Regeneron Files Reply in Favor of Injunction in Case Against MFN Rule

Regeneron Pharmaceuticals Inc. filed a reply on Friday in support of order to show cause for a preliminary injunction, temporary restraining order, and expedited briefing schedule as part of ongoing litigation against the Department of Health and Human Services (HHS) and its Secretary, Alex Azar, as well as the Centers for Medicare and Medicaid Services (CMS) and Seema Verma, in her role as CMS administrator. The case, filed in the Southern District of New York, challenged an executive order by President Donald Trump. The Most Favored Nation (MFN) Rule requires that the government pay the lowest price offered to any other country that is a member of the Organization for Economic Cooperation and Development with a GDP per capita at least 60% of the United States for the top fifty prescription medications covered by Medicare.

Regeneron stated that its claims are not barred from judicial review under the Medicare statute, arguing that 42 U.S.C. § 1315(a), the statute under which their claims arise, is not a part of the Medicare statute and that their claims are not barred from judicial review. The government argued that § 1315(a) is “indisputably part of the Medicare statute.”

The plaintiff also argued that §§ 405(h), requiring that “claimants first exhaust their administrative remedies” before “judicial review of reimbursement decisions,” does not apply because Regeneron “cannot seek reimbursement and has no administrative remedies to exhaust.” Regeneron argued that it is excused from exhausting its administrative remedies and does not need to “endure the ‘incontrovertibly grotesque,’ ‘ten-year’ backlog of the Medicare reimbursement administrative process.”

The government allegedly bypassed the notice-and-comment period mandated by the Administrative Procedures Act (APA) because of the urgent need to reduce drug prices because of the COVID-19 pandemic. Regeneron argued that “multiple courts have rejected government arguments that COVID-19 makes notice and comment “impracticable” and that “neither Defendants nor the President ever invoked COVID-19 … as a reason for the rule.”

Regeneron alleged that the MFN Rule is arbitrary and capricious. Regeneron argued that the defendants “failed to consider the specific factors that Congress directed them to consider” and that the defendants “failed to consider several of the most significant problems” with the rule, such as “adverse effect on innovation, drug companies’ longstanding reliance on statutory law, and some manufacturers’ … lack of control over foreign drug prices.”

The pharmaceutical company alleged that the MFN rule violates the First Amendment because “retaliation for protected speech would violate the First Amendment.” Regeneron stated that the defendants “promulgated the (MFN) rule as retaliation for the (pharmaceutical) industry’s failure to support (Trump’s) reelection.” Regeneron quoted Trump claiming he “ ‘ha(d) to’ follow through on the order with the rule because ‘(b)ig pharma ran millions of dollars of negative advertisements against (him) during (his) campaign.” Further, Regeneron stated that Azar “emphasized the president’s involvement and criticized drug companies for “run(ning) millions of dollars in ads against the President’s drug pricing initiatives.”

Regeneron claimed that its “reputation, good will, and business opportunities” will suffer irreparable harm from the MFN Rule. Regeneron also stated that other courts “have held that a violation of an affected party’s notice-and-comment rights is irreparable where, as here, the party has some ‘immediate’ interest ‘at stake.’ ”

Regeneron requested that the court grant a “preliminary injunction enjoining the MFN Rule, including a temporary restraining order preventing Defendants from implementing or enforcing the rule.” Regeneron is represented by Kirkland & Ellis LLP.