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Trump Plan Tying Drug Payments to Foreign Rates Halted Twice (2)

Dec. 28, 2020, 8:47 PMUpdated: Dec. 28, 2020, 10:14 PM

A federal judge in California halted a Trump administration rule tying domestic drug reimbursement to foreign prices, adding more fuel to legal disputes trying to squelch the plan entirely.

“The preliminary injunction is granted based on the government’s failure to complete the notice and comment procedures required by the Administrative Procedure Act,” Judge Vince Chhabria of the U.S. District Court for the Northern District of California said in an order Monday.

“The government is enjoined from implementing the rule pending completion of those procedures,” he said.

Chhabria is the second judge in a week to delay the policy. A federal judge in Maryland Dec. 23 ordered that the rule, which was slated to take effect Jan. 1, be paused for two weeks.

Medicare reimbursement for high cost drugs administered in doctors’ offices would be tied to cheaper prices paid in other countries under the rule. Doctors would also be paid a flat fee for administering the drug instead of a fee tied to the price of the medicine.

The Health and Human Services Department finalized the policy through an interim final rule in November, meaning the agency skipped the comment period. Lowering drug costs for patients is the end goal of the policy, which the government argues justified the speedy implementation.

‘Contrived’ Reasoning

The HHS said in an opposition brief that the Centers for Medicare & Medicaid Services found good cause to forgo advance notice and comment “because of the particularly acute need for affordable Medicare Part B drugs now, in the midst of the COVID-19 pandemic.”

But Chhabria admonished the federal government for skipping a key step in the rulemaking process and called the government’s reasons for doing so “contrived.”

“While there’s nothing unlawful per se about rushing to enact policy in the final days of a presidential administration (indeed, it’s a time-honored tradition), executive branch officials may not circumvent clear legal requirements in the eleventh hour to achieve goals they couldn’t accomplish in the normal course,” he said.

Chhabria vacated the interim final rule pending completion of the notice and comment process, calling it the “only appropriate relief.”

The Biotechnology Innovation Organization, which represents various biotech and drug companies, filed for a preliminary injunction in early December along with other life sciences groups, including the California Life Sciences Association. BIO argues the administration rushed the rule through the regulatory process and will harm patients, doctors, and hospitals because it so “drastically transforms” the reimbursement process.

The California Life Sciences Association applauded the judge for stopping the interim final rule.

“It will harm America’s most vulnerable senior citizens and cause irreparable harm to the health care providers who serve this large patient population and could devastate the innovative life sciences ecosystem if implemented as proposed on January 1, 2021,” Mike Guerra, the group’s president and CEO, said in a statement.

An agency spokesperson said the HHS is reviewing the opinion together with the Department of Justice, and that the agency doesn’t comment on matters in litigation. The spokesperson directed questions to the DOJ, which didn’t immediately respond to a request for comment.

The case is Biotechnology Innovation Org. v. Azar, N.D. Cal., No. 20-cv-08603, order 12/28/20.

(Updated with additional reporting throughout.)

To contact the reporters on this story: Jacquie Lee in Washington at jlee1@bloomberglaw.com; Lydia Wheeler in Washington at lwheeler@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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