Pharmaceutical and biotechnology advocacy groups claimed Friday that a new U.S. Health and Human Services (HHS) rule affecting drug pricing was initiated in a manner that violates the Administrative Procedure Act (APA) and exceeds the HHS’s legal authority. The Trump Administration rule is set to alter the way healthcare providers are paid for the top fifty prescription medications given to certain Medicare patients.
The Northern District of California complaint contends that without injunctive relief, the change will devastate biotechnological innovation and financially wound healthcare providers.
The plaintiffs are Biotechnology Innovation Organization, self-described as the world’s largest biotechnology trade association, California Life Sciences Association, the state’s biggest life sciences advocacy and business leadership organization, and Biocom California, also an international life sciences advocacy and business organization.
The filing explains that “during the final days of the Trump Administration,” HHS issued the new reimbursement calculation rule. Yet, the plaintiffs aver, the rule was based on “premature conclusions,” and is “not a valid exercise of HHS’s authority to test models.”
Specifically, the complaint argues that the rule was issued in clear violation of the APA’s notice-and-comment requirements. The plaintiffs explain that in November, HHS issued an interim final rule, effective immediately, that will begin altering reimbursement payments as of Jan. 1, 2021. The plaintiffs claim that these actions, purportedly in response to an urgent need to reduce drug prices in light of the COVID-19 Pandemic, institute a rule without soliciting or considering public comment, in violation of procedural mandates.
In addition, the plaintiffs argue, HHS overstepped its authority by using its ostensibly restricted power as an improper “basis for completely rewriting the reimbursement formula Congress enacted.” As a result, they claim, and as the HHS reportedly acknowledges, some healthcare providers may undergo “extreme financial hardship,” and some Medicare patients may receive inferior therapies or end up delaying or forgoing treatment altogether.
A lawsuit similarly crying foul of the Trump administration’s “eleventh hour” enactment was also filed Friday by the Association of Community Cancer Centers, Global Colon Cancer Association, National Infusion Center Association, and Pharmaceutical Research and Manufacturers of America. The District of Maryland complaint seeks an order preventing the defendants from effectuating the law and declaring it unconstitutional and violative of the APA.
In the Northern District of California suit, Biotechnology Innovation Organization and Biocom California are represented by Sidley Austin LLP, and California Life Sciences Association by Covington & Burling LLP.
