in effect if any part of it is held unconstitutional. The challengers in the individual-mandate cases therefore argued that the entire act would be invalid if any part of it was struck down.

On January 31, 2011, Judge Roger Vinson of the Northern District of Florida accepted this argument and, having concluded that the individual-mandate provision was unconstitutional, struck down the ACA in its entirety. Although Judge Vinson did not mention the BPCIA by name, he made clear that his decision applied to all provisions of the ACA, and not just those that related directly to health insurance. Indeed, as Judge Vinson noted, the government had conceded that the insurance reforms of the ACA (such as the requirement that insurers cover pre-existing conditions) were not severable from the individual mandate. As a result, the only severability question in dispute was “whether the Act's other, non-health-insurance-related provisions can stand independently or whether they, too, must fall with the individual mandate.” Judge Vinson concluded that the ACA’s non-health-insurance-related provisions must fall. This included the BPCIA.

The death of the BPCIA was short-lived. Before the challenge reached the Supreme Court, the Eleventh Circuit, although affirming Judge Vinson’s holding that the individual mandate was unconstitutional, reversed his severability conclusion and held that only the individual mandate should be struck down. The Supreme Court appeared to take the issue seriously, allocating one of the three days of ACA-related oral argument to the issue, and seeming to find the issue to be a difficult one during the hearing. Ultimately, of course, the Court did not need to reach the issue of severability because it upheld the mandate as a constitutionally permissible tax.

Although the headline health-insurance provisions of the ACA are once again before the Supreme Court, the BPCIA is now safely beyond the fray, as the petitioners’ statutory challenge does not raise a severability issue or otherwise affect the ACA’s non-health-insurance-related provisions. As the BPCIA’s regulatory pathway and patent-litigation provisions continue to become a reality, it is interesting to recall that they were once not far from being struck down by the federal courts.

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