Third Court Puts the Brakes on Trump Administration’s “Most Favored Nation” Drug Pricing Rule

On Dec. 30, Regeneron Pharmaceuticals Inc. won a preliminary injunction preventing the U.S. Department of Health and Human Services (HHS) and other defendants from applying the Trump Administration’s “Most Favored Nation” (MFN) rule to its drug EYLEA (aflibercept) injection (EYLEA). The court found that the pharmaceutical manufacturer, aided by amicus curiae the American Society of Clinical Oncology, showed that the emergency relief measure was warranted under the circumstances.

The court explained that the MFN rule, released on Nov. 20, 2020, mandates that the federal government pay the lowest price offered to any country that is a member of the Organization for Economic Cooperation and Development (OECD) with a comparable per-capita gross domestic product for the top 50 prescription medications covered by Medicare. Notably, the federal government issued the rule without the statutorily required notice-and-comment period.

Like other federal courts ruling on MFN challenges, the court held that the plaintiff’s APA claim has a good chance of prevailing. In part, it ruled that Regeneron likely qualifies for an exception to section 405(h) of the Medicare Act, normally a bar to such litigation, where application of the section “‘would not simply channel review through the agency, but would mean no review at all.’”

Without circuit precedent, the court looked to a sister circuit for guidance as to whether the exception applied. Regeneron argued and the court agreed that neither health care providers nor patients would be inclined to challenge the MFN rule on its behalf. Judge Karas concluded that the suit was the company’s only means of challenging a rule sure to cost it financial and reputation harm. The court also shrugged off the defendants’ proffered reasons for bypassing the notice-and-comment period, in line with other federal courts.

Indeed, the decision is the latest in a trio of overlapping judicial decries: on Dec. 24, 2020, a Maryland court enjoined enforcement of the law for 14 days, and on Dec. 28, 2020, Judge Vince Chhabria of the Northern District of California ruled that “the only appropriate relief is to vacate the interim final rule pending completion of the notice and comment process.”

The plaintiff is represented by Kirkland & Ellis LLP, amicus curiae American Society of Clinical Oncology by Ropes & Gray LLP, and the defendants by the Department of Justice.