November 17, 2020 - Federal Circuit Insights

Healthcare, Biologics, and Severability: Will the ACA—and the BPCIA—Survive the Latest Challenge?

I was counsel of record on an amicus brief in California v. Texas for four law professors arguing that even if the Affordable Care Act’s individual mandate is unconstitutional, it can be severed from the rest of the statute. This post states my own views, not necessarily those of amicus brief’s signatories.

The Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) is looking alive and well after last week’s Supreme Court oral argument on the Affordable Care Act (“ACA”).

If you didn’t realize the BPCIA was at issue in California v. Texas—the latest of many attempts to invalidate the Affordable Care Act—you are not alone. The BPCIA, a law allowing for FDA approval of “biosimilars” (less expensive versions of already-approved biologic medicines), seems far afield from the Affordable Care Act’s marquee provisions expanding health coverage and reforming health insurance markets.

But the BPCIA was in fact Title VII, Subtitle A of the Affordable Care Act. That provenance has put the BPCIA at risk from the repeated, politically charged attempts to invalidate the entire ACA.

The latest such case argued last week began after Congress amended the ACA in 2017. By then, the Supreme Court in NFIB v. Sebelius had already held that the Affordable Care Act’s “individual mandate” could be construed as a tax and upheld on that basis. But after the 2017 Congress reduced that tax to zero, several Republican states (later joined by the Trump Department of Justice) argued that the mandate could no longer be a tax provision and was now unconstitutional. The challengers further argued that the entire ACA was inseverable from the now-unconstitutional mandate and thus should fall.

The challengers’ inseverability argument for total invalidation extends not just to the ACA’s reforms of the health insurance market (such as its prohibition of coverage denials based on pre-existing conditions) but also to what the Trump DOJ characterized as the statute’s “comparatively ‘minor,’ ancillary provisions”—including the BPCIA.

Manufacturers of biologics and biosimilars might be surprised by the characterization of the BPCIA as “minor” or “ancillary.” The FDA has approved at least 28 biosimilars since 2010.[1] It has been estimated that nine of these drugs alone are already creating more than $250 million in annual market savings.[2]

In any event, after last week’s oral argument it appears that the BPCIA and the rest of the ACA’s provisions—whether characterized as major or minor—are safe. It has been widely expected that the Court’s three more liberal members, Justices Breyer, Sotomayor, and Kagan, would vote to leave the rest of the ACA intact even if the tax-less “mandate” were found unconstitutional. That means at least two of the Court’s six more conservative Justices would also need to support a holding that the “mandate” is severable from the rest of the statute for that position to win. Based on their comments at oral argument, it appears that at least Chief Justice Roberts and Justice Kavanaugh are likely to provide those two critical votes.

For example, Chief Justice Roberts observed that the Court’s severability doctrine requires it to ask “whether Congress would want the rest of the law to survive if an unconstitutional provision were severed” and noted that “here, Congress left the rest of the law intact when it lowered the penalty to zero.” He said “[t]hat seems to be compelling evidence on the question.” Justice Kavanaugh also appeared to lean in favor of severability: “looking at our severability precedents, it does seem fairly clear that the proper remedy would be to sever the mandate provision and leave the rest of the Act in place, the provisions regarding preexisting conditions and the rest.” Making case outcome predictions from oral argument can be perilous, but these statements struck many Court observers as quite definitive.

Yale Law School Professor Abbe Gluck has called the Affordable Care Act “the most challenged—and the most resilient—statute in modern American history.”[3] It appears likely that the statute—and its subpart, the BPCIA—will show its resilience yet again when the Court rules in California v. Texas. Decision is expected by July 2021.


[1] FDA, Biosimilar Product Information: FDA-Approved Biosimilar Products, https://www.fda.gov/drugs/biosimilars/biosimilar-product-information.

[2] Wayne Winegarden, Incenting Competition to Reduce Drug Spending: The Biosimilar Opportunity 4 (2019), https://www.pacificresearch.org/wp-content/uploads/2019/07/BiosimilarsCompetition_F.pdf.

[3] Abbe R. Gluck, Affordable Care Act Entrenchment, 108 Georgetown L.J. 495 (2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3561167.