Maryland Court Enjoins Enforcement of “Most Favored Nation” Drug Pricing Rule for Two Weeks

On Dec. 23, Judge Catherine C. Blake of the District of Maryland granted the plaintiffs’ request for a temporary restraining order (TRO) in a case challenging the Trump administration’s “Most Favored Nation” (MFN) rule impacting the federal government’s Medicare Part B drug expenditure. Its originally scheduled effective date would have reduced reimbursements to healthcare providers from Jan. 1, 2021, cutting spending by a predicted $5 billion in its first year, and nearly $70 billion over the MFN rule’s lifetime. In a parallel California proceeding, the court is expected to rule on the plaintiffs’ request for a preliminary injunction today.

In the Maryland case, the organizational plaintiffs sought to enjoin the MFN rule, arguing that in promulgating it, the Centers for Medicare and Medicaid Services’ (CMS) violated the Administrative Procedure Act (APA), exceeded its Social Security Act authority, and transgressed constitutional bicameral, presentment, and separation of powers requirements. The plaintiffs are organizations representing the interest of provider groups, doctors, patients, pharmaceutical companies, and other entities.

In its opinion granting the TRO, the court addressed several threshold arguments made by the defendants before turning to the parties’ merits contentions. Based on the plain text of the relevant statutes, the court found that there was no bar to jurisdiction, as the defendants claimed.

As to standing, the court considered just one plaintiffs’ positions in light of the “compressed schedule” Judge Blake had to adhere to in ruling on the motion. The court concluded that National Infusion Center Association (NICA) had representational standing to litigate on behalf of its members, in part citing a “striking example” of the harm the MFN rule would likely cause.

The court pointed to a doctor’s declaration describing how his clinic would have to stop providing a covered drug to patients. Because the infusion drug is supposedly the sole FDA approved therapy for primary progressive multiple sclerosis, the court explained, patients would then be left without a treatment alternative.

As to the case’s merits, the court agreed that the plaintiffs’ APA claim, the only one it addressed, was likely to succeed. The plaintiffs argued that the rule’s promulgation without the usual notice and comment procedures was improper, while the government claimed it had good cause for omitting this step, pointing to the “rising cost of drug prices and the economic consequences of the COVID-19 pandemic…” The court held that the government’s purported justification “falls flat” because it failed to provide evidence establishing that drug prices had indeed increased and that COVID-19 had “rapidly exacerbated” the rise.

Judge Blake further found that the plaintiffs were at risk of irreparable harm without the TRO and that on balance, injunction was warranted. The court concluded, that “[a]s noted extensively throughout this memorandum, the MFN rule was promulgated without adequate procedure, depriving the plaintiffs of an opportunity to comment on a potentially drastic revision to an important regulatory system with far-reaching consequences.”

The plaintiffs are represented by Hogan Lovells US LLP, Manatt Phelps and Phillips, Cleveland Terrazas PLLC, Gordon, Wolf & Carney CHTD, and Arnold & Porter Kaye Scholer LLP. The defendants are represented by the U.S. Department of Justice.