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Judge Delays Plan Tying U.S. Drug Costs to Foreign Prices (2)

Dec. 23, 2020, 8:31 PM; Updated: Dec. 23, 2020, 10:50 PM

The government must wait until late January to cut Medicare reimbursements for certain high-cost drugs rather than beginning Jan. 1 as initially planned, a federal district judge ruled Wednesday.

The judge granted a cancer association’s request for a two-week temporary restraining order against the Trump administration’s drug price rule linking domestic reimbursement to foreign prices.

Federal agencies have “broad discretion” to create policy, but the Centers for Medicare & Medicaid Services’ concern about high drug costs “is insufficient to dispense with the notice and comment procedures which are required under the Administrative Procedures Act and which are essential to ensuring civic participation in the rulemaking process,” U.S. District Court for the District of Maryland Judge Catherine Blake said.

The Department of Health and Human Services didn’t immediately respond to a request for comment.

The rule, finalized in November, replaces a doctor payment model that relies on the price of a drug with a flat fee. The administration released the policy as an “interim final rule,” which makes the policy effective upon publication and skips the final comment process. Lowering drug costs is the ultimate goal of the policy.

But drug companies and other cancer groups say the rule would limit patients’ access to medications. Cancer health providers—who will be particularly affected by the rule because it targets high cost drugs— wouldn’t be able to absorb the lost revenue because they’ve already negotiated their drug contracts and would have to turn patients away, their lawyers argued last week.

An attorney for the federal government argued in court that immediate implementation of the rule was necessary because people are struggling now to afford their medications.

The Association of Community Cancer Centers, the Pharmaceutical Research and Manufacturers of America, and two other health-care groups filed for an injunction Dec. 4.

“As the lawsuit continues, we continue to have grave concerns with this policy and the negative consequences it will have on America’s patients, providers and future medical innovation,” PhRMA Executive Vice President and General Counsel James C. Stansel said in a statement Wednesday.

The Association of Community Cancer Centers said it is “encouraged” by the ruling, and that the delay gives the court time to hear arguments on permanently blocking the rule. Three other cases challenging the rule were filed recently in different courts and “may be decided in the next few weeks,” the group said in a statement.

The American Hospital Association said in a statement that it hopes the court will ultimately throw out the rule entirely.

The case is Ass’n of Community Cancer Centers v. Azar, D. Md., No. 1:20-cv-03531-CCB, order 12/23/20.

(Updated to include comment from the Association of Community Cancer Centers.)

To contact the reporter on this story: Jacquie Lee in Washington at jlee1@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com

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