Posted on March 11, 2007 by Jayne E. Juvan

Juvan's Health Law Recap--March 11, 2007--Generics, Drug Importation, Caremark and Oakwood

Welcome to daylight savings time, which has been moved up from April!  Hopefully, the extra sunshine will calm the nerves of those whose blackberries are still an hour behind and whose calendar appointments are incorrect.  My calendar, for example, has shifted all of my lunch appointments to 10:00AM--so I'll either be finding myself drastically early for lunch or having brunch with acquaintances whose calendars are likewise confused.  If only the weather in Cleveland could also be affected by the change and undergo an early 50 degree shift in temperature...

On a more serious note...Generics, Generics, Generics! Generics made news on several fronts last week.  First, on Wednesday, the Senate Committee on Commerce, Science and Transportation Subcommittee on Interstate Commerce, Trade and Tourism reviewed the safety of drug importation.  At the hearing, Billy Tauzin, President and CEO of PhRMA,  stated that the closed system that blocks importation is the only way to ensure a safe supply chain.  Tauzin also launched attacks against those who argue that the cost savings of importation benefits consumers when he stated that "[m]ost of the savings would likely go to third party payers, such as insurance companies and HMOs."  Likewise, Randall W. Lutter, Acting Deputy Commissioner for Policy at the Food and Drug Administration, stated that the risk of receiving counterfeits is drastically increased when drugs are purchased online and that drugs purchased from foreign markets often have similar names but different active ingredients.  So--how is this news item tied to generics?  In his testimony, Lutter emphasized that generics, not imports, are the answer to cost control. 

In related legislation, lawmakers are also continuing to consider whether to ban negotiations between generic drug companies and makers of brand name drugs that effectively delay or prohibit the entry of lower cost drugs to the market.  The details of the hearing are set forth more fully in the post linked to above. 

Finally, lawmakers considered a bill last week that would provide the FDA with the authority to approve generic forms of biotech drugs.  Currently, the FDA lacks this authority because of the difficulty of creating generic equivalents of these drugs, which are made with living organisms.  As reported by the Kaiser Family Foundation, the proposed legislation requires that the drugs be comparable or interchangeable and that the principal molecular features be highly similar to the brand name. 

Merger mania revived!  Caremark RX, Inc. and CVS inched forward toward completion of their merger plan last week when a new proposal offered to increase by an addition $1.50 a special cash dividend, bringing the total to $7.50 per share.  As reported by the Wall Street Journal, the company post-merger would also "commence a cash tender offer for 150 million, or 10% of outstanding shares at a fixed price of $35 each."  The Wall Street Journal views this new offer as bringing "the competing proposals largely in line on a dollar basis" and giving CVS "a significant advantage in its ability to close the deal quickly."  While rival company Express Scripts has also raised its offer, Express Scripts currently does not have regulatory approval of its proposed deal from the Federal Trade Commission. 

Interested in an update on the NLRB's Oakwood decision?  On March 7, the BNA Daily Labor Report, which discussed the early impact of the Oakwood decision, stated that the fallout has thus far not been quite as severe as would have been originally anticipated.  However, while management attorneys speaking at a conference held by the American Bar Association stated that the "decision has not had much impact on supervisory determinations," union attorneys speaking at the same conference claim "that the full impact has yet to be felt." 

As previously discussed on Juvan's Health Law Update,  the NLRB held in Oakwood that charge nurses employed by an acute care hospital executed supervisory authority within the meaning of Section 2(11) of the NLRA because they assigned responsibilities to other nurses and exercised independent judgment in making these assignments.  

 

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Posted on October 8, 2006 by Jayne E. Juvan

Some Charge Nurses Promise Revolt Over NLRB Decision

On Tuesday, the National Labor Relations Board ("NLRB") rendered three decisions that clarified the test applicable to determine whether an individual qualifies as a "supervisor" or an "employee" under the National Labor Relations Act ("NLRA").  One of the NLRB's decisions in particular has left many nurses outraged. 

Under Section 2(11) of the NLRA, the term "supervisor" includes "any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment" (emphasis added).  The distinction regarding whether an individual is a supervisor or an employee under the NLRA is a meaningful one because, while employees have the right under the NLRA to collectively bargain, supervisors do not have the same rights and protections. 

Until these three decisions were handed down, the NLRB rather narrowly construed the term "supervisor."  In a 2001 United States Supreme Court decision, NLRB v. Kentucky River Community Care, 532 U.S. 706 (2001), the Court addressed the status of similar types of employees and criticized the NLRB's interpretation of the term "independent judgment."  The NLRB has now seized upon the opportunity to clarify its interpretation of the phrase "independent judgment" and at the same time also altered its interpretation of the terms "assign" and "responsibility to direct."   

In Oakwood Healthcare, Inc., 348 NLRB No. 37 (Sept. 29, 2006), the NLRB held that charge nurses employed by an acute care hospital executed supervisory authority within the meaning of Section 2(11) of the NLRA because they assigned responsibilities to other nurses and exercised independent judgment in making such assignments.  Specifically, the charge nurses in Oakwood independently exercised their own judgment in "assigning nursing personnel to patients."  The NLRB did, however, distinguish between these nurses and rotating nurses, holding that, because the rotating nurses in this case did not exercise supervisory authority a substantial amount of the time, they were properly characterized as employees under the NLRA. 

The NLRB stated that "assign" means to designate "an employee to a place (such as a location, department or wing), appointing an individual to a time (such as a shift or overtime period), or giving significant overall duties, i.e. tasks, to an employee . . . and refers to the . . . designation of significant overall duties to an employee, not to the . . . ad hoc instruction that the employee perform a discrete task."  An individual has the "responsibility to direct" other employees if the individual "decides what job shall be undertaken next or who shall do it," as long as the individual is also "responsible" and carries out the tasks with "independent judgment."  Finally, an individual exercises "independent judgment" if the individual exercises judgment that is not controlled by another authority and if the degree of discretion arises above the "routine or clerical."

The NLRB has applied this new interpretation in two companion cases.  In Croft Metals, Inc., 348 NLRB No. 38 (Sept. 29, 2006), the NLRB held that lead persons at a manufacturing plant were not supervisors because their employer retained so much control over their decisions that the direction they gave to other employees was simply routine and clerical.  Similarly, in Golden Crest Healthcare Center, 348 NLRB No. 39 (Sept. 29, 2006), the NLRB concluded that the charge nurses at issue were not supervisors because they did not have the authority to assign tasks to other nurses, to require other nurses to stay beyond their shift or to call in off-duty nurses.  Moreover, the annual rating of these nurses based upon their ability to direct other nurses was insufficient to establish that these nurses were actually accountable for the job performance of other nurses.

Many nurses have already begun to revolt against this new interpretation.  The Sacramento Business Journal reports, for example, that over 30,000 nurses have signed pledges promising to strike if their employers attempt to exploit the decision. 

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