What Does California Attorney General Xavier Becerra’s Record Tell Us about What He Might Do as Secretary of HHS?
By Richard M. Scheffler & Surina A. Khurana
Read a related guest commentary by Richard M. Scheffler on Cal Matters: Three Cases Show Becerra’s Range of Expertise in health Policy
President-elect Joe Biden has nominated Xavier Becerra to serve as the nation’s 25th Secretary of Health and Human Services. A former member of the California State Legislature and the US Congress and, since 2017, the Attorney General of California, Becerra has a lengthy record in health policy.
As the director of the Nicholas C. Petris Center on Health Care Markets and Consumer Welfare, Richard Scheffler has advised and worked with the nominee and his office on numerous occasions and on several key health policy issues in California. These include:
The Case Against Sutter Health
After the release of an independent research report on health care prices in California produced by the Petris Center, Becerra filed a lawsuit against Sutter Health titled People of the State of California, ex. rel. Xavier Becerra v. Sutter Health. The Attorney General’s office had begun investigating Sutter under the leadership of then–Attorney General Kamala Harris but ultimately acted during Becerra’s term.
Months later, the parties reached a landmark settlement that included Sutter Health paying $575 million to compensate employers, unions, and others covered under the class action. The decision limited charges for out-of-network services, increased transparency; ceased anticompetitive bundling of services and products; and eliminated all-or-nothing contracting deals, among other measures.
Before the suit, if an organization wanted to contract with one Sutter hospital, it had to contract with all 24 Sutter hospitals, even if another hospital offered a better deal. This case is the largest and most significant healthcare antitrust case to date.
The attorney general has long acknowledged that without competition in healthcare markets, costs increase dramatically and often fall on those least able to pay their medical bills. Again, Becerra’s understanding of the need for maintaining competition and providing charity care was recently exemplified by the several conditions he imposed on Cedars-Sinai Health System and Huntington Memorial Hospital as he conditionally approved their cross-market affiliation.
The National Stage: Defending the Affordable Care Act
The Attorney General’s impact on accessible health care has extended far beyond the state of California; Becerra has been a leader in defending the Affordable Care Act (ACA) and preserving Americans’ access to healthcare.
A former co-sponsor of Medicare-for-all legislation, Becerra has previously expressed support for a single payer system. Ultimately, he supported the law of the land and aggressively backed the ACA.
Becerra took the lead on California v. Texas, the case recently heard before the Supreme Court, in which Becerra defended the ACA. Representing California and leading 20 states and the District of Columbia, Becerra has gained national recognition for his unwavering support and understanding of the law.
Women’s Right to Healthcare
In addition to serving as the leader of the defense of the ACA in the landmark healthcare repeal case, Becerra has also been a fierce defender of women’s access to contraceptive services, having led 14 other state attorneys general in successfully securing a preliminary injunction blocking the Trump Administration’s attempt to deny millions of women and their families access to cost-free birth control by allowing employers to interfere with their healthcare.
Since then, further legal challenges have attempted to undermine efforts protecting birth control coverage. Becerra has continued to defend women’s access to birth control and, with Massachusetts Attorney General Maura Healey, Becerra led a coalition of 21 state attorneys general in filing an amicus brief in the Supreme Court defending contraceptive coverage and counseling as mandated under the ACA. The case surrounding the expanded religious and moral exemptions to the ACA’s contraceptive mandate, however, was ultimately brought to the Supreme Court which reversed a lower court’s opinion and upheld Trump-era rules in a 7-2 decision.
Nevertheless, Becerra’s defense of the ACA highlights his leadership in defending and protecting access to healthcare for all Americans, especially disenfranchised populations, and his in-depth understanding of the healthcare law itself.
Addressing Drug Affordability: Legislation and Litigation
Taking on pharmaceutical companies is an elusive and daunting task.
Pay-for-delay agreements, in which a company owning a brand name drug will pay a generic company to delay entering the market, are often anticompetitive in nature and have been a major source of the high drug costs plaguing consumers across the country. A Federal Trade Commission study found that pay-for-delay deals cost consumers and taxpayers $3.5 billion in higher drugs costs each year; another study found that such deals delayed the release of generic drugs by an average of five years and forced consumers to pay up to 33 times more for the brand-name options.
In 2019, three pharmaceutical companies settled with California over antitrust violations that included pay-for-delay agreements. Among them was Teva Pharmaceuticals, which agreed to pay the state $69 million for its efforts to keep a generic version of its narcolepsy drug Provigil off the market for nearly six years. Becerra’s office called the deal the largest pay-for-delay settlement received by any state. Given the Office of the Attorney General’s success, the lawsuits led to major legislation for the state.
Preserving Access to Affordable Drugs
In October 2019, California passed AB-824, Preserving Access to Affordable Drugs. The bill’s passage marked a major milestone for the state and the country, as California became the first state to pass pay-for-delay legislation. The law states that a settlement agreement is presumptively anticompetitive, under the Cartwright Act, when an exchange is made that involves a brand-name pharmaceutical company transferring “anything of value” to a generic drug manufacturer in response to the generic manufacturer delaying market entry. It also establishes a stronger basis from which harmful drug pricing practices can be investigated and prosecuted.
Becerra’s role in creating and passing this legislation cannot be overstated. AB-824 was produced by Becerra and Assemblymember Jim Wood. In future years, it may serve as an example for states across the nation that seek to protect patients in their states from the rising costs of medications that are a product of monopoly power and anticompetitive behavior.
However, even prior to its passage and enactment, the legislation encountered obstacles. Among them is a lawsuit filed by the Association for Accessible Medicines (AAM) against Becerra, seeking to prevent the state from enforcing AB-824. Yet the American Antitrust Institute (AAI) has since filed multiple amicus briefs opposing the case and backing the legislation. On two of the briefs, AAI was joined by Public Citizen and Consumer Reports. Becerra is also fighting challenges to the law, filing a brief in October arguing that AAM lacks the standing to challenge AB-824.
Becerra recently began leading a bipartisan coalition of attorneys general in urging the Department of Health and Human Services (HHS) to hold drug manufacturers accountable for unlawfully refusing discounts to those covered through the 340B Drug Pricing Program. The program serves to provide discounted prescription drugs to federally qualified health centers and providers who often serve uninsured and low-income patients. This program, like the coalition urging action from HHS, has substantial bipartisan support as the gravity of denying indigent populations access to medications, especially during the pandemic, is well understood.
Equity During the Pandemic: CARES Act Provider Relief Fund Distribution
Amidst the COVID-19 pandemic, there have been efforts to offset hospitals’ and health care providers’ financial distress through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act (PPPHCEA).
After $50 billion was distributed by the Department of Health and Human Services in the Phase 1 General Distribution, the Attorney General of California requested the Petris Center examine how the provider relief funds were allocated to health systems in California.
We produced two reports for his office that showed that provider relief payments per adjusted patient day were correlated with a hospital’s share of net patient revenue from private insurers and the hospital market concentration in the county that the hospital operates in. Essentially, hospitals with less revenue coming from private insurers and those in less concentrated markets may have not received the aid they needed while systems with more market power received more (see here). Our analysis suggested that future distribution plans should be analyzed to address equity concerns.
Four of the top health policy challenges facing the Biden administration will be to improve competition in health care, repair and expand the ACA, reign in drug prices, and address equity concerns exacerbated by the pandemic. Attorney General Xavier Becerra has demonstrated leadership and has expertise in each of these areas which will serve him and the county should he be confirmed.