DC Judge, Applying 'Loper Bright,' Dismisses Complaint in Medicare Drug-Classification Dispute
U.S. District Senior Judge Beryl A. Howell ruled that federal law “precludes the exercise of jurisdiction to review the agency’s classification of certain oral-only drugs as ‘renal dialysis services’ and its decision to identify [Ardelyx Inc.’s drug Xphozah] as qualifying for such classification.”
November 12, 2024 at 03:54 PM
4 minute read
What You Need to Know
- Latham & Watkins represented drugmaker Ardelyx Inc. in a lawsuit against the U.S. Department of Health and Human Services.
- U.S. District Senior Judge Beryl A. Howell dismissed the complaint on jurisdictional grounds.
- Ardelyx is reviewing its appellate options.
A federal judge has dismissed a lawsuit filed against the U.S. Department of Health and Human Services on behalf of a drug company.
U.S. District Senior Judge Beryl A. Howell for the District of Columbia ruled she has no jurisdiction to consider Massachusetts-based Ardelyx Inc.’s claims alleging HHS misclassified phosphate-lowering therapies in violation of the Administrative Procedure Act.
Federal law—the Medicare Improvements for Patients and Providers Act of 2008—“precludes the exercise of jurisdiction to review the agency’s classification of certain oral-only drugs as ‘renal dialysis services’ and its decision to identify [Ardelyx’s PLT drug Xphozah] as qualifying for such classification,” Howell wrote in her memorandum opinion filed Nov. 8. “Accordingly, defendants’ motion is granted, requiring dismissal of this case.”
Latham & Watkins filed a complaint in July against President Joe Biden’s HHS Secretary Xavier Becerra and the Centers for Medicare and Medicaid Services alleging CMS violated the APA by changing Xphozah’s classification and Medicare reimbursement scheme.
Representing Ardelyx and two nonprofit advocacy organizations, Latham argued the Medicare reimbursement changes that go into effect in January 2025 are “arbitrary, capricious, contrary to law, in excess of statutory authority, and short of statutory right, and must therefore be set aside.”
U.S. Attorney Matthew M. Graves for the District of Columbia filed court papers asking the trial court to dismiss Latham’s complaint for lack of subject-matter jurisdiction.
“Separate from their failure to demonstrate an irreparable economic injury,” U.S. attorneys argued in a brief, “Plaintiffs’ motion for preliminary injunctive relief should be denied because the alleged imminent economic harm they ask this Court to redress is, in substantial part, self-inflicted. Ardelyx could have, but did not, seek to have the Medicare program make an add-on payment adjustment to End-Stage Renal Disease facilities when they use [Xphozah] to treat patients.”
Bound by the U.S. Supreme Court’s Loper Bright decision overturning “Chevron deference,” Howell in her decision wrote the trial court “analysis does not defer to the agency’s interpretation of any of the statute’s provisions, even if ambiguity were found.”
Howell granted the defendants’ motion to dismiss and denied Latham’s preliminary injunction motion as moot, ruling the MIPPA statutes prevents judicial review of the claims.
Mike Raab, president and CEO of Ardelyx, issued a statement saying the company is “disappointed and saddened” by Howell’s decision.
“This will result in incredible harm to dialysis patients who, as a result of the bundled payment system, are unable to access the best care and medicine they require,” Raab said. “Dialysis patients are among those who have historically experienced poorer health outcomes due to negative social determinants of health. And, while addressing health disparities has been a stated goal for CMS, this policy moves us in the opposite direction, resulting in severely restricted access to important medications.”
Founded in October 2007, Ardelyx is the Massachusetts-based drugmaker of Xphozah, a phosphate-lowering therapy approved by the U.S. Food and Drug Administration in October 2023 for treating chronic kidney disease patients on dialysis.
Ardelyx in its 2023 annual report said the government classifying Xphozah for reimbursements under Medicare Part B and no longer under Part D in 2025 could have a negative impact on the company’s revenues.
Ardelyx in a Nov. 8 press release said it is “currently reviewing the District Court’s decision and will consider all options related to the lawsuit.”
A CMS spokesperson said the federal agency also is reviewing the decision Tuesday.
Howell rendered her decision in Ardelyx v. Becerra, civil action No. 1:24-cv-02095.
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